Federation of Wholesale Distributors (FWD) chief executive James Bielby has accused Chancellor Philip Hammond of producing a Budget that “disproportionately affects” wholesalers.
Announcements on the soft drinks levy, National Living Wage (NLW) and potential new duty rates on cider all featured in Hammond’s first Budget, which he unveiled in the House of Commons (8 March) yesterday.
Hammond confirmed that the levy on high-sugar soft drinks will be set at 18p and 24p per litre, revealed that the government will launch a consultation looking into introducing a new tax band for still cider just below 7.5% ABV, and added that the NLW will rise from £7.30 to £7.50 from next month for those in employment aged over 25.
But Bielby said: “This Budget made no mention of the tumultuous changes to food and drink distribution what will come with Brexit. Instead, it introduces changes which will disproportionately affect our members and their 400,000 retail and foodservice customers.
“We will work with HMRC to ensure that illicit product does not get a foothold in the UK soft drinks market, and that any duty rate rise for high-strength ciders is introduced in the context of equal measures to tackle irresponsible promotions in other alcohol categories.”
Hammond highlighted manufacturers’ willingness to reduce sugar content in their products, but Bielby argued that he has “done nothing to address the potential for tax-evaded products to flood the market”. Bielby added: “The levy is not placed at the point of entry of high-sugar soft drinks at borders, and responsible wholesalers who pay the new tax could find themselves in competition with criminals who do not. FWD is working closely with HMRC to reduce the risk of fraudulent sales.”
The body welcomed the prospect of a consultation on a new duty rate for still ciders, as it believes price intervention is “the best way to regulate an alcohol market where voluntary schemes have not prevented very low cost alcohol being widely available in most supermarkets.” As the affected ciders represent only 0.1% of the market, the FWD will attempt to ensure that any change in duty rates takes into account the deep discounting of other alcohol products by national retailers.
Meanwhile, the FWD believes that the NLW rise, along with the new Apprenticeship Levy, “puts further pressure on low-margin wholesalers, which are already facing rising product and commodity prices. Wage increases which do not reflect trading conditions are likely to result in recruitment freezes, reduction in hours, or job losses.”
Elsewhere in the budget, Hammond introduced a new minimum excise duty on cigarettes based on a pack price of £7.35.