Beer Duty Escalator

Thursday 1st November 2012 Commons Chamber

[Mr Speaker]

Before I call the hon. Member for Burton (Andrew Griffiths) to move the motion, I remind the House that, on account of the level of interest, I have imposed an eight-minute limit on each Back-Bench speech. That limit will take effect after the motion has been moved.

11:33

[Andrew Griffiths (Burton) (Con)]

I beg to move,

That this House welcomes the essential contribution of brewing and pubs to the UK’s economy in providing one million jobs; notes the 42 per cent increase in beer duty since 2008 and HM Treasury forecasts that have shown that there will be no additional revenue generated from beer duty despite planned increases over the next two years; is therefore concerned about the effectiveness of this policy in tackling the Budget deficit, its impact on valued community pubs and the continued affordability of beer in pubs; and therefore urges the Government to support the UK’s beer and pub sector by conducting a thorough review of the economic and social impact of the beer duty escalator to report back before the 2013 Budget.

I begin by thanking the Backbench Business Committee for giving us the opportunity to debate this important issue on the Floor of the House. I know from the number of e-mails and telephone calls that I have received that publicans, brewers and people in pubs up and down the country are tuning into the Parliament channel to listen to the debate, such is their level of interest. I commend the Backbench Business Committee for giving us this opportunity.

Colleagues will know that the debate is a result of the fact that 104,000 people have signed a petition demanding the scrapping of the beer duty escalator and calling for the issue to be debated on the Floor of the House. I congratulate everybody who took the time and opportunity to familiarise themselves with these issues and sign in support of their pubs and breweries. Of course, 104,000 signatures do not appear overnight. I pay particular tribute to the work of the British Beer and Pub Association; CAMRA, the Campaign for Real Ale; SIBA, the Society of Independent Brewers; and brewers such as Hobgoblin, which has done so much to raise the profile of Britain’s brewers.

[Mr Brian H. Donohoe (Central Ayrshire) (Lab)]

I must declare an interest as secretary of the all-party Scotch whisky and spirits group. This issue affects Scotch whisky as well as beer. The whole whisky industry employs some 34,000 people in this country, and they are being affected too. Will the hon. Gentleman include them in his plea to the Government to look again at the escalator?

[Andrew Griffiths]

I completely understand the hon. Gentleman’s wanting to defend an important industry in his constituency, but I gently point out to him that the Scotch whisky industry had a 10-year freeze on duty under the previous Government, that 95% of Scotch whisky is exported, and that spirits have now become the drink of choice for young people across the country. I am making the case on behalf of the brewing industry, which has been so badly served.

[Thomas Docherty (Dunfermline and West Fife) (Lab)]

On the hon. Gentleman’s point about the choice that young people are making, Dunfermline Round Table recently held a beer festival that raised more than £20,000 for local good causes and charities, and I assure him that very many young people came along to support that event and had a very good evening drinking beer.

[Andrew Griffiths]

I thank the hon. Gentleman not only for making that important point—I agree that the pub offers a safe environment particularly for young people to be introduced to alcohol—but for the work that he has done on behalf of the all-party beer group, as have other colleagues in the Chamber, particularly my hon. Friend the Member for Leeds North West (Greg Mulholland), who, with the all-party save the pub group, has done such a lot to champion our pub industry.

[Sir Tony Cunningham (Workington) (Lab)]

With 16 pubs a week closing, it is important to remember that is what is really at risk is the football team, the cricket team, the golf society, the theatre at the back of the pub, the small library, the shop, the bowling green—the list goes on and on. The pub is a huge part of the community. I hope that the hon. Gentleman agrees with that.

[Andrew Griffiths]

Clearly, the hon. Gentleman has read my speech. We all recognise the value of the community pub in our communities. Be it the last pub in the village, the pub on the council estate, or the bar on the high street, we recognise that those establishments are at the heart of our communities. They not only provide employment but give people an opportunity to come together to celebrate and to meet friends, and they run football clubs, for example.

[Dr Julian Huppert (Cambridge) (LD)]

I congratulate the hon. Gentleman on securing this important debate. He is right to mention not only the social role but the economic role of pubs. Is he aware that each pub injects an average of £80,000 into a local economy? In my constituency alone, pubs employ just under 1,500 people, many of them young.

