The U-turn decision comes after former chancellor Kwasi Kwarteng set out a planned freeze on alcohol duty in the UK Government’s mini-Budget three weeks ago.
However, following his sacking, the UK’s newly-appointed Chancellor Jeremy Hunt reversed almost all the tax-cutting policies announced in the mini-budget.
In a statement on Monday, the Chancellor confirmed the freeze – due to come into force in February next year – would no longer take place, saving the government £600 million a year. Alcohol duty will now rise in line with inflation, as measured by the retail price index (RPI), currently at 12.3 per cent.
Criticising the decision, Mark Kent, chief executive of the SWA, said: “Business can only work on the basis of certainty and stability. That has been stripped from the Scotch whisky industry following the Chancellor’s decision to U-turn on the duty freeze for Scotch whisky announced just over two weeks ago.
“Time after time, duty freezes on spirits have increased government revenue contrary to what the Treasury’s forecasts have predicted. The industry has been an economic anchor, even in times of volatility.
“With the average priced bottle of Scotch whisky already taxed at 70 per cent, a double-digit rise in spirits duty will now seriously reduce the industry’s ability to support the UK economy through investment, job creation and rising revenue to the Treasury. It will add to pressures in the UK hospitality industry, and household budgets as costs inevitably increase.
"Distillers are facing increasing economic headwinds and rising costs, the duty freeze offered much needed support. We urgently need that commitment to be reinstated.”
The British Beer and Pub Association also hit out, with chief executive Emma McClarkin calling the move “a huge blow to brewers and pubs”.
The UK Government has said the next steps of its alcohol duty review, which included measures to introduce an 18-month transitional measure for wine duty, as well as a draught duty rate for beer by August 2023, would continue as planned