The government’s decision to backtrack on minimum pricing for alcohol will save the Exchequer a massive £1.3bn in lost duty revenue and enforcement costs by the end of the next parliament, according to a new study by economists.

The report by the Centre for Economics and Business Research claimed MUP would have added at least £253m to public sector debt over the period enough to build 18 new schools or more than 1,500 new average price homes.

The wine and Spirit Trade Association, which commissioned the research, said the analysis of the government’s impact assessment showed minimum pricing would have resulted in a loss of duty revenue of £200m a year and incurred a £500,000 annual enforcement bill.

The government had claimed the policy would lead to an annual net benefit over a 10-year period because of a fall in crime and improvement in health. But the new report suggested it would have taken until at least 2018/19 for the benefits to outweigh the loss in revenue and until 2022 for a gain to register - even if it did produce the expected health improvements.

In his Budget presentation, in which he scrapped the duty escalator on beer and cut tax on beer by 1p a pint, the Chancellor said the government was determined not to punish responsible drinkers.