North East distilleries and restaurants have reacted to an overhaul on alcohol duty coming into effect today.

Darlington businesses have spoken of their worry after a new alcohol duty was introduced today (August 1), which has seen a decrease in price for draught beer and increases to wine and spirits costs.

This is due to the government's decision to tax alcohol based on strength, coinciding with Chancellor Jeremy Hunt’s ending of the freeze on alcohol duty meaning the price will rise by 10.1 per cent in line with inflation.

This means drinks with alcohol by volume (ABV) below 3.5 per cent will be taxed at a lower rate, but tax on drinks with ABV over 8.5% will stay the same.

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Jay Byers, the director of independent gin distillery Steel River Drinks in Stockton, called the duty a "bombshell for the whole industry."

He said: "We are already managing rising energy bills, record inflation and rocketing interest rates.

"A fresh hike on duty is the last thing distillers and our hospitality industry needs.

“The gin boom of the last decade has been a gift for the Treasury, but this tax rise puts all that at serious risk.

"The success of our industry came through innovative new entries to the market who took a risk to get their business off the ground.

"Many distilleries like mine create local jobs and growth directly and support the local community. Nationwide, our hospitality continues to fly the flag for British produce across the globe.

“But now all of this growth has been put on the line by the Chancellor, with businesses and consumers picking up the tab at a time when they can least afford it. Sadly, there may be no coming back for hospitality in many areas of the UK now.”

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The increase will see duty rise by 44p on a bottle of wine, which when combined with VAT will mean consumers will pay an extra 53p, according to the Wine and Spirit Trade Association (WSTA).

Duty on 18% cream sherry will rise from £2.98 to £3.85, with VAT adding up to an increase of more than £1 a bottle, while a bottle of port will go up by more than £1.50.

The total tax on a bottle of gin or vodka will go up by around 90p.

Richard Holden, MP for North West Durham, said the duty will support pubs and the hospitality sector by putting "more money on their balance sheets."

He said: “This is the biggest change to alcohol duty in over 140 years, going from an incredibly complex system to one which will save our beloved pubs, clubs and breweries and their customers up to 10% on their pints.

“Our pubs and clubs are so important to our local culture as well as the economy. I want to see more people through their doors, which these changes will encourage. 

“This change levels out the unfair advantage supermarkets had over our pubs and clubs. This will support customers as well as the wider hospitality sector by putting more money on their balance sheets. It is a huge win for everyone.”

A spokesperson for Durham Distillery said they were disappointed by the duty rise and said this would pressure local producers even further.

"We are very disappointed that the Chancellor is going through with the duty rise.   

"This will make the cost of living crisis worse for lots of people, and will put more pressure on local craft producers who have given the North East such a vibrant drink scene.

Sparkling wine, previously taxed at a higher rate than still wine, will be 19p cheaper for a standard-strength bottle, if retailers pass on the tax changes by lowering prices.

Meanwhile, a can of pre-mixed gin and tonic would be 5p cheaper.

Shuhel Ahmed, one of the owners of Babul's in Darlington, said the decrease in draught prices has not benefitted the restaurant but understands it has been done to save pubs.

He said: "The duty decrease in draught won't help us at all. I understand why it's [been] done because it's to save the pubs.

"Pubs are an institution in the UK. Without pubs in the UK, are we the UK? It's like fish and chips, it's an essential part of the community.

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"I applaud the government on doing that, but by putting up the rest of the duties, it's like a backhanded compliment.

He said the restaurant's pricing strategy has been affected by the increases on duty, and they have been forced to pass this on considering the current financial climate.

He said he believes the business will be able to cope having diversified its menu, and called on the government to introduce lower duties on food to help the hospitality sector.