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.
More on Jeremy Hunt
Related Topics:
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”.
Advertisement
“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.”
Please use Chrome browser for a more accessible video player
2:49
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.”
A British fintech which counts Standard Life among its key clients is close to finalising one of the industry’s biggest funding rounds so far this year.
Sky News understands that Hyperlayer, which is run by the former Morgan Stanley executive Rob Rooney, is lining up a major equity injection led by CDAM, a UK-based investment firm, and several new institutional investors.
City sources said this weekend that the new capital from CDAM and other backers could total at least £30m.
The funding round is expected to take place at a post-money valuation of about £160m.
Hyperlayer, which operates a consumer-facing digital wallet called Hyperjar, intends to use the new funding as growth capital to finance the development of new partnerships with global banks and asset managers.
The company provides smart account technology on existing client infrastructure, and is said to work with a number of the world’s 10 largest banks – although it has not publicly disclosed their identities.
Its work with Standard Life involves the future launch of a consumer money app aimed at people approaching or in early retirement.
Hyperlayer’s consumer-facing platform sees customers organise their money in what the company calls “digital jam jars”, enabling them to earn rewards which give them access to partner brands such as Asda, Morrisons and Starbucks.
IKEA and the John Lewis Partnership are among the other merchant partners with which Hyperlayer is working to develop distinctive loyalty-based initiatives for its financial institution clients.
Founded in 2006 by Adam Chamberlain and Scott Davies, CDAM has $1.5bn in assets under management and is an experienced investor in financial services technology.
Mr Davies has had a seat on Hyperlayer’s board for several years.
Mr Rooney, who was a prominent Wall Street executive for years, ultimately serving as Morgan Stanley’s technology operations, joined the company as CEO in 2023.
The new capital injection led by CDAM is understood to be subject to approval by Hyperlayer’s shareholders.
Octopus Energy Group, Britain’s largest residential gas and electricity supplier, is plotting a £10bn demerger of its technology arm that would reinforce its status as one of the country’s most valuable private companies.
Sky News can exclusively reveal that Octopus Energy is close to hiring investment bankers to help formally separate Kraken Technologies from the rest of the group.
The demerger, which would be expected to take place in the next 12 months, would see Octopus Energy’s existing investors given shares in the newly independent Kraken business.
A minority stake in Kraken of up to 20% is expected to be sold to external shareholders in order to help validate the technology platform’s valuation, according to insiders.
One banking source said that Kraken could be valued at as much as $14bn (£10.25bn) in a forthcoming demerger.
Citi, Goldman Sachs, JP Morgan and Morgan Stanley are among the investment banks invited to pitch for the demerger mandate in recent weeks.
A deal will augment Octopus Energy chief executive Greg Jackson’s paper fortune, and underline his success at building a globally significant British-based company over the last decade.
More on Energy
Related Topics:
Octopus Energy now has 7.5m retail customers in Britain, following its 2022 rescue of the collapsed energy supplier Bulb, and the subsequent acquisition of Shell’s home energy business.
In January, it announced that it had become the country’s biggest supplier – surpassing Centrica-owned British Gas – with a 24% market share.
It also has a further 2.5m customers outside the UK.
Image: Kraken is an operating system licensed to other energy providers, water companies and telecoms suppliers. Pic: Octopus
Sources said a £10bn valuation of Kraken would now imply that the whole group, including the retail supply business, was worth in the region of £15bn or more.
That would be double its valuation of just over a year ago, when the company announced that it had secured new backing from funds Galvanize Climate Solutions and Lightrock.
Shortly before that, former US vice president Al Gore’s firm, Generation Investment Management, and the Canada Pension Plan Investment Board increased their stakes in Octopus Energy in a transaction valuing the company at $9bn (£7.2bn).
Kraken is an operating system which is licensed to other energy providers, water companies and telecoms suppliers.
It connects all parts of the energy system, including customer billing and the flexible management of renewable generation and energy devices such as heat pumps and electric vehicle batteries.
The business also unlocks smart grids which enable people to use more renewable energy when there is an abundant supply of it.