[Andrew Griffiths]

I thank the hon. Gentleman for that intervention. He is absolutely right. Some 85% of pubs across this country are small and medium-sized enterprises—small businesses that are trickling that economic impact down into our communities.

I draw the hon. Gentleman’s attention to the statistics released today by CAMRA, which show that there is an alarming increase in the number of pub closures. We all thought that we had seen the back of the bad old days in 2010 when 26 pubs per week were closing, once the figure had fallen to 12 per week. However, the new figures released by CAMRA show that 18 pubs per week are closing. That means that since March this year some 450 pubs have closed, and since the introduction of the beer duty escalator in 2008 some 5,800 pubs have closed.

[Christopher Pincher (Tamworth) (Con)]

A regrettable statistic—and I remember the days—is that one used to be able to buy six pints for a fiver. [Interruption.] I did not drink them all, I might say; I was buying a round. Since then, the cost of beer has increased and, as my hon. Friend says, the number of pubs that have gone to the wall and are going to the wall is increasing. As a result, revenue to the Exchequer is falling. Does he agree that the beer duty escalator is not simply raising money? It is losing money for the Exchequer.

[Andrew Griffiths]

My hon. Friend has put his finger on the nub of the problem. I want to remind the House that when the then Chancellor, the right hon. Member for Edinburgh South West (Mr Darling), introduced the beer duty escalator he said that,

“as incomes have risen, alcohol has become increasingly more affordable…In order to ensure that alcohol duties keep pace with rising incomes, alcohol duty rates will increase by 2 per cent above the rate of inflation”.

[Mr Donohoe]

Will the hon. Gentleman give way?

[Andrew Griffiths]

If I could finish my point, I will then give way. The reality is that since the introduction of the beer duty escalator in 2008, beer duty has increased by a crippling 42%.

[Jesse Norman (Hereford and South Herefordshire) (Con)]

I congratulate my hon. Friend on securing this debate. Herefordshire has wonderful pubs, which are hard-pressed, breweries and some of the finest hops in the country. Does my hon. Friend agree that part of the review’s solution must be to include a rebalancing of duty away from pubs and towards retailers?

[Andrew Griffiths]

My hon. Friend makes an important point. The gap between prices charged at the pub and those charged at the supermarkets has widened. The supermarkets have driven the price down, as they did with milk, which affected our dairy farmers, and every time there is a duty increase it is the brewers who are forced to stand it.

[Several hon. Members]

rose—

[Andrew Griffiths]

I think I am in danger of breaking the record for the number of interventions taken, but I will give way to the hon. Member for Coventry South (Mr Cunningham).

[Mr Jim Cunningham (Coventry South) (Lab)]

I thank the hon. Gentleman for giving way. As he has said, since March 2008 the duty has gone up by 42%, which is surely not sustainable. It has had an effect on pubs since 2008, and over the past 10 years at least 18,000 pubs have closed.

[Andrew Griffiths]

The hon. Gentleman makes a valid point. We should consider the impact that the beer duty escalator has had on our brewers.

[Mr Donohoe]

Will the hon. Gentleman give way?

[Andrew Griffiths]

I would like to make a little progress, if I may.

Since the introduction of the beer duty escalator, beer sales have reduced by 16%. To put that in perspective, it is the equivalent of the loss of 1.5 billion pints as a result of the beer duty escalator. To put it another way, it is the equivalent of one major brewery in our country closing every year since the introduction of the beer duty escalator.

[Mr Donohoe]

Will the hon. Gentleman give way?

[Andrew Griffiths]

The hon. Gentleman is quite exercised, so I will give way to him.

[Mr Donohoe]

I am very grateful to the hon. Gentleman for giving way. Will he reconsider his previous answer to me? Scotch whisky is the heaviest taxed of all the spirits, beers, ciders and wines in this country. [Interruption.] It is the heaviest taxed.

[Madam Deputy Speaker (Dawn Primarolo)]

Order. The hon. Gentleman will sit down. We are not discussing duty on whisky, as much as some Members would like to discuss it. We will keep to the debate, which is about beer duty and pubs.

[Andrew Griffiths]

Thank you, Madam Deputy Speaker. What I would say to the hon. Gentleman is that 95% of all Scotch whisky is exported. In the UK, 87% of all the beer that is drunk in this country is brewed in this country. Beer is a great British manufacturing success story, which is why we need to support it.

