The trade has been dealt another blow — with the price of a pint set to rise another 10p — after the Chancellor stuck to plans to increase duty by 7.5%.
The rise in duty is the third price rise of the year after January’s VAT hike and brewery rises in February.
George Osborne confirmed that duty on beer would rise 2% above inflation, which is currently running at 5.5%. It means that duty on a 4.2% abv beer is now 44p and VAT 51p — a total increase of 3.72p.
Beer tax has now risen over 33% since March 2008 — the new rise will take effect from midnight on Sunday.
Duty will be halved for beers below 2.8% abv and be higher for beers above 7.5%.
The trade had held out slim hopes for a reprieve on the grounds that a duty freeze could have saved over 10,000 jobs and generate £40m in extra tax revenue for the Government, according to research conducted by Oxford Economics on behalf of the British Beer and Pub Association.
Jonathan Neame, chief executive of Kent brewer and pub operator Shepherd Neame, labelled the news "absolutely astonishing" and said the Budget "doesn't help the community pub at all".
"It's very disappointing. From what's in the round a very upbeat Budget on focus jobs and growth, it seems to me that every part of the economy can benefit from this but the pub sector. "
Steve Haslam, who operates four pubs, said: “Another hike is another nail in the coffin. They are treating beer as the new petrol and sooner or later they will have to stop — it’s border-line insanity.”
Haslam raised his prices in January to account for the brewers price rises, the VAT rise and the anticipated duty rise announced today.
“We added between 10 and 20p onto our prices in January. We might have to make a small adjustment. Everyone expects a rise after the Budget because it is well publicised so people don’t beat you up about it.”
Also in the Budget:
• The small business rate relief holiday is being extended by one year to October 2012, at a cost of £370m.
• There will be a moratorium of three years for small business on “new domestic regulation”
• All planning bodies will be expected to prioritise jobs and growth
• Corporation Tax will be cut by 2%
• Income Tax relief on the Enterprise Investment Scheme will increase from 20% to 30% in April 2011
• Consultation on the merging of National Insurance and Income Tax.
Click back later for more reaction to the Budget.
