Business leaders from the pub industry have described the decision by the government to raise alcohol duty by 8% as a "another kick in the teeth”.
The move by Alistair Darling in yesterday's pre-budget report, which will put 3p on a pint of beer, 13p on a bottle of wine and 53p on a bottle of spirits by Monday, has been widely criticised.
The duty increase will also be maintained when the temporary relief in VAT ends in January 2010 and, taking into account the duty increase from the March 2008 budget, will mean a 17% increase in duty in just one year.
This will be further impacted by the duty escalator that comes into effect in March of an increase of 2% above inflation.
Andy Wood, chief executive of brewer and pub group Adnams, said: "It's another kick in the teeth for the brewing industry. We have been caught up in a perfect storm that is battering the whole trade. What we are seeing at the moment is our customers, the pubs, closing at an unprecedented rate."
Mark Hastings, British Beer & Pub Association, director of communications, said: “It’s truly staggering that struggling community pubs and brewers have been denied the tax benefit extended to the rest of the business sector through the VAT cut.
“With pubs closing at record rates and beer sales at their lowest since the Great Depression, this sector needs a fiscal stimulus just as much as the rest of the economy.
“The decision to increase tax further now, plus the looming escalator in March will significantly increase pressures on the community pub.
“There is genuine dismay and disbelief that the Chancellor is turning a deaf ear and a blind eye to the economic plight of Britain’s traditional beer and pub sector."
Analyst Mark Brumby said: "By singling out alcohol and tobacco (and petrol to be fair) for special treatment, the Treasury has suggested by its actions that it believes beyond doubt that alcohol is the new tobacco. The demonizing of the product would look set to continue.
"Beer duty increases will be in force from Monday but VAT decreases, although they may be put through to consumers from the same date, will not be felt by the publicans in the shape of reduced payments until the VAT is due, which is usually quarterly.
"The above all seems a bit tortuous and unnecessary. Surely HMRC could simply have introduced a differential rate of VAT for alcohol (of 17.5%) whilst putting all other rates down by 2.5%?"
Mike Benner, chief executive of the Campaign for Real Ale, added: “The Chancellor’s refusal to allow beer drinkers to benefit from a VAT reduction means that 7,500 pubs could close by the end of 2012.
“The Government’s failure to support pubs will undermine community life, ruin livelihoods and deprive people of an affordable night out at a local pub.”
He was supported by Jeremy Beadles, chief executive of the Wine and Spirit Trade Association, said: "The Chancellor has given consumers no cause to celebrate this Christmas.
"This year he will have increased tax on alcohol by a massive 17 per cent, hurting consumers when they have little else to cheer about. It's the wrong tax rise at the wrong time."
Nick Bish, the chief executive of the Association of Licensed Multiple Retailers said that the government risked having no pub industry left to tax.
He said: "The whole of today’s announcement is one big gamble and yet again the Chancellor is risking the future of Britain’s pub industry. Today’s Pre-Budget Report is entirely based on the assumption that the economy will grow again in 2010 which is when the new personal taxation starts to bite.
"But for pubs the tax grab starts next week, continues in April with the Duty Escalator and strikes again on New Years Day 2010 when the VAT goes back to 17?%. Mr Darling is squeezing pubs and bars for the stake money for this gamble and all based on optimistic Treasury forecasts of economic recovery by 2015; these will inevitably be wrong – how wrong we don’t yet know.
“Pubs and bars have been struggling for some time; they cannot absorb duty rises like the supermarkets can, and so will be even more threatened by the below-cost marketing that fuels irresponsible drinking."
Even before his announcement had been made Darling had also been criticised by Shepherd Neame boss Jonathan Neame.
Neame said Darling would be guilty of “gross cultural vandalism” if he did not cut duty on beer in his Pre-Budget Report to help save community pubs.
