The beer industry is celebrating a momentous change this week as the unpopular beer duty escalator was scrapped in the 2013 Budget and drinkers will save a penny off their pints from tonight.
On Wednesday, George Osborne made the surprise announcement that the beer duty escalator was to be abolished, and unexpectedly went further with a 1p cut in the duty on beer.
The Chancellor said the escalator, which automatically adds 2 per cent to the price of pints each year, would be scrapped entirely for beer.
The escalator has increased the price of beer by an astounding 42 per cent since its introduction in 2008.
But, to the cheers of MPs, Mr Osborne told the House of Commons: “Responsible drinkers – and our pubs – should not pay the price for the problems caused by others.
“The sad fact is that we’ve lost 10,000 pubs in the UK over the last decade. I intend to maintain the planned rise for all alcohol duties – with the exception of beer. We will now scrap the beer duty escalator altogether.
“And instead of the 3p rise in beer duty tax planned for this year I am cancelling it altogether.
“That’s the freeze people have been campaigning for. But I’m going to go one step further and I am going to cut beer duty by 1p. We’re taking a penny off a pint.
“The cut will take effect this Sunday night and I expect it to be passed on in full to customers.”
Mike Benner, chief executive of the Campaign for Real Ale (CAMRA) which has led a huge campaign to freeze the beer duty escalator including an e-petition which amassed over 100,000 signatures, said the cuts were a “massive vote of confidence” in British pubs.
He said: “This is a momentous day for Britain’s beer drinkers, who will tonight be raising a glass to the Chancellor for axing this damaging tax escalator and helping keep pub-going affordable for hard-pressed consumers. This decision will keep the lid on the cost of a pint down the pub.
“Since the duty escalator was introduced in 2008, 5,800 pubs have been forced to call last orders for good. What could have been the final nail in the coffin for our pubs has been decisively avoided by the Chancellor in a move that will spark celebration in pubs across the UK.”
Brigid Simmonds, chief executive of the British Beer and Pub Association, said: “This is absolutely brilliant news, and it will make George Osborne the toast of Britain’s pubs. By cutting the tax on beer, he has moved to boost jobs in Britain’s pubs at a time when it is most needed.
“In abolishing the beer tax escalator, the Chancellor has ended a hugely damaging policy that would have made Britain’s beer the most heavily taxed in Europe.
“This will protect thousands of jobs this year, and will allow us to create many new jobs in this brilliant industry.
“I hope this heralds the start of a long term change that recognises the benefits of beer and pubs, for the economy, and for society.”
However, the news was not so welcome in other parts of the alcohol industry, as it became clear the escalator would remain for wine and spirits.
There were even suggestions that the move which scraps the escalator for beer – but not other drinks – could be illegal.
Miles Beale, chief executive of the Wine and Spirit Trade Association, said: “This is bad news for the UK wine and spirits sector, with year on year duty increases hitting consumers and businesses hard. It makes little sense to single out beer, particularly as there is a legal precedent to suggest Government is unable to do so.
“If this was designed as a measure to support pubs it seems misplaced: over 41 per cent of drinks sold in pubs are wine and spirits, contributing £9.4bn per year.
“The Chancellor’s decision ignores the growing value of the English wine industry and the UK spirits industry, which accounts for 18 per cent of all jobs in the EU spirits industry.”