The price of a pint is set to rise by 2p after John Healey announced plans to hike beer duty, saddling pubs with more costs despite a commitment to cut their business rates.

The Chancellor said alcohol duty, which is charged on every pint sold, will rise in line with Retail Prices Index (RPI) inflation, which stands at 3.9 per cent. This will push up the duty on a pint from 50p to 52p. 

The hike to beer duty will disappoint pub landlords across the country, who were cheered by the Treasury’s commitment to cut their business rates but had been hoping for more support at the Budget.

Healey sought to soften this blow by handing a £10m boost to alcohol duty relief, which will benefit more than 2,000 British beer brewers and cider makers.

“Small alcohol producers make an important contribution to the economy and local communities,” the Treasury’s Budget document said.

The increase to alcohol duty will add between 10p and 12p to the price of a bottle of wine, depending on its strength, while the duty on a bottle of 37.5 per cent gin will rise by 35p, according to estimates circulated ahead of the Budget.

The Treasury typically rakes in about £12.5bn from alcohol duty every year. Receipts from the tax peaked at £13.2bn in the 2021-22 financial year. The Office for Budget Responsibility said receipts will reach £13bn next year before increasing to £14bn by 2031-32.

Healey has confirmed the Treasury will cut business rates on pubs, clubs and music venues by 20 per cent – a pledge announced by Andy Burnham just days into his premiership. 

Hospitality industry bosses welcomed this decision at the time but have told the government that more help is needed to stem the rising tide of costs which they say is forcing pubs, restaurants and bars to disappear from town centres. 

The bosses of pub chain Admiral Taverns and Estrella brewer Damm UK had been hoping for a freeze to alcohol duty at this Budget, while celebrity chef Tom Kerridge and JD Wetherspoon chair Sir Tim Martin have been pushing for a cut to VAT.

Beer tax hikes ‘failing’

When rumours of a hike to alcohol duty were first reported by the Telegraph earlier this week, Emma McClarkin, chief executive of the British Beer and Pub Association said the industry cannot stand any more tax rises.

She said: “At a time when young people are finding it really tough to find work, supporting the beer and pub sector would mean the Government are helping us create much-needed jobs.”

“Our brewers are forced to pay some of the highest rates of beer duty in Europe, 12 times more than Germany and Spain. Freezing the tax at its current rate, rather than the current planned increase, will start to bring our brewers closer in line with our European counterparts.”

Miles Beale, chief executive of the Wine and Spirit Trade Association, said: “With a cost of living crisis and an aim for growth in every postcode, this Government should be supporting not squeezing the British drinks sector.

“The Chancellor cannot control global fuel prices, but he can put the brakes on relentless and punishing alcohol tax increases, which have consistently failed to raise revenue.”