[Sir Roger Gale (North Thanet) (Con)]

Shepherd Neame, a Kent family brewer, and Thorley Taverns in Margate are both major employers in one of the areas of highest social deprivation in the south-east. They are both under threat, paying huge amounts of their revenue in tax while companies such as Starbucks pay virtually nothing at all. Putting the beer duty escalator to one side, I remember going to see John Cope—now Lord Cope—when he was a Treasury Minister about 20 years ago, and our parliamentary delegation demonstrated then that the more we tax, the less revenue we take in the end. Is that not the nub of this argument—it is counter-productive?

[Andrew Griffiths]

I agree completely with my hon. Friend. The point about an escalator is that we stop when we get to the top. We have reached the top of the escalator and we are in danger of going off the edge of a cliff. That is why we must do something about the beer duty escalator.

[Robert Halfon (Harlow) (Con)]

I congratulate my hon. Friend on securing this debate on the cost of living. I recently attended the Campaign for Real Ale’s Harlow beer festival, which was supported by small independent breweries. Does he accept that the big breweries have a role to play, and that we need evidence to understand whether they are partly responsible for keeping beer prices high?

[Andrew Griffiths]

I commend my hon. Friend for supporting CAMRA, but I do not think there are such things as a bad brewer and a good brewer. We need large breweries just as we need micro-breweries, because we need a mixed economy. The problem is that all brewers are being hammered by the escalator.

The figures speak for themselves. In the last quarter alone, beer sales reduced by 5.6%, which is absolutely unsustainable. The Economic Secretary knows the figures better than I do, and he will know that the Treasury’s own projections for the next two years demonstrate clearly that the beer duty escalator will raise absolutely no money. Instead, it will hit the brewing industry and cost jobs and production.

[Mark Pawsey (Rugby) (Con)]

My hon. Friend is making a strong case. He has just spoken about micro-breweries. Does he agree that they provide great diversity in the beer market? We have fantastic micro-breweries such as The Atomic Brewery and Wood Farm Brewery in my constituency, and we need to support the concession necessary to provide the breadth and diversity of product that is now available.

[Andrew Griffiths]

I congratulate my hon. Friend not only on supporting breweries but on managing to get both his local brewers into Hansard in one attempt, which is absolutely fantastic.

[Bill Wiggin (North Herefordshire) (Con)]

I am grateful to my hon. Friend for his generosity in giving way. He will be aware that we need it, as he is one of the few Members whose speech does not have a time limit.

Will my hon. Friend use his excellent speech and the sense of unity in the House today to ensure that people paying duty on beer do not fight with people paying duty on cider? We must stay united, otherwise the Treasury will win.

[Andrew Griffiths]

I completely understand what my hon. Friend is saying. Nobody wants one industry to fight against the other, but we are seeing a reduction in the brewing industry simply because it is being treated unfairly. All that we are calling for is fairness. He talks about cider, and he will know that there is a 50p difference between the duty paid on a pint of cider and on a pint of beer. How can it make sense to the Treasury that every time somebody buys a pint of cider instead of a pint of bitter, it not only disadvantages brewers but costs the Treasury 50p?

[Greg Mulholland (Leeds North West) (LD)]

I am delighted to be working with my hon. Friend on this matter. He is aware that beer carries higher duty per serving than any other form of alcohol—spirits, wine or cider. Duty is 19p on a pint of cider and 41p on a pint of beer, which is simply not fair. We are calling today for fair duty on beer.

[Andrew Griffiths]

My hon. Friend hits the nail on the head.

We need to understand that the beer and pubs industry employs 1 million people across the country, 50% of whom are under the age of 25. We have a problem with youth unemployment, so surely supporting such a dynamic industry is the right thing to do.

[Heather Wheeler (South Derbyshire) (Con)]

I congratulate my neighbour on introducing the debate. We rely greatly on jobs in the industry in South Derbyshire and Burton. We have some fantastic local brewers such as Tollgate Brewery in Shardlow, John Thompson in Ingleby and of course the Burton Bridge Brewery, which has opened its fantastic pub, the Brickmaker’s Arms, in Newton Solney. They all create jobs, and we are asking Treasury Ministers to understand the cost-benefit analysis and bring the price down.

