Chancellor John Healey is expected to increase alcohol duty in Wednesday’s Budget, despite warnings from industry leaders that higher taxes could put further pressure on struggling pubs, breweries and consumers.
Britain’s beleaguered pubs could face another financial setback this week as Labour prepares to increase alcohol duty, potentially adding around 2p to the tax charged on a pint of beer.
Chancellor John Healey is reportedly planning to proceed with an inflation-linked rise in alcohol duty in his first Budget on Wednesday (28 October), rejecting calls from the drinks industry for a freeze.
The proposed increase would see alcohol duty rise in line with the Retail Prices Index (RPI), which stood at 3.9 per cent in September.
This would increase the duty on a pint from approximately 50p to 52p, depending on the product, although the amount passed on to customers would ultimately depend on pricing decisions by pubs and breweries.
Wine and spirits would also be affected, with duty on a bottle of wine potentially increasing by between 10p and 12p, while the tax on a bottle of gin at 37.5 per cent alcohol strength could rise by around 35p.
The reported plans have prompted renewed criticism from industry representatives, who warn that further tax increases could undermine businesses already struggling with higher operating costs and reduced consumer spending.
Industry warns Labour against another tax increase
The Wine and Spirit Trade Association (WSTA) has urged the Chancellor to reconsider, arguing that repeated duty increases risk harming businesses without necessarily generating additional revenue for the Treasury.
Miles Beale, chief executive of the association, told The Telegraph: “With a cost of living crisis and an aim for growth in every postcode, this Government should be supporting not squeezing the British drinks sector.”
Industry representatives have pointed to the Government’s own alcohol duty receipts as evidence that higher rates do not automatically translate into increased tax revenue.
Alcohol duty revenues reached £13.2 billion in 2021-22 but have subsequently remained below £12.5 billion annually, according to figures cited by The Telegraph.
While changes in drinking habits and economic conditions also influence receipts, the industry argues that repeatedly raising duty risks further weakening sales and investment.
British brewers face some of Europe’s highest beer taxes
The British Beer and Pub Association (BBPA) has also called for the planned increase to be abandoned, warning that the sector’s ability to create jobs could be damaged by further taxation.
Emma McClarkin, the association’s chief executive, highlighted the importance of pubs and breweries as employers, particularly for younger workers entering the labour market.
She told The Telegraph: “At a time when young people are finding it really tough to find work, supporting the beer and pub sector would mean the Government are helping us create much-needed jobs.”
The BBPA argues that British brewers already operate under a substantial tax disadvantage compared with many European competitors.
According to the association, beer duty in Britain is around 12 times higher than in Germany and Spain.
Industry leaders believe freezing duty would provide some relief to brewers, publicans and customers while helping the sector remain competitive.
Why Labour’s choice of inflation measure matters
The proposed increase would be linked to RPI inflation rather than the Consumer Prices Index (CPI), the measure used for the Bank of England’s inflation target.
Official figures from the Office for National Statistics show that RPI inflation stood at 3.9 per cent in September 2026, compared with CPI inflation of 3.5 per cent.
RPI frequently produces a higher inflation figure than CPI, meaning tax increases linked to it can be larger.
The ONS also states that RPI does not meet the required standard for designation as an accredited official statistic, although it remains widely used for certain financial calculations.
Office for National Statistics+1
For hospitality businesses, an increase in alcohol duty would add to existing pressures, including wages, energy bills, business rates and the cost of supplies.
Pubs are particularly vulnerable because their customers are also confronting higher household expenses, leaving less disposable income for evenings out.
While a 2p increase may appear relatively modest on an individual pint, the cumulative effect of higher taxes and operating costs can be considerable for businesses selling thousands of drinks each week.
Another test of Labour’s promises on growth
The reported plans present Labour with a difficult choice between increasing tax revenues and supporting an industry that contributes to employment, tourism and the economies of towns and villages across Britain.
Pubs are more than commercial premises. In many communities, particularly rural areas, they provide important social meeting places and support local jobs, suppliers and events.
Critics argue that increasing the tax burden on the sector risks accelerating the decline of businesses already operating on narrow margins.
The Telegraph has highlighted these pressures through its Save Our Pubs campaign, drawing attention to the difficulties faced by publicans across the country.
An alcohol duty rise would also raise questions about the Government’s wider economic priorities, particularly its stated ambition to stimulate growth while supporting businesses and working households.
The current alcohol duty system already provides reduced rates for qualifying draught products sold in hospitality venues, but a further increase in those rates would nevertheless add to the costs faced by the sector.
Treasury refuses to confirm Budget plans
The Treasury has not confirmed whether the expected alcohol duty increase will be announced on Wednesday.
Responding to the reports, a spokesman told The Telegraph: “As has always been the case, decisions on tax are a matter for the Chancellor to set out at fiscal events, rather than routinely commenting on rumour, speculation or proposals.”
The final decision will be revealed when the Chancellor delivers his Budget on 28 October.
However, with pub operators and drinks producers already warning about the financial pressures facing their businesses, industry leaders will be watching closely to see whether Labour chooses to provide relief or impose another increase.
For publicans struggling to balance their books, and customers already paying more for a night out, even a relatively small additional tax burden will be unwelcome.
The wider question is whether the Treasury can raise more money from an industry that says it is already being taxed too heavily, without further damaging the very businesses on which that revenue depends.
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