Beer duty up 5%, cider up 13%
Beer duty will increase by a further 5% — adding 8p a pint at the pumps — as the Chancellor delivered yet another dagger to the heart of the pub and brewing industry.
The increase takes effect from Sunday. Duty on cider will be increased by 10% above inflation (13%) to address the tax "anomaly".
Changes to the definition of cider are also planned to ensure stronger variants are taxed more heavily.
Alastair Darling ignored pleas from the industry and ploughed ahead with his controversial duty escalator — meaning duty will rise 2% above the projected inflation for September, amounting to a rise of 5%. Duty has risen 20% over the past two years already.
The escalator has also been extended for a further two years to 2015.
The rise will mean that tax on a standard pint of 5%abv beer increases from 46.8p to 49.1p. The price of a pint to customers is likely to rise around 10p a pint.
It will add another £161m to the industry's tax bill at a time when 39 pubs are closing each week and beer volumes are dropping. Tax on beer in Britain is now 11 times higher than Germany, nine times higher than Spain and seven times higher than France.
A recent study by Oxford Economics estimated that the increase in beer tax will cost 59,000 jobs and lead to a £9 billion loss in economic activity.
Simon Russell of the National Association of Cider Makers said the hike in cider duty was a "real hit" and "far more than expected". He said: "The cider industry is already at saturation point."
British Beer and Pub Association chief executive Brigid Simmonds said: "This latest beer tax hike piles on the misery for Britain's hard-pressed pubs and beer lovers. It is also a snub to voters, who by a majority of two to one wanted the Chancellor to scrap the beer tax escalator.
"Since 2008, beer tax has increased by an eye-watering 26% — a £761 million tax rise — and we have seen the loss of 4,000 pubs and over 40,000 jobs up and down the country. Beer sales are down £650m in the last year alone."
The stated policy of the Conservatives — who promise another Budget within 50 days of the general election if they win — is to add "significant" tax hikes on higher-strength alcoholic drinks.
For example, trebling tax on RTDs. But they would freeze duty on lower-strength products such as beer.
Small business help
Elsewhere, business rates will be cut for one year from October, which will benefit 500,000 small firms.
Help could be on the way for licensees struggling to secure loans, with news of a new legally-binding credit adjudication service for companies that are denied financing.
The time-to-pay scheme will also be extended until the end of the next Parliament.
Darling also announced a £2.5bn one-off package of measures, partly funded by the extra tax on bank bonuses, to help small firms in areas such as skills.
The Chancellor also said the increase in fuel duty would be staggered, going up 1p in April, 1p in October and the remainder in January 2011.