[Andrew Griffiths]

I thank my hon. Friend; nobody does more to support the brewing industry than she. I am astounded at the level of understanding shown by right hon. and hon. Members. Clearly Parliament gets it, and our job today is to ensure that the Treasury gets it, and that it scraps the tax and does more to support Britain’s beer and pubs industry.

[Dr Sarah Wollaston (Totnes) (Con)]

Last week, I met people from the Victoria Inn and the Kings Arms in Salcombe, as well as the publican from the Ferry Boat Inn in Dittisham. Those are among the finest pubs in Britain, and I was told that they could employ more young people if they had lower overhead costs, which includes the beer duty escalator. Does my hon. Friend agree that the greatest threat to those wonderful pubs is the toxic effect of ultra-cheap alcohol from our supermarkets? We must do more to level the playing field.

[Andrew Griffiths]

My hon. Friend does a great deal of work on alcohol and responsible drinking, and I am pleased that she has seen for herself the benefits that pubs can provide in educating young people and providing low-strength, high volume drinks such as beer.

I am getting some looks from the Chair, so I must press on and finish my speech. I hope hon. Members will forgive me, but Madam Deputy Speaker is giving me that stern look.

The beer and pub industry pays £11 billion in tax, and many of our brewers pay more than 50% of their turnover in tax and duty to the Treasury. This is not special pleading, and the industry does not expect to be treated any differently from others, but as my hon. Friend the Member for North Thanet (Sir Roger Gale) pointed out, companies such as Starbucks and Kentucky Fried Chicken, which have vastly larger turnovers, pay no tax. We want proper support for a good, British manufacturing industry.

We also want fairness. Britain pays 40% of all EU beer taxes, yet we drink just 13% of the beer—we are clearly not drinking hard enough. Why do we in Britain pay eight times more duty than a French drinker, 10 times that of a Spanish drinker, and 11 times that of a German drinker?

[Philip Davies (Shipley) (Con)]

I commend my hon. Friend on his speech, which is excellent as ever. Is not the point that beer duty disadvantages pubs against supermarkets? Supermarkets have 40,000 other products that they can cross-subsidise, perhaps by selling beer at a loss or a reduced price. We are in an economic mess because we have over-spent, not because we are under-taxed, and the Government’s solution should be to reduce spending, not to seek to increase taxation for ever.

[Madam Deputy Speaker (Dawn Primarolo)]

Order. There is a great deal of pressure on this debate, and I wish it took only a look from the Chair to remind Members that introductory remarks are supposed to last for 10 minutes or so. The speech by the hon. Member for Burton (Andrew Griffiths) has already lasted considerably longer, and I would be grateful if he would make progress so that others can contribute in full speeches, rather than interventions.

[Andrew Griffiths]

Thank you for reminding me of my obligations, Madam Deputy Speaker. I will come quickly to a conclusion.

My hon. Friend the Member for Shipley (Philip Davies) makes two important points. First, supermarkets have the ability to force brewers to include in the price paid for the beer any increases in duty, whereas publicans, who tend to run small businesses, do not have that opportunity. Secondly, supermarkets use their bulk buying power to drive down the price and use alcohol as a loss leader, which disadvantages pubs.

[Mr John Leech (Manchester, Withington) (LD)]

Will the hon. Gentleman give way?

[Andrew Griffiths]

I will not; I am going to finish my speech if I may.

The reality is that most pubs get 65% of their income from the sale of beer. That is why beer duty—rather than duty on wine, spirits, cider or anything else—is so important. Publicans, those small businesses in all our constituencies, rely on selling beer, and the 45% increase in duty that we have seen is simply unsustainable.

This is an opportunity. A fair taxation system for beer would help to drive growth, and if beer were given a fair break, it would challenge the industry to find ways of providing growth and employment, particularly for young people. I remind the Minister that some 2,370 people are employed in the beer and pub industry in 78 pubs in his constituency, including at the fabulous Bird’s Brewery in Bromsgrove of which he will be aware. A study by Oxford Economics showed that scrapping the beer duty escalator would save 5,000 jobs in the first year alone, and stop the closure of hundreds of pubs in all our communities. This is a huge opportunity to bring balance and fairness into the duty system, and to support our pubs and breweries.

