The price of a bottle of wine could rise by 44p this summer after Jeremy Hunt limited a freeze on alcohol tax to pints.
The chancellor unveiled a surprise “Brexit pubs guarantee” in his budget that will keep the levy on beer and cider up to 11p lower than shop-bought booze.
But drinkers will see the duty on other alcohol soar by 10.1% in August in line with inflation after a freeze during the peak of the cost of living crisis.
Mr Hunt said the exemption would protect pubs as he quipped: “British ale is warm but the duty on a pint is frozen.”
However, wine and whisky producers did not see the funny side as they accused the chancellor of inflicting a “historic blow” on their industries with the highest tax increases in nearly 50 years.
The Wine and Spirit Trade Association (WSTA) said the changes will mean that duty on a bottle of still wine will go up by 44p while a bottle of vodka could rise by 76p.
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For fortified wines, the increase will be even greater, with port potentially rising by £1.30 a bottle.
Miles Beale, Chief Executive of the WSTA, said the government was “punishing” businesses and consumers with “the largest increase in wine duty since 1975”.
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“What does government have against people who choose to produce and drink wine?” he said.
“These crippling inflationary tax hikes will be lumped on top of stealth tax rises for some alcoholic products, which the government has built into the move to taxing alcohol by strength.
“After all the effort to relaunch hospitality supply chains in 2022, the government is offering no help in 2023 for the wine and spirit trade – and particularly for the UK’s 33 million wine drinkers who will see their – and the nation’s – favourite drink hit with a 44p duty rise in the midst of a cost-of-living crisis.”
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Mhari Aurora explains all you need to know about the Budget
The Scottish Whisky Association (SWA) also claimed the rise in alcohol duty would be the “largest tax increase for decades”.
Chief executive Mark Kent told Sky News: “It’s bad news. It’s bad news for the consumer, it’s bad news for inflation, bad news for spirits, bad news for scotch and bad news for Scotland which produces 90% of all UK spirits.”
The whisky boss said the duty rise means 75% of the cost of a bottle of scotch will go to the exchequer in tax – about £11 out of £15.
Mr Kent said that is “the biggest tax hike since 1981” and the largest rate in the G7.
“We are already the highest taxed country in the G7 for spirits and our taxes are 60% more on average than the EU, so all of this puts us at a competitive disadvantage compared to other countries,” he said.
“It discriminates against people who drink spirits, what we want to see is a fair system where the unit of alcohol, however you choose to consume it, is taxed at the same rate.”
He warned the hit to profit will impact jobs and investment as he called on MPs to reject the measure.
“Our message has been clear, the best outcome would be a freeze because that has shown to bring in increasing revenues for the exchequer and supports businesses to invest more in the economy and in jobs.”
Image: Jeremy Hunt has been urged to U-turn on the decision to end the alcohol tax freeze
‘Brexit pubs guarantee’
Explaining the beer exemption as he set out his budget, Mr Hunt said he wanted to protect “one of our other most treasured community institutions, the great British pub”.
He told the Commons: “In December, I extended the alcohol duty freeze until August 1, after which duties will go up in line with inflation in the usual way.
“But today, I will do something that was not possible when we were in the EU and significantly increase the generosity of Draught Relief so that from August 1 the duty on draught products in pubs will be up to 11p lower than the duty in supermarkets, a differential we will maintain as part of a new Brexit pubs guarantee.
“Madam deputy speaker, British ale may be warm, but the duty on a pint is frozen.”
Many Tory MPs welcomed the announcement, while the British Beer and Pub Association (BBPA) said it was a “positive” step in time for summer.
But Emma McClarkin, the BBPA’s chief executive, added: “The fact is our industry will be facing an overall tax hike, not a reduction, come August. Duty on non-draught beer will rise and the measures introduced today won’t rebalance the catastrophic impact soaring inflation and unfair energy contracts are having on both pubs and the breweries that supply them.”
An independent review of the water industry is to recommend sweeping changes to the way the sector is managed, including the potential replacement of Ofwat with a strengthened body combining economic and environmental regulation.
Former Bank of England governor Sir Jon Cunliffe will publish the findings of the Independent Water Commission on Monday, with stakeholders across the industry expecting significant changes to regulation to be at its heart.
The existing regulator Ofwat has been under fire from all sides in recent years amid rising public anger at levels of pollution and the financial management of water companies.
