Price of beer and wine to increase as Jeremy Hunt scraps freeze on alcohol duty

ELGIN, SCOTLAND - AUGUST 16: Conservative Leadership hopeful Liz Truss and leader of the Scottish Conservative Party Douglas Ross visit the BenRiach Distillery on August 16, 2022 in Elgin, Scotland. Liz Truss was accompanied by Douglas Ross, leader of the Scottish Conservatives along with Laura Tolmie of BenRiach. Foreign Secretary, Liz Truss and former Chancellor Rishi Sunak are vying to become the new leader of the Conservative Party and the UK's next Prime Minister. (Photo by Paul Campbell - Pool/Getty Images)
Liz Truss during a visit to the BenRiach Distillery on the Tory leadership campaign trial. The price of alcoholic drinks will now increase after a U-turn on alcohol duty by Jeremy Hunt. (Paul Campbell - Pool/Getty Images)

The price of a pint of beer and glass of wine is set to increase after the new chancellor scrapped the freeze on alcohol duty.

Jeremy Hunt tore up beleaguered prime minister Liz Truss's economic plan on Monday in an effort to ease the worries of the financial markets.

The chancellor, only in the job since Friday after Truss sacked Kwasi Kwarteng, reversed almost all the tax cutting policies announced in last month's disastrous mini-budget.

As well as scaling back support for household energy bills, which will now only be capped until April and not for two years, he abandoned plans to cut the basic rate of tax from 20p to 19p.

He also ditched the planned freeze on alcohol duty, meaning the price of beer, cider, wine and spirits will go up.

Watch: Jeremy Hunt reverses most tax cuts to tackle economic instability

In a televised emergency statement, Hunt said: “We will reverse almost all the tax measures announced in the growth plan three weeks ago that have not started parliamentary legislation.

“So whilst we will continue with the abolition of the health and social care levy and stamp duty changes, we will no longer be proceeding with the cuts to dividend tax rates, the reversal of off-payroll working reforms introduced in 2017 and 2021, the new VAT-free shopping scheme for non-UK visitors or the freeze on alcohol duty rates.”

He said the new measures would bring in £32bn after economists estimated the government was facing a £60bn black hole in the public finances.

Alcohol duty usually rises with the Retail Price Index (RPI) of inflation, although it has been cut or frozen in every budget since 2013.

PA video grab image of Chancellor Jeremy Hunt speaking to the nation from the Treasury in London, during an emergency statement as he confirmed he is ditching many of the measures in the mini-budget, including the planned cut to income tax. Picture date: Monday October 17, 2022.
Chancellor Jeremy Hunt made a televised address on Monday to scrap a number of prime minister Liz Truss's tax plans. (PA)

Last month, Kwarteng announced a freeze on the alcohol duty rate from February 2023.

At the time, the government claimed a freeze on the planned rise would save customers 7p on a pint of beer, 4p on a pint of cider, 38p on a bottle of wine and £1.35 on a bottle of spirits.

The government said scrapping the alcohol duty freeze will save £600m a year.

Emma McClarkin, chief executive of the British Beer and Pub Association said: “The chancellor’s decision today to reverse the alcohol duty freeze is a huge blow to brewers and pubs.

"The freeze would have delivered a £300m saving to our industry at a time when we desperately need any relief we can get, to help to keep a lid on spiralling costs and keep the price of pint affordable for pub goers this winter.

Prime Minister Liz Truss during a press conference in the briefing room at Downing Street, London. Picture date: Friday October 14, 2022.
Prime minister Liz Truss is under increasing pressure after the new chancellor ditched her economic plan. (PA)

“The cost of doing business is completely out of control for pubs and brewers and the failure to act today to reduce pressures on businesses will hit them extremely hard."

Hunt will outline his economic plan to MPs in the House of Commons later on Monday.

In his televised address, he said: “It is a deeply held conservative value – a value that I share – that people should keep more of the money that they earn.

“But at a time when markets are rightly demanding commitments to sustainable public finances, it is not right to borrow to fund this tax cut.”

Following his statement, Truss tweeted that the government was taking action to “chart a new course for growth that supports and delivers for people across the United Kingdom”.

Angela Richardson became the fourth Tory MP to publicly call for Truss to stand down on Monday.

She told Times Radio: “I just don’t think that it’s tenable that she can stay in her position any longer. And I’m very sad to have to say that.”

Watch: Jeremy Hunt scales back energy price cap duration