I thank the House for taking such an interest in the debate. The Minister has a perfect opportunity today to demonstrate that the Government understand the pressures on hard-working families and do not want to penalise them by over-taxing the great British pint of beer. This is a great opportunity for the Minister to be the man who saves Britain’s brewing industry, protects the nation’s pubs and saves the great British pint. Scrap the duty!

11:55

[Mr David Hamilton (Midlothian) (Lab)]

I will try not to take up too much time. I want to be specific, because it appears from the interventions on the hon. Member for Burton (Andrew Griffiths) that hon. Members have a wide range of opinions that all go in the same direction. They will give the facts and figures during the debate.

When I was a young man, there were 23 pubs in Dalkeith high street. Times have changed. The price of alcohol has created problems for the brewing industry, but so have changes in habits and priorities. There is no doubt that taxation is one of the many factors that have created a problem for our pubs. Every day, we see on television and in the newspapers the problems on high streets at weekends, but no one talks about the thousands of pubs in villages and housing estates where there are no problems whatever. We want to protect those pubs.

No doubt the Minister will say that treating alcohol-related diseases costs 3% of the NHS budget; that only £10.6 billion is raised in tax; and that £21 billion is spent through the NHS on treating alcohol-related injuries and so on. I understand that, but I have a specific point for him to consider. Many hon. Members will talk about draught beer and cider, which are disproportionately affected by what happens in the supermarkets. In Scotland, there will be a threshold for alcohol pricing in supermarkets, but a minimum pricing regime will mean that the supermarkets take the money—nobody else will get it. Will the Treasury consider transferring the duty, and reducing the tax on some products and increasing it on others?

If hon. Members go to Tesco across the road from the Palace, they will find that four cans of John Smith’s will cost them £3.50—so I am told. A pint of the same beer will cost them £4.10 in The Red Lion. The tax on alcohol in supermarkets is completely disproportionate to the tax on alcohol bought at the bar.

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

The hon. Gentleman makes a serious point about the health impact of alcohol on our society. Does he agree that pubs are a more controlled environment for drinking, and that people are less likely to abuse alcohol in pubs than if they buy cheap booze from the supermarket?

[Mr Hamilton]

I could not agree more. As a side issue, the central location of television soap operas is the pub. Things might be exaggerated on television, but pubs are about families and people getting together. Pubs are controlled environments where people look after one another. It is not uncommon for the bar steward to say to someone who is too drunk, “You’ve had enough. Away you go.” Somebody might look after someone who is too drunk in the pub. Drinking at home is uncontrolled and causes far more bother. Another problem we must face is that, nowadays, people—youngsters especially—meet in houses and get drink-fuelled before going out to the nightclubs.

[Mr Jim Cunningham]

Does my hon. Friend agree that one big problem with our high streets is the fact that there have been a lot of pub closures? Working men’s clubs are also affected. Are they not contributing factors to why we have ghost city centres, as we call them these days? A commission is looking into that.

[Mr Hamilton]

It is also the case that it is not just about pubs and the price of beer. Pubs, and especially clubs, have a far wider role. My local club, the Dalkeith miners club, has about 25 different organisations, including ones for kids, using its big halls during the day, and it is looking at other avenues. In many cases, clubs are community centres where no other community centre exists. They become the focal point for everyone.

I know that other hon. Members will raise a host of issues, but I have a specific point I wish to make. Surely it is not beyond the wit of the civil servants in the Department to come up with a mechanism that would tax a 50-pint cask of beer differently from anything else. That would allow draught beers to be taxed at a different rate—nobody is going to go to Tesco and buy a 50-pint cask and carry it home. Draught beers, ciders and lagers could be taxed differently.

[Mr Leech]

Is not the easy solution a differential on beer duty as between off-sales and on-sales? Minimum pricing for alcohol in supermarkets is still going to make supermarket alcohol much cheaper than in the pubs. If there is a massive differential in duty between supermarket alcohol and on-sales, it would make a massive difference in terms of encouraging people to drink in the pub instead of front-loading from the supermarket.

[Mr Hamilton]

I agree with the hon. Gentleman’s point, but without a cross-subsidy—the money raised from one being transferred to the other—I would be reluctant to go down the road of minimum pricing as proposed by the Scottish Government. Nobody has yet told me where that extra money will go, and that is a really big question that has to be answered. It has to be taken on board by the Department.

