The price of a pint of beer and a glass of wine is set to rise after the new Chancellor scrapped the alcohol duty freeze.
Jeremy Hunt tore up embattled Prime Minister Liz Truss’ economic plan Monday in a bid to allay financial market concerns.
As well as cutting support for household energy bills, which will now only be capped until April and not for two years, it has dropped plans to cut the base rate of the tax from 20p to 19p.
He also scrapped a planned alcohol tax freeze, which means the price of beer, cider, wine and spirits will rise.
Watch: Jeremy Hunt rolls back most tax cuts to tackle economic instability
In a televised emergency statement, Hunt said: ‘We will reverse almost all of the tax measures announced in the growth plan three weeks ago that have not started parliamentary legislation.
“So while we will pursue the abolition of the health and welfare tax and stamp duty changes, we will no longer pursue dividend tax rate cuts, reversal of labor reforms self-employed introduced in 2017 and 2021, the new VAT free shopping scheme for non-UK visitors or the freezing of alcohol duty rates.
He said the new measures would bring in £32billion after economists estimated the government faced a £60billion black hole in public finances.
Alcohol duties generally increase with the retail price index (RPI) of inflation, although they have been reduced or frozen in every budget since 2013.
Last month, Kwarteng announced a liquor tax rate freeze from February 2023.
At the time, the government claimed a freeze on the planned hike 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 has said lifting the alcohol duty freeze would save £600m a year.
Emma McClarkin, chief executive of the British Beer and Pub Association, said: ‘The Chancellor’s decision today to reverse the liquor duty freeze is a huge blow for brewers and pubs.
“The freeze would have saved our industry £300m at a time when we desperately need every relief possible, to help contain spiraling costs and keep the price of a pint affordable for pub goers this winter.
“The cost of doing business is completely out of control for pubs and brewers and failure to act today to reduce the pressures on business will hit them extremely hard.”
Hunt will present his economic plan to MPs in the House of Commons later on Monday.
In his televised address, he said: “It’s a deeply held conservative value – a value I share – that people should keep more of the money they earn.
“But at a time when markets are rightly demanding commitments to sustainable public finances, it is not fair to borrow to fund this tax cut.”
Following his statement, Truss tweeted that the government was taking action to “chart a new path for growth that supports and benefits people across the UK”.
Angela Richardson has become the fourth Conservative MP to publicly ask Truss to stand down In Monday.
She told Times Radio: ‘I just don’t think it’s tenable that she can stay in her job any longer. And I’m very sad to have to say that.
Watch: Jeremy Hunt cuts duration of energy price cap