Brown's Budget spells bad news for smuggling

A rise in cross-Channel bootlegging is inevitable following the Chancellor's penny-on-a-pint tax hike.

So say trade leaders who feel today's Budget presents a huge set-back in their campaign to stem the spiralling smuggling problem.

Michael Turner, chief executive of London brewer Fuller's, said: "The Chancellor missed a huge opportunity to reduce, and practically remove, this crime. This is bad news for the industry and the Treasury."

Shepherd Neame's managing director Jonathan Neame said: "The only winners will be the smugglers, and the French Treasury which already collects duty and VAT on the million pints brought in from Calais every day.

"It is a cynical move by a cynical Chancellor. It is a duty hike which makes no economic sense."

Trade associations reacted angrily to the 1p rise on beer and 4p increase on a bottle of wine and have vowed to continue to fight for a series of duty cuts. By bringing Britain into line with other European countries, it is hoped that the incentive to buy cheap booze on the continent will be removed, along with the criminal activities that go with it.

John McNamara, chief executive of the BII, said: "We are extremely concerned and disappointed at the Chancellor's decision and we will be liaising with other trade bodies and our members in order to step up the fight for a duty cut. This increase will hit our members hard and could well lead to an increase in prices for customers - something the trade had hoped to avoid."

Rob Hayward, chief executive of the British Beer & Pub Association, said: "Higher beer taxes only encourage more people to travel across the Channel and shop for their beer in France. The end result is less tax for the Treasury and less money for the Chancellor to spend on public services."