On the wider issue of alcohol taxation, it is a fact that the tax nowadays is so draconian compared with many years ago that it is a case of beer drinkers subsidising tax revenues. That has to stop, and the European Commission has to be drawn into line. I believe strongly that there is an alternative to the present proposal of cutting tax across the board. A selective cut could be effective. There have been many campaigns on beer, cider and lager, but there is an easier method if the tax is considered in terms of barrels of beer. It would have to be cleared through Europe, but the civil servants could do it.

12:02

[Greg Mulholland (Leeds North West) (LD)]

I am delighted to be a co-sponsor of the motion and to work with my hon. Friend the Member for Burton (Andrew Griffiths). He is the chair of the all-party parliamentary beer group and I am the chair of the all-party parliamentary save the pub group, and we are delighted to be working together on this very important campaign. I add my thanks to the Backbench Business Committee for granting us this time. I also congratulate the 104,000 people, and counting, who have signed the e-petition, and CAMRA and others who have achieved that figure.

This debate is about our national drink, beer, but it is also a Treasury debate about a major national industry. There are brewers up and down the country—

[Several hon. Members]

rose—

[Greg Mulholland]

Despite being a co-sponsor, I only get eight minutes, so I will take only two interventions.

[Neil Carmichael (Stroud) (Con)]

I wish to highlight the fact that I have four breweries in my constituency—Uley brewery, Severn Vale, Stroud and John Kemp’s excellent brewery, which has produced a Coalition ale, appropriately for this debate. All four do a huge amount for the community. Does my hon. Friend agree that that is a powerful reason to support this motion?

[Greg Mulholland]

It is, indeed. I have not tried Coalition ale—perhaps we can toast with it when the Government abolish the duty escalator next May. Exactly the same point applies to my own breweries: Wharfebank, Briscoe’s, Rodhams and other Leeds breweries all contribute to the local economy.

[John Hemming (Birmingham, Yardley) (LD)]

I declare an interest on behalf of myself and my hon. Friend the Member for Cheadle (Mark Hunter). We are both members of the Campaign for Real Ale. Does my hon. Friend agree that the social environment of pubs is very important?

[Greg Mulholland]

My hon. Friend is absolutely right. The key point from the hub perspective, as opposed to the beer perspective, is that beer duty is simply absorbed by the big supermarkets. They do not need to pass it on. They do not even have to make a profit from beer. Indeed, they have been shown to be selling irresponsibly at a loss. The point is not one of unfairness, though; the escalator simply makes no sense in terms of the Government’s own agenda, because it pushes people away from drinking in the sociable, controlled environment of the pubs and social clubs around the country, and encourages them to drink at home.

Beer is now 10 times more expensive in pubs than in supermarkets. That cannot be good. I am delighted to see the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Great Yarmouth (Brandon Lewis), who has responsibility for community pubs, in his place. I welcome him to his post and look forward to working with him, as well as with the Economic Secretary. Frankly, though, we should also have a Health Minister attending this debate, given the health impacts that are being discussed.

The beer duty escalator does not make economic sense. It was introduced in 2008, at a time when alcohol duties were keeping pace with rising incomes and when inflation was considerably lower. Now, incomes have fallen, inflation is higher and VAT has risen. The simple reality is that since 2004 beer duty rates have increased by 60% and beer duty revenue by just 10%—a significant fall in real terms. As well as the damage to jobs, in putting up the duty, the Government are simply not taking the revenue projected. It is nonsense. It is a tax that simply does not add up.

It is encouraging to see Opposition Members now opposing the escalator. We have this strange situation, though, in which Labour, which introduced it, now opposes it, and Conservative and Liberal Democrat MPs who opposed it at the time now support it. Can we not unite the House now and say that this silly tax should go? We are sending that message loud and clear today.

I know that the Economic Secretary is a fan of pubs, and I know his Bromsgrove constituency well, because it is where my in-laws come from. I often visit and am pleased to drink in some of his local pubs. As well as announcing—I hope—that he will conduct this review, will he take the opportunity to consider other forms of progressive taxation that can help the British pub? There are various ways of doing that.

