Trade groups demand scrapping of duty escalator

The British Beer & Pub Association (BBPA) is urging the government to freeze beer tax to give the industry a boost at the Budget next month.

The trade body is also calling on the coalition to cancel the controversial beer duty escalator that sees alcohol taxes increased by two per cent above inflation every year.

Ditching the escalator would save more than 10,000 jobs and create an extra £40m in tax revenues, according to the BBPA.

In its Budget submission the group also said the move could also stop a further 5p being added to the price of a pint.

Brigid Simmonds, the BBPA's chief executive, said: "The government needs to recognise the vital role that Britain's beer and pub sector plays in the economy, and call time on further, punitive tax increases.

"As the beer escalator is predicated on two per cent above inflation, we could see a rise of seven per cent in the tax on beer.

"When the duty escalator was first introduced inflation was considerably lower. Beer accounts for 60 per cent of drinks sold in pubs, so fairer beer taxation is vital to their survival. On current policies, we are heading for the biggest single rise in beer tax in a year ever - something for which the government will surely not want to be remembered."

The Wine and Spirit Trade Association has also backed the call to abandon the duty escalator.

Chief executive Jeremy Beadles said: "The scale of tax rises on wine and spirits in recent years has cost thousands of jobs and made matters worse for households struggling to cope in difficult economic circumstances.

"Abandoning the tax escalator would help hard-pressed consumers and a sector which ought to be part of the drive to restore economic growth in the UK."