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Real ale receives Budget boost

Real ale drinkers are raising their glasses after a 14 pence reduction in the cost of a pint.

Alcopop drinkers are, however, set to drown their sorrows after the announcement of a 12 pence increase in the price of a bottle.

To Commons cheers, Gordon Brown announced that the beer duty paid by small brewers is to be cut by 50 per cent.

The chancellor said that drinkers will be able to benefit from a cheaper pint in time for the World Cup this summer.

"To encourage one group of small businesses: the nation's smaller brewers - often village pubs, some two centuries old - I have decided that the duty paid on their own beer will be halved," said the chancellor.

Coming along with a freeze on overall beer duty, the move was warmly welcomed by the Lib Dem chairman of the All-Party Parliamentary Beer Group, Nigel Jones.

"This is good news. The industry is under severe pressure from cross-Channel smuggling and this will enable British brewers to remain competitive," he said.

"The duty relief for small brewers is also welcome. It will affect 90 per cent of brewers, but this works out at probably less than two per cent of beer production. I hope that this will enable specialist small brewers to continue producing their nectar."

But the Gin and Vodka Association (GVA) was dismayed at Brown's decision to hit alcopops, which are often spirits mixed with fruit flavoured drinks, by reclassifying them as spirit rather than wine-based.

The popular drinks are commonly associated with the under-age drinking the government believes is behind the rise in street crime.

Edwin Atkinson of the GVA said: "The tax freeze on spirits was welcome. But the tax hike on pre-packaged spirit brands is a blow to white spirits producers who are being taxed for their investment in innovation - and are being penalised for being successful".

"We are extremely disappointed that the Treasury seems to have taken no consultation on this whatsoever," added Atkinson.

Relief among beer, wine and spirit drinkers was, however, echoed in the brewing industry.

Rob Hayward, chief executive of the British Beer and Pub Association declared the duty freeze to be a sign the government has started to listen to the industry's arguments about the economic and social problems caused by "high beer taxes".

But he urged the chancellor to go further. "It is still the case that every time you buy a pint, the government takes a third in tax," he said.

"Consumers in the UK pay one of the highest beer tax rates in Europe. High beer taxes discourage people from having a pint in the British pub and encourage them to buy beer in France.

"The end result is a lower tax take for the Treasury and less money for the chancellor to spend on public services."

Hayward believes that until the broader beer duty issue is tackled, UK brewers will continue to lose out.

"Gordon Brown has preferred to tinker with beer duty rates rather than act decisively. The consequence for UK brewers is continuing competitive disadvantage.

"The consequence for consumers is that 98 per cent of the beer they drink will remain untouched by the proposed tax reduction," he said.

Published: Wed, 17 Apr 2002 00:00:00 GMT+01