On the question of whether we can tax cask beer or real ale—or, indeed, all draught ale—separately, there is of course the problem of European regulation, as the Economic Secretary will point out when he sums up. First, we should challenge those regulations, but secondly may I put to him the interesting possibility presented by the duty-free element on cask beer? The reason for the duty-free element is the sediment in cask beer and the fact that cask beer requires much more care and effort to store, and lasts for a much shorter time. At the moment, we have a complex regime under which different breweries have different rates for different casks of beer. It is very complex and costly to administer. Could we not consider standardising the allowance and being generous with it, because it could provide a perfectly legal way of applying a lower rate of duty for real ale, our great British beer?

I also ask the Economic Secretary to consider the report by the Institute for Public Policy Research on the possibility of community pubs being granted 50% business rate relief if they can demonstrate their social and community impact. It has come up with a test, and I urge him and his officials to look into that and other ways of benefiting the pub in the way that right hon. and hon. Members are suggesting, alongside getting rid of the beer duty escalator.

As the chair of the save the pub group, I would be the first to say that the beer duty escalator is not the only issue facing pubs. There are others that should also rightly be tackled. I want to raise with my hon. Friend the Minister the issue of large pub companies and the large pub-owning breweries. Unfortunately, the large pub companies’ tenants and lessees also face their own pubco escalator, with unfair rises resulting from the eye-watering debts that those companies incurred because of their irresponsible actions some years ago. It is also important to tackle that. When my hon. Friend announces the review, as I hope he will, I hope he will also make it absolutely clear to those companies that they should pass on any drop in beer duty, because if they do not, those tied pubs will see no benefit whatever. In conducting the review and, we hope, making that announcement in the Budget next year, he must issue and receive a firm guarantee that any drop will be passed on, so that it benefits licensees and can therefore be passed on to customers, so that those pubs can become more attractive in competing with free houses.

My final point—I say this to the community pubs Minister—is that we must look at giving more protection to pubs in planning law.

[The Parliamentary Under-Secretary of State for Communities and Local Government (Brandon Lewis)]

Does my hon. Friend agree that the work we have done to allow the community right to buy and to bid has been helpful—just this afternoon I am visiting the Norton pub, which has been taken over by the community in order to save its local pub—and that any work we can do to support those pubs will be helpful?

[Greg Mulholland]

I thank the Minister for that, and I look forward to working positively with him. The inclusion of pubs in the national policy planning framework is hugely positive. I would also point him in the direction of Cambridge city council’s excellent policy, which I hope he will encourage other councils to follow.

At the moment we face a ludicrous situation, which is absolutely pertinent to this debate. We talk about supermarkets and wanting people to drink in pubs, but at the moment the planning system allows pubs to be turned into Tesco and Sainsbury’s shops without even having to go through the planning process and without any opportunity for the community to have a say. The supermarkets are engaged in the predatory purchasing of profitable pubs from indebted pub companies that are desperate to sell them just to try to balance their books. The Minister is the man who can stop it, by making very simple changes to the planning law and dealing with the fact that free-standing pubs can be demolished. I hope that there is progress, but there are also simple things that I hope he will do—both as part of this process and in getting rid of the beer duty escalator—so that the Government can live up to the Prime Minister’s claim about this being a pub-friendly Government.

As I hope I have pointed out already, and as I know many colleagues will, it is absolutely fantastic to see so many colleagues here when those of us on this side of the House have been put, I believe wrongly, on a one-line Whip. Whatever the vote, and even if there is no vote, it is absolutely clear what the will of the House is on this issue, and the Government must not ignore it. The beer duty escalator does not make economic or social sense. It is unfair, unsustainable and unjustifiable. I hope the Minister will have the courage today to say, “We will have the review,” and I look forward to a sensible economic strategy for growth in next year’s Budget which involves abolishing the beer duty escalator once and for all.

12:13

[Mr Iain Wright (Hartlepool) (Lab)]

It is a pleasure to follow the hon. Member for Leeds North West (Greg Mulholland). I do not think it does either of our reputations any good to declare to the House that he once bought me a pint at Huddersfield railway station—and very good company and a very good pint it was too.

