John Healey set to add 2p to price of a pint in fresh Budget blow to pubs

Pubgoers face paying more for their drinks as John Healey prepares to raise alcohol duty in his first Budget.

The tax charged on a pint would increase from 50p to 52p under the plans.

The Chancellor is expected to announce a 3.9 per cent rise on Wednesday, despite mounting pressure from the drinks industry to freeze duty at its current level.

Wine drinkers could pay an additional 10p to 12p per bottle, depending on its alcohol content.

Duty on a bottle of gin with an alcohol strength of 37.5 per cent would rise by 35p.

The increase would be linked to September’s Retail Prices Index (RPI), an older measure of inflation that tracks changes in household costs and typically runs higher than the Consumer Prices Index (CPI).

CPI, the more widely used measure of inflation, stood at 3.5 per cent in September.

Miles Beale, who leads the Wine and Spirit Trade Association, called on the Chancellor to hold duty steady rather than burden consumers already grappling with rising living costs.

“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,” he said.

Mr Beale also argued that successive duty hikes had failed to deliver higher receipts for the Exchequer.

“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,” he added.

Government alcohol duty income reached a high of £13.2billion during the 2021-22 financial year. Since that peak, annual receipts have remained below £12.5billion.

Emma McClarkin, chief executive of the British Beer and Pub Association, warned that raising the tax would put employment at risk across a sector already under significant strain.

“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,” she said.

Ms McClarkin pointed out that British brewers shoulder beer duty rates 12 times greater than those paid by their counterparts in Germany and Spain, describing UK levies as among the steepest on the continent.

She urged the Government to freeze duty to bring domestic rates closer to European norms.

Chris Jowsey, chief executive of pub operator Admiral Taverns, underscored the razor-thin economics facing the trade, noting that the typical British pub earns a margin of just 12p on each pint served.

Mr Jowsey called on ministers to boost the draught discount for pubs to 30 per cent and freeze beer duty, measures he said would give publicans vital breathing room and make a trip to the local more affordable.

Admiral Taverns is also pushing for reform of the small business rate relief threshold, which has been stuck at £12,000 for a decade. Had it kept pace with inflation, Jowsey argued, it would now stand at £18,000.

The pub industry is additionally seeking a cut in hospitality VAT to 10 per cent, roughly half the current rate and closer to what many European competitors charge.

A Treasury spokesman said: “As has always been the case, decisions on tax are a matter for the Chancellor to set out at fiscal events, rather than routinely commenting on rumour, speculation or proposals.”

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