3p extra duty on a pint

UPDATE: Will he, won't he? Expectations now that Osborne will pull back from another beer duty increase...

The price of a pint of beer is set to rise by at least 3p after next week's Budget, if the Chancellor George Osborne follows his previous practice and uses the "duty escalator" to calculate the new level of duty.

The escalator is designed to add inflation plus 2% to alcohol duty per year, using the higher RPI measure of inflation, until 2014-15.

The British Beer & Pub Association warns that once brewers pass on the 3p increase, pubs could actually add as much as 10p to the average £3.09 price of a pint.

Currently bitter is £2.83 a pint, typically, and lager is £3.22.

The duty escalator was introduced in 2008 under the previous government. It has been used ever since.

Along with VAT, tax and duty accounts for around a £1 of the price of a pint of beer.

Prices are already on the rise because of the increasing cost of raw materials and energy used in brewing.

Osborne's No-Budge Budget

The Chancellor isn't expected to budge on cuts or raising tax, save for some tinkering round the edges and a rethink on fuel duty.

In fact today's news that inflation is rising even faster, now reaching 4.4% (or 5.5% on the RPI measure), limits Osborne's room for manoeuvre because any retreat from his hard stance might add to pressure on the the Bank of England to raise interest rates.


Fuel duty.
Due to go up by inflation plus a penny, the fuel duty escalator.
Will he forget about the 1p, or forgo the whole increase, or postpone it, staggering the hike over the rest of the year?

Duty on booze.
Will Osborne bottle on the other duty escalator?
A rise of inflation + 2% is pencilled in, which might mean 3p on a pint, or even more once suppliers add their mark-up.
One populist measure could be to forgo some of the increase.
He is likely to announce a lower rate of duty for weak beers and a higher rate for strong beers.

Lots on pensions.
More detail expected on a £140 flat-rate pension, planned for 2015.
Reaction to Hutton Report on public sector pensions.
Possible mention of giving pension savers early access to their money.

Junior ISA
At new tax-free savings scheme has been promised for the autumn. More information is expected.

Unifying Income Tax and National Insurance
Let's face it, this would be terrible news for pensioners if it was done crudely, because there's no National Insurance on pensions.
The Office for Tax Simplification said it might be a good idea, so expect a study.
The OTS also wanted a review of inheritance tax.

Air Passenger Duty
There have been rumours of a freeze, to soften the impact of fuel surcharges on holidaymakers.
And maybe there'll be an update on per flight duty to replace Air Passenger Duty (promised in the coalition agreement).

Crackdown on cheap CDs
He could close the VAT loophole for CDs, DVDs costing under £18 from the Channel Islands. Costs £130m a year.

There are lots of changes already happening in April. The ones he'll wanted to re-mention are:

*Personal allowance rising to £7,475 from £6,475, to £10,000 in 2015-16
*Corporation tax cut to 27% from 28%, small profits rate to 20% from 21%
*£50,000 annual limit on pension contributions.
*5% stamp duty for £1m homes

He might want to gloss over:

*National Insurance going up
*Benefits and tax credits only increased by CPI
*40% tax threshold lowered