THE Chancellor brought some cheer to the nation's beer drinkers by scrapping a duty escalator blamed for closing pubs - and going further by cutting duty by 1p.

The beer industry and campaign groups have been warning the Government that the escalator, which has added 2% to the price of a pint since it was introduced by Labour in 2008, was forcing pubs out of business.

The Campaign for Real Ale (Camra) gathered more than 100,000 names on a petition which led to a parliamentary debate last year.

Camra pointed out that beer duty has risen 42% since 2008, adding that 18 pubs a week are closing.

George Osborne told MPs that 10,000 pubs have closed in the past decade.

The Chancellor said the beer duty escalator will be scrapped, preventing a 3p rise this year.

Mr Osborne drew cheers from MPs when he said he intended to go further, by cutting beer duty 1p from Sunday evening.

Brigid Simmonds, chief executive of the British Beer & Pub Association, said: "This is absolutely brilliant news, and it will make George Osborne the toast of Britain's pubs today. By cutting the tax on beer, he has moved to boost jobs in Britain's pubs at a time when it is most needed.

"In also abolishing the beer tax escalator, the Chancellor has ended a hugely damaging policy that would have made Britain's beer the most heavily taxed in Europe.

"This will protect thousands of jobs this year, and will allow us to create many new jobs in this brilliant industry.

"I want to pay tribute to the hundreds of thousands of people who have supported this campaign. This has been a broad and persuasive campaign uniting the industry and consumers. I hope this heralds the start of a long-term change that recognises the benefits of beer and pubs, for the economy, and for society."

Mike Benner, chief executive of Camra, said: "This is a momentous day for Britain's beer drinkers, who will tonight be raising a glass to the Chancellor for axing this damaging tax escalator and helping keep pub-going affordable for hard-pressed consumers. This decision will keep the lid on the cost of a pint down the pub.

"Since the duty escalator was introduced in 2008, 5,800 pubs have been forced to call last orders for good. What could have been the final nail in the coffin for our pubs has been decisively avoided by the Chancellor in a move that will spark celebration in pubs across the UK.

"Scrapping the beer duty escalator, combined with a 1p cut, is a massive vote of confidence in British pubs and will lead to an increase in pub going and more money in the Chancellor's coffers.

"Today's decision is a huge triumph for Camra's pub campaigners who have been building overwhelming public support for a fair deal for beer and pubs, pub by pub and beer festival by beer festival."

Airline groups were disappointed that the Chancellor put "beer before aviation" by making no changes to the air passenger duty (APD) airport departure tax that is due to rise again next month.

Dale Keller, chief executive of airline group BAR UK, said: "Just because the industry was fully expecting a slap in the face from the Treasury does not make it any more palatable. It's beyond belief that the Chancellor has put beer before aviation."

There were suggestions that scrapping the extra tax on beer while keeping a duty escalator on other alcoholic drinks may be illegal.

The Wine and Spirit Trade Association condemned the Chancellor for pushing ahead with inflation-busting alcohol tax rises on wines and spirits for the fifth year in a row, through the "much hated" alcohol duty escalator.

The group, which represents around 340 retailers and suppliers, said the escalator has increased taxation by 2% above RPI inflation each year since 2008, and will add another 10p to a bottle of wine and 53p to a litre bottle of spirits after the 5.3% rise announced today.

Chief executive Miles Beale said: "This is bad news for the UK wine and spirits sector, with year on year duty increases hitting consumers and businesses hard. It makes little sense to single out beer, particularly as there is a legal precedent to suggest Government is unable to do so.

"If this was designed as a measure to support pubs it seems misplaced. Over 41% of drinks sold in pubs are wine and spirits, contributing £9.4 billion per year. The Chancellor's decision ignores the growing value of the English wine industry and the UK spirits industry, which accounts for 18% of all jobs in the EU spirits industry."

A spokesman for drinks giant Diageo said: "This move is disappointing. Cutting duty on beer while increasing it on spirits punishes the UK spirits industry for its success in this harsh economic climate. Scotch is the UK's biggest food and drink export. This move risks that success."

Ted Tuppen, chief executive of Enterprise Inns, which owns about 6,000 leasehold pubs, said: "We welcome the Chancellor's decision to reduce beer duty and abolish the damaging beer duty escalator which was introduced by the previous Labour administration.

"We will be passing the reduction on to our publicans immediately so that they can pass the benefits on to customers straight away. Beer duty has risen 42% since 2008, imposing an unsustainable strain on publicans and consumers. We hope this Budget will encourage communities back into their pubs."

Dr Vivienne Nathanson, the British Medical association's director of professional activities, said: "We're getting mixed messages from the Government about its commitment to tackling the harm caused by alcohol misuse.

"On one hand the Prime Minister says he wants to crack down on cheap alcohol, and on the other the Chancellor announces a penny less on beer.

"The success of the Government's alcohol strategy for England and Wales will be undermined if cheap booze continues to be available.

"We urge the Government to demonstrate that it is committed to tackling alcohol misuse and introduce a minimum unit price."

The Scotch Whisky Association (SWA) said the Chancellor's decision to increase duty on spirits, while cutting beer duty, was "unfair and incomprehensible" and undermined one of Britain's major industries.

The Budget announcement penalises consumers who choose Scotch Whisky over beer, said the association.

Drinkers of a dram are now paying 48% more duty than a beer drinker, further "distorting" the alcohol drinks market in the UK, said the SWA.

The 47p rise, including duty and VAT, sees the average price of a standard 70cl bottle of Scotch Whisky jump to £12.89 from £12.42, threatening sales.

Gavin Hewitt, chief executive of the Scotch Whisky Association, said: "This is an unfair and incomprehensible attack on the Scotch Whisky industry in its domestic market, where it is a vital part of the Scottish and UK economy and where it supports many other businesses. It penalises responsible drinkers who like a dram rather than a pint. There is no justification for spirits being taxed more heavily than beer.

"It also damages all the good work done to create fairer tax regimes overseas to provide a fairer playing field for Scotch Whisky. It hinders the Government's ambitions for an export-led recovery."

The British Beer & Pub Association said it wasn't true that beer must be treated the same as other alcohol for tax purposes.