Chancellor George Osborne has announced that the alcohol duty escalator is to be scrapped, and duty on beer again cut by 1p per pint.

In his Budget today, Osborne said that alcohol duty would rise with inflation - with the exception of Scotch whiskey and other spirits, and “ordinary cider”, where it will be frozen.

It will be the second year running that Osborne has cut beer duty by 1p per pint. “Pubs saved. Jobs created. A penny off a pint for the second year running,” he said.

The alcohol duty escalator, introduced by the previous Labour Government, saw alcohol duty rise by 2p above inflation each year.

Brigid Simmonds, British Beer & Pub Association chief executive, said: “This is fantastic news, and George Osborne is again the toast of Britain’s brewers, pubs and pubgoers.  It will protect over 7,000 jobs over two years, mostly jobs of younger people in Britain’s pubs. 

“It also shows that the Government has understood our case, that taxes on British beer had become far too high, and action was long overdue.

“I hope this becomes a trend in future budgets for this British-made, lower-strength drink.”


Other tax announcements

Business rates discounts and enhanced capital allowances will be extended in enterprise zones for another three years, Osborne announced.

The annual investment allowance will be doubled to £500,000 and will be extended until the end of 2015; 99.8% of businesses will benefit from the scheme.

Osborne said the Government “will block transfer of profits between groups to avoid tax”. It will also “curb abuses” of the Enterprise Investment Scheme and similar tax-efficient initiatives.

He said: “From midnight tonight anyone purchasing residential property worth over half a million pounds through a corporate envelope will be required to pay 15% stamp duty.”

The amount of export finance available has been doubled to £3bn and interest rates on loans cut by one third, in a move than could help drinks producers looking to export.

The Government will extend the grant for small businesses to support 100,000 more apprenticeships, he said. Degree-level apprenticeships will be developed.

A £7bn package was announced to help cut energy bills for British manufacturers.

Bingo duty will be halved to 10%.



He said the Office for Budget Responsibility (OBR) has revised up growth estimates for the UK economy for 2014, from 2.4% at the Autumn Statement in November to 2.7% today. Growth in the following years is estimated to be +2.3%, +2.6%, +2.6% and then +2.5%.

On the employment front, he said the OBR predicts there will be one and half million more jobs over the next five years. There has been a 24% fall in the claimant count in one year, Osborne said.


Deficit and borrowing

Osborne said the OBR has also revised down its assessment of the underlying deficit. He said it was 11% before the Coalition was elected and is now 6.6%. It’s set to fall over the following years to 5.5%, 4.2%, 2.4% and reaching 0.8% by 2017/2018. There will be a small surplus of 0.2% in the 2018/2019.

Borrowings have also been reduced. He said Britain was borrowing £157bn per year before the election. This year it borrowed £108bn, £12bn less than earlier forecast, said Osborne.

The level of borrowing will fall to £95bn in 2014/2015, and then decline over the following years to reach a surplus of £5bn in 2018/2019.

“Taken together these new figures mean Great Britain will be borrowing £24bn less than in the last forecast,” said Osborne. “That’s more than we spend in an entire year on the Police and Criminal Justice system.”