Pub trade denied price relief

Rises of up to 8% in alcohol duty have left the pub trade reeling, following the pre-Budget report.

Chancellor of the Exchequer Alistair Darling told MPs that alcohol duty will rise "by an amount which should keep the overall cost to consumers the same this year", offsetting the 2.5% cut in VAT.

The Treasury believes the price of a pint in a pub will fall slightly, while alcohol bought in supermarkets will rise in price - a differential due to the higher cost of alcohol in pubs, and the correspondingly higher amount of VAT levied there.

However, the British Beer and Pub Association (BBPA) says struggling pubs and brewers have missed out on the tax benefits which have been extended to the rest of UK business.

Last month, the BBPA reported a significant decline in beer sales, and earlier this year the chancellor announced an 'escalator' tax on beer, at 2% above the level of inflation.

Mark Hastings, BBPA director of communications, said there was "genuine dismay and disbelief" at the actions of the Government.

"It's truly staggering that struggling community pubs and brewers have been denied the tax benefit extended to the rest of the business sector through the VAT cut," he added.

"With pubs closing at record rates and beer sales at their lowest since the Great Depression, this sector needs a fiscal stimulus just as much as the rest of the economy.

"The decision to increase tax further now, plus the looming escalator in March will significantly increase pressures on the community pub."

IMAGEJulien Behal/PA Wire