George Osbourne MP in the annual Budget today (March 19) has also cut the duty on beer by 1p but the duty on tobacco has risen by 2% above inflation and this escalator is to be extended beyond the next general election.

The Scotch Whisky Association (SWA) has welcomed the Coalition Government’s decision to scrap the alcohol duty escalator a year early and freeze excise duty on spirits.

The escalator has increased duty on Scotch whisky by 2% above the rate of RPI every year since 2008. He has also by frozen the excise duty on whisky. The SWA says this means that planned increases of 4.8% in excise duty, which would have added another 40p in tax to a bottle of whisky, will not now go ahead.

The SWA said that the decision was a show of support for a major Scottish and British industry, which supports 35,000 jobs, many in economically fragile areas.

The Chancellor described Scotch whisky as a great “British success story”. The move will also benefit the wider hospitality industry and help support investment across the sector, according to independent research by Ernst & Young.

The SWA claimed scrapping the escalator will be welcomed by hard-pressed consumers. The vast majority of UK consumers – almost 70% - said in a poll last week that pre-planned tax increases under the escalator on a bottle of Scotch were too high.

SWA chief executive David Frost, said: “We are delighted that the Chancellor and the Chief Secretary to the Treasury listened to our case for scrapping the unfair alcohol duty escalator and freezing whisky duty.

“This fairer tax treatment in the UK, the third biggest market for Scotch whisky, also sends the right signal on excise policy to the governments of the 200 countries to which we export. So its effects will be felt around the world.”

Andrew Cowan, country director, Diageo Great Britain the UK division of the world’s largest premium drinks company, said: “The Chancellor has today given a huge boost to one of Britain’s most successful industries. From Scotch whisky to London gin, British spirits are admired and enjoyed around the world. In freeing the industry from a debilitating tax policy the Government has given a show of support for these quality products. That will benefit the industry not just at home but also help us as we fly the flag for British business across the world.”

Bibendum Wine managing director, Michael Saunders said: “I am delighted that the Government has listened to the WSTA’s ‘Call Time on Duty Campaign’ and scrapped the alcohol duty escalator.

“However, the decision to increase wine and spirits duty in line with inflation is disappointing. A recent Ernst and Young report had showed that freezing duty on wine and spirits would have created 6,000 new jobs and resulted in £230m extra revenue for the Treasury. Today’s budget may be a step in the right direction but it still represents a missed opportunity, he said.

“While we welcome the announcement to cut beer duty, the Chancellor’s claim that this will help pubs is misplaced. 40% of the drinks sold in pubs are wine or spirits and the increased duty rates on these products will have a real impact on business.

“With the duty escalator now a thing of the past, the Government now needs to move forward and engage with business, creating policies that are good for jobs and the economy,” said Saunders.

CAMRA (The Campaign for Real Ale, the pressure group for lovers of genuine ale and great pubs) chief executive Mike Benner, said:

“CAMRA is delighted to see the Chancellor implementing an unprecedented second consecutive cut of a penny in beer duty. This is not only about keeping the price of a pint affordable in British pubs but helping an industry which has been in overall decline continue on its long road to recovery.

“Keeping the price of a pint affordable is vital for the long-term health of the pub sector and CAMRA would hope this latest vote of confidence in British pubs will go some way to slowing the rate of closures, by encouraging more people to make use of their local this summer.

“No doubt many of CAMRA’s 160,000 members will be raising a glass to the Chancellor this evening to toast another brilliant Budget for British beer drinkers,” said Benner.

Julian Grocock, chief executive of the Society of Independent Brewers (SIBA) said, “SIBA applauds the Chancellor’s decision to take another penny off the pint, following last year’s historic decision to scrap the unpopular escalator. It is good to see that this government believes in providing long-term support for the British brewing and pubs industry.

“SIBA’s Budget submission to the Treasury this year was based on the very positive impact of the 2013 duty cut on the local brewing industry. Our members now feel more confident about the long-term prospects for their breweries, and are investing in them by buying new equipment, recruiting new staff or opening new pubs,” he said.

“This evidence of an industry buoyed by the duty cut, which we presented to government both centrally and locally, through our members’ lobbying of their MPs, is one reason why we have been given what we asked for in this Budget – the ‘same again, please, George’. We promise to return the Chancellor’s positive response by giving back more of the same from Britain’s local brewers: more investment in breweries, jobs and pubs.

“It is particularly pleasing that, while duty concessions were given to other drinks, only beer, as our national drink, was rewarded with an actual cut in duty,” said Grocock.

National Association of Cider Makers (NACM) chairman, Paul Bartlett, said: “It is great news that the Chancellor has abandoned the duty escalator and frozen duty on cider this year in recognition of the important role that cider makers play in their local, rural communities as well as the impact on growers and cider makers from the winter storms and rain.

“This common sense decision will be celebrated by nearly 500 producers across the country as it protects the investment they have made over many years to grow the industry and support the rural community – as well as supporting thousands of jobs.

“As the investment cycle for our industry is measured in decades, we have a critical need for stability on duty and policy and we hope this decision signals a period of sustained support from Government for a great British success story.”

“UK cider makers account for over half of all cider produced in the world and British businesses are very active seeking to grow export markets, so this might present a terrific opportunity for producers and the UK economy,” said Bartlett.

Wine & Spirit Trade Association chief executive Miles Beale said: “The Chancellor’s decision to scrap the alcohol duty escalator a year early and freeze alcohol duty for spirits is fantastic news and will be widely welcomed by consumers and businesses.

“The move will help British pubs, bars, and restaurants up and down the country, and will boost jobs and investment in the great British drinks industry and in the hospitality sector more widely.

“While we would have liked to have seen a complete freeze on wine duty, this is a positive step and as such the WSTA applauds the Chancellor’s decision to scrap the escalator,” said Beale.

Duty changes:

Duty on a 750ml bottle of wine is now £2.05p, up by 5p

Duty on a 750ml bottle of sparkling wine is £2.63, up 7p

Duty on a 70cl bottle of vodka at 37.5% remains at £7.41p

Duty on a litre bottle of vodka at 37.5% remains at £10.58p

Duty on a 70cl bottle of Gin at 40% remains at £7.90p

Duty on a litre bottle of Gin at 40% remains at £11.29p

(Source: WSTA)

The revised rates are due to come into effect at midnight, Sunday March 23. The rate of inflation is 2.47%. This is calculated by using the RPI estimate for September 2014 provided by the Office of Budget Responsibility.