In the UK, its platform is licensed to Octopus Energy’s rivals EON and EDF Energy, as well as the water company Severn Trent and broadband provider Cuckoo.
Overseas, Kraken serves Origin Energy in Australia, Japan’s Tokyo Gas and Plentitude in countries including France and Greece.
Its biggest coup came recently, when it struck a deal with National Grid in the US to serve 6.5m customers in New York and Massachusetts.
Sources said other major licensing agreements in the US were expected to be struck in the coming months.
Kraken, which is chaired by Gavin Patterson, the former BT Group chief executive, is now contracted to more than 70m customer accounts globally – putting it easily on track to hit a target of 100m by 2027.
Earlier this year, Mr Jackson said that target now risked being seen as “embarrassingly unambitious”.
Last July, Kraken recruited Amir Orad, a former boss of NICE Actimize, a US-listed provider of enterprise software to global banks and Fortune 500 companies, as its first chief executive.
A demerger of Kraken will trigger speculation about an eventual public market listing of the business.
Its growth in the US, and the relative public market valuations of technology companies in New York and London, may put the UK at a disadvantage when Kraken eventually considers where to list.
One key advantage of demerging Kraken from the rest of Octopus Energy Group would be to remove the perception of a conflict of interest among potential customers of the technology platform.
A source said the unified corporate ownership of both businesses had acted as a deterrent to some energy suppliers.
Kraken has also diversified beyond the energy sector, and earlier this year joined a consortium which was exploring a takeover bid for stricken Thames Water.
The boss of Ryanair has told Sky News the president of the European Commission should “quit” if she can’t stop disruption caused by repeated French air traffic control strikes.
Michael O’Leary, the group chief executive of Europe’s largest airline by passenger numbers, said in an interview with Business Live that Ursula von der Leyen had failed to get to grips, at an EU level, with interruption to overflights following several recent disputes in France.
The latest action began on Thursday and is due to conclude later today, forcing thousands of flights to be delayed and cancelled through French airspace closures.
Mr O’Leary told presenter Darren McCaffrey that French domestic flights were given priority during ATC strikes and other nations, including Italy and Greece, had solved the problem through minimum service legislation.
He claimed that the vast majority of flights, cancelled over two days of action that began on Thursday, would have been able to operate under similar rules.
Mr O’Leary said of the EU’s role: “We continue to call on Ursula von der Leyen – why are you not protecting these overflights, why is the single market for air travel being disrupted by a tiny number of French air traffic controllers?
More from Money
Image: Ryanair has cancelled more than 400 flights over two days due to the action in France. File pic: PA
“All we get is a shrug of their shoulders and ‘there’s nothing we can do’. We point out, there is.”
He added: “We are calling on Ursula von der Leyen, who preaches about competitiveness and reforming Europe, if you’re not willing to protect or fix overflights then quit and let somebody more effective do the job.”
The strike is estimated, by the Airlines for Europe lobby group to have led to at least 1,500 cancelled flights, leaving 300,000 travellers unable to make their journeys.
Image: Michael O’Leary believes the EU can take action on competition grounds. Pic: PA
Ryanair itself had axed more than 400 flights so far, Mr O’Leary said. Rival easyJet said on Thursday that it had cancelled 274 services over the two days.
The beginning of July marks the start of the European summer holiday season.
The French civil aviation agency DGAC had already told airlines to cancel 40% of flights covering the three main Paris airports on Friday ahead of the walkout – a dispute over staffing levels and equipment quality.
Mr O’Leary described those safety issues as “nonsense” and said twhile the controllers had a right to strike, they did not have the right to close the sky.
DGAC has warned of delays and further severe disruption heading into the weekend.
Many planes and crews will be out of position.
Mr O’Leary is not alone in expressing his frustration.
The French transport minister Philippe Tabarot has denounced the action and the reasons for it.
“The idea is to disturb as many people as possible,” he said in an interview with CNews.
Passengers are being advised that if your flight is cancelled, the airline must either give you a refund or book you on an alternative flight.
If you have booked a return flight and the outbound leg is cancelled, you can claim the full cost of the return ticket back from your airline.