Campaigners and politicians have accused Ofwat of failing to hold water operators to account, while the companies complain that its focus on keeping bills down has prevented appropriate investment in infrastructure.
In an interim report, published in June, Sir Jon identified the presence of multiple regulators with overlapping responsibilities as a key issue facing the industry.
While Ofwat is the economic regulator, the Environment Agency has responsibility for setting pollution standards, alongside the Drinking Water Inspectorate.
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Sir Jon’s final report is expected to include a recommendation that the government consider a new regulator that combines Ofwat’s economic regulatory powers with the water-facing responsibilities currently managed by the EA.
In his interim report, Sir Jon said options for reform ranged from “rationalising” existing regulation to “fundamental, structural options for integrating regulatory remits and functions”.
He is understood to have discussed the implications of fundamental reform with senior figures in industry and government in the last week as he finalised his report.
Environment Secretary Steve Reed is expected to launch a consultation on the proposals following publication of the commission report.
The commission is also expected to recommend a “major shift” in the model of economic regulation, which currently relies on econometric modelling, to a supervisory approach that takes more account of individual company circumstances.
On Monday, the government’s long-awaited review into the UK’s water industry will finally report.
The expectation is that it will recommend sweeping changes – including the abolition of the regulator, Ofwat.
But frustrated customers of the water companies could rightly complain that the process of taking on this failing sector and its regulator has been slow and ineffective.
They may be forgiven for going further and suggesting that how Labour has dealt with water is symbolic of their inability to make an impact across many areas of public life, leaving many of their voters disappointed.
This is an industry that has been visibly and rapidly declining for decades, with the illegal sewage dumping and rotting pipes in stark contrast with the vast salaries and bonuses paid out to their executives.
It doesn’t take a review to see what’s gone wrong. Most informed members of the public could explain what has happened in a matter of minutes.
And yet, despite 14 years in opposition with plenty of time to put together a radical plan, a review is exactly what the government decided on before taking on Ofwat.
Month after month, they were asked if they believed the water industry regulator was fit for purpose despite the obvious disintegration on their watch. Every time the answer was ‘yes’.
As in so many areas of government, Labour, instead of acting, needed someone else to make the decision for them, meaning that it has taken over a year to come to the simple conclusion that the regulator is in fact, not fit for purpose.
As they enter their second year in office, maybe this can provide a lesson they desperately need to learn if they want to turn around their fortunes.
That bold decisions do not require months of review, endless consultations, or outside experts to endlessly analyse the problem.
They just need to get on with it. Voters will thank them.
Sir Jon has said the water industry requires long-term strategic planning and stability in order to make it attractive to “low-risk, low-return investors”.
The water industry has long complained that the current model, in which companies are benchmarked against a notional model operator, and penalised for failing to hit financial and environmental standards, risks a “doom loop”.
Thames Water, currently battling to complete an equity process to avoid falling into special administration, has said the imposition of huge fines for failing to meet pollution standards is one of the reasons it is in financial distress.
Publication of the Independent Commission report comes after the Environment Agency published figures showing that serious pollution incidents increased by 60% in 2024, and as Thames Water imposes a hosepipe ban on 15m customers.
Ofwat, Water UK and the Department for the Environment all declined to comment.
The first Post Office Capture conviction is to be sent to the Court of Appeal, Sky News understands, in a “breakthrough” moment in the IT scandal.
The Criminal Cases Review Commission (CCRC) has decided to refer the case of sub-postmistress Patricia Owen, who was convicted in 1998 of theft.
Mrs Owen was found guilty by a jury based on evidence from the faulty IT software Capture, which was used in 2,500 branches between 1992 and 1999, before the Horizon Post Office scandal.
Image: Pat Owen, pictured here with her husband David, always maintained her innocence but died in 2003 with a criminal record
It comes after Sky News revealed that a damning report into Capture, which could help overturn criminal convictions, had been unearthed after nearly 30 years.
The decision to refer the first-ever Capture case to the Court of Appeal has been made on the grounds that Mrs Owen’s prosecution was an “abuse of process”.
The development has been described by victims’ lawyer Neil Hudgell as “hugely pivotal”.
“The Court of Appeal don’t receive that many referrals that start at the CCRC, and most get turned away, so it’s a very high bar to even get cases from the CCRC to the Court of Appeal…”
“I think it will be a real shot in the arm to all the other Capture victims who are waiting for their cases to be determined by the CCRC.”
