THE PRICE of a pint of beer is set to fall by 1p after George Osborne reversed previous commitments to increase duty above inflation.
But the relief was not applied to cider, wine or spirits, which will be subjected to a 5.3 per cent rise in duty from Sunday. Tobacco duty also rose by the same amount yesterday.
The changes mean that, on average, the price of a bottle of wine will rise 10p, a bottle of spirits will be 38p extra, cider will rise by 2p a pint, and 20 cigarettes will cost 26p more.
In a bid to boost the UK’s suffering pub and brewing industries, the chancellor made beer exempt from the alcohol duty escalator, which increases excise duty by two per cent above inflation every year. Duty on beer has risen 42 per cent since Labour brought in the escalator in 2008.
Yesterday, Osborne cut beer duty by two per cent, promised it would be frozen in next year’s Budget, and said the tax would rise in line with inflation following that. The Treasury predicted the move would cost £1bn over the next five years.
The move was welcomed as a relief by most of the beer industry, which has been intensely lobbying the chancellor. Ted Tuppen, the head of pub group Enterprise Inns said: “We will be passing the reduction on to our publicans immediately.”
But Tim Martin, chairman of JD Wetherspoon, told City A.M.: “This is yet another tax rise and no one will be fooled by it. It sounds to me like another Brownite obfuscation and overall, pubs will be paying more.”
The cut means that by next year a pint of beer will be 4p cheaper than if the escalator had continued. It will cost £170m this year, £215m in 2014, and £205m to £210m after that.