The government recently announced that changes in the regulation on the imports of wine would save consumers £130 million per year.
The claim was reported by the Telegraph and the Express and the Leader of the House of Commons, Jacob Rees-Mogg MP, shared the Telegraph article on Twitter, with the words: “Another benefit of Brexit, cheaper wine and less red tape.”
Most of this “saving” derives from the UK not requiring EU wine producers to fill in a form when exporting to the UK.
But EU wine producers already don’t have to fill out the form. Far from a saving, this just represents maintenance of the status quo, and the avoidance of a cost which the government had originally planned, before reversing the decision.
Background
EU rules say that winemakers from non-EU countries must complete something called a VI-1 form in order to export wine to an EU country. The form gives details about the composition of the wine, which must be analysed first. The cost of this analysis and paperwork slightly raises the overall cost of each imported bottle of non-EU wine. EU winemakers do not need to complete the form to sell wine to other EU countries.
The UK has continued to follow these rules, requiring the form for non-EU imports, but not requiring the form for EU imports.
After Brexit, the UK government had said that, in addition to requiring the form for non-EU wine imports, it would also require the form for EU wine imports coming into Great Britain, while EU wine entering Northern Ireland would not require the VI-1 form. This would have continued the extra cost applied to non-EU wine, and added an extra cost to EU wine.
The Wine and Spirit Trade Association (WSTA), which campaigned against this plan, estimated that it would add an extra £70 million to the cost of importing EU wine. It would also continue the £30 million cost that it estimated was already being paid by wine exporters outside the EU. (We have not analysed how these estimates were made, so we cannot say how accurate they are.)
However, on 25 July, the government announced that it would scrap the form entirely, thereby avoiding the planned extra cost on EU wine and removing the existing cost on non-EU wine.
How to get to £130 million
Full Fact asked the Department for Environment, Food and Rural Affairs (Defra) how it had calculated this decision would save wine drinkers £130 million per year.
It said it was based on the WSTA’s estimate that requiring the form on EU wine imports would cost £70 million. As EU imports accounted for 55% of wine imports, it then multiplied that £70 million up to get to £130 million.
There are two problems with this.
Firstly, as mentioned, the WSTA does not estimate that the cost of the VI-1 form on EU and non-EU wine exporters is £130 million. It estimates the cost would be £100 million. Why the government decided to multiply up the EU exporter cost rather than just use the WSTA’s total exporter cost is unclear and we have asked Defra for clarity on this.
But more importantly, it’s misleading to refer to this as a “saving”.
As we’ve said, the UK already does not require the form on EU imports. It only requires the form on non-EU imports. The WSTA estimates this costs around £30 million.
The government’s decision to scrap the form will therefore remove this cost. But it won’t save the consumer the cost of VI-1 forms on EU imports, because they simply aren’t required at the moment. They only exist under the policy the government had planned to bring in, but has now scrapped.