Mr Hudgell described the report found earlier this year – written by computer experts in 1998 and highly critical of Capture – as “significantly tipping the balance”.
Image: Lawyer Neil Hudgell says development is ‘hugely pivotal’
Sky News found that the Post Office knew about the report at the time and continued to prosecute sub-postmasters based on Capture evidence.
Pat Owen always maintained her innocence but died in 2003 with a criminal record before the wider Post Office scandal came to light.
Her daughter Juliet Shardlow said she cried when she heard the news that her mother’s case would be referred to the Court of Appeal.
“I feel angry that she is not here because she died before her time… we will be there – we will be sitting there in that front row.
“I can’t put it into words because it’s still all a shock that we are where we are and that later this year, or next year, we might have what we set out to get… justice for her.”
Image: Juliet Shardlow is seeking justice for her mother
The CCRC is currently investigating 30 cases potentially related to the Capture software system.
Twenty-seven of those cases are now assigned to case review managers and under “active review”, with a further three cases in the preparatory stages.
The CCRC has described a “challenge” over determining “whether cases involved the use of Capture at the time of the alleged offences”.
In a letter written to Liam Byrne, chair of the Business and Trade Committee, and seen by Sky News, it said that information the Post Office has provided “does not, in most cases, show whether it was installed and in operation at the time of the alleged offending”.
It also mentioned that the Post Office is reviewing “a significant amount of data which may contain further information”.
A Post Office spokesperson said: “While it is not appropriate for us to comment on specific cases, we have been very concerned about the reported problems relating to the use of the Capture software, and we are sincerely sorry for past failings that have caused suffering to postmasters.
“We are determined that past wrongs are put right and continue to support the government’s work in this area as well as fully co-operate with the Criminal Cases Review Commission.”
The number of most serious water pollution incidents rose by 60% last year, according to data covering England, with three companies responsible for the bulk of them.
The Environment Agency (EA) – under fire for its own oversight of water firms’ pollution performance – said that more than 80% of the 75 instances of pollution in its two most serious categories were the responsibility of Thames Water (33), Southern Water (15) and Yorkshire Water (13).
But the body added it had found “consistently poor performance” across all nine water and wastewater firms in the country – a similar summary to that of 2023.
According to the report, reasons behind the 2024 results included persistent underinvestment in new infrastructure, poor asset maintenance, and reduced resilience due to the impacts of climate change.
The period was dominated by spells of intense rainfall, which overwhelmed storm overflows and resulted in sewage discharges.
The EA reported 2,801 pollution incidents in total during 2024 – a hike of almost a third.
The data was released as a committee of MPs called for regulation of water companies to face a “complete overhaul” amid a lack of public trust and anger over surging bills to pay for long overdue infrastructure improvements.
The Public Accounts Committee said that Ofwat and the EA had failed to secure industry compliance and warned that even the high bill settlements to 2030 would only result in 44% of sewage overflows being overhauled.
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‘Paddle-out’ protest against water pollution
The Independent Water Commission, established by the government last year and led by former Bank of England deputy governor Sir Jon Cunliffe, is due to make final recommendations on the regulatory framework next week.
He warned when the interim report was published last month: “There is no simple, single change, no matter how radical, that will deliver the fundamental reset that is needed for the water sector.”
Alan Lovell, the EA’s chair, said: “This report demonstrates continued systemic failure by some companies to meet their environmental targets.
“The water industry must act urgently to prevent pollution from occurring and to respond rapidly when it does.
“We have made significant changes to tighten our regulation of the water industry and ensure companies are held to account.
“With a dedicated larger workforce and increased funding, our officers are uncovering and acting on failures to comply with environmental law.”
A spokesperson for industry group Water UK responded: “While there have been some improvements it is clear that the performance of some companies is not good enough. The Environment Agency is right to highlight underinvestment in infrastructure and maintenance as the major causes of these results.
“Investment in the sector has been suppressed with Ofwat prioritising short -term cuts to people’s water bills over the long-term resilience of the network. This is finally being put right, with a record £104bn investment over the next 5-years to secure our water supplies, support economic growth and end sewage entering our rivers and seas.
“However, fundamental change to regulation is also needed. We hope that the recommendations of the Independent Water Commission next week will ensure the sector continues to get the investment it needs to drive down pollution incidents.”