This is an important issue, and I pay tribute to the Backbench Business Committee for arranging the debate. I want to focus on the impact in my constituency. The pub and brewery industry is of both historical and current importance to Hartlepool. It is said—I do not know about the accuracy of this, but it is a good statistic regardless—that in the early part of the 20th century, Hartlepool had the highest ratio of pubs to streets in the entire country. Sadly that is no longer the case, and we have seen a steady stream of pub closures. The hon. Member for Leeds North West quite rightly talked about the planning system. Only in the last month one of the pubs in Hartlepool—the Pink Domino—has been earmarked for demolition. There is a planning application going through at the moment for a supermarket to be built in its place, with a loss to the community.

However, I am not just looking backwards. The pub and brewery trade is still hugely important to my town, both socially and economically. We have first-class pubs, such as the Causeway, the Fisherman’s Arms, the Pothouse and the Jackson’s Arms. Hartlepool has an economy that employs about 34,000 people. Of those, some 1,000 are employed in the pub trade, so it is not an insignificant part of the town’s economy. Indeed, that figure does not take into account those employed in working men’s clubs or, like my mother, behind the bar in venues such as the town hall or the borough hall on the Headland. The pub trade therefore has a major impact on the town’s economy and employment, particularly for younger people and those in part-time flexible working.

[Hazel Blears (Salford and Eccles) (Lab)]

My hon. Friend is making a powerful case. I have had the pleasure of visiting his constituency and having a drink of beer in Hartlepool at the time of his election. My community in Salford and Eccles is similar to the community in Hartlepool. We have a great brewery, Joseph Holt, which just this year has been forced to get rid of 11 pubs, with the loss of 94 jobs, at the same time as seeing massive increases in duty. Does my hon. Friend agree that the escalator is punishing communities in poorer areas such as ours, where people’s wages have not kept pace with duty increases?

[Mr Wright]

My right hon. Friend is exactly right. She mentions the importance of the pub trade in the local economy—the economies of Salford and Hartlepool are very similar—but she also talks about breweries, which brings me to my next point.

We have a major brewery in my constituency: Camerons brewery—I am pleased to confirm to the House that it has nothing to do with the Prime Minister, thank goodness. Camerons brewery has been on the same site for more than 140 years, using the unique Hartlepool water from its own well to make the beer. It now employs 100 people and is involved in large-scale ale and lager production. Not only does Camerons produce quality ales of its own—I would recommend to hon. Members Camerons Strongarm and 6th Sense, which are particularly good pints—but its modern manufacturing facility and investment in plant means that the brewery is now capable of producing 1.3 million hectolitres per annum, with the potential to increase that, given certainty in the brewery trade, to 2 million hectolitres. Camerons has been well positioned to win orders for beer and ale production from global brands such as Carlsberg. The brewery continues to be—and has been for the best part of 150 years—an important part of the town’s manufacturing base.

[Andrew Bingham (High Peak) (Con)]

Will the hon. Gentleman give way?

[Mr Wright]

I give way for the second and last time.

[Andrew Bingham]

Does the hon. Gentleman agree that it is not just the big breweries that are affected, but small microbreweries, of which there are many in rural constituencies, where pubs are extremely important socially, such as Howard Town brewery and Buxton brewery in my constituency of High Peak?

[Mr Wright]

I absolutely agree with the hon. Gentleman. If manufacturing is to be an important part of this country’s economic base, with small and medium-sized enterprises forming a key part of that, the food and drink sector—of which microbreweries have to be an essential and growing component—will be vital to that.

I have listened closely to other hon. Members’ contributions to this debate, which has been fair and balanced. It is unreasonable to suggest that beer duty is the sole reason that the pub and beer trade is facing difficulties. There are long-term social and economic forces at work. Over the past 30 years, people have switched away from beer to wine in their alcohol consumption. That is true not just in Britain, but throughout western Europe and the United States. Significantly—this point has been touched on many times in the debate, but it is worth repeating—people are now consuming alcohol in their homes rather than in pubs. In fact, some 70% of the alcohol purchased in the UK is bought for consumption at home. Traditionally, 30 or 40 years ago, people probably bought alcohol only in a pub; now, it is far more likely that beer will be bought in a supermarket.

[Dan Rogerson (North Cornwall) (LD)]

Will the hon. Gentleman give way?

[Mr Wright]

Just because I went through the Education Bill Committee with the hon. Gentleman—we had nightmares together—I will give way.

[Dan Rogerson]

The hon. Gentleman is making a good point about wine drinking in the home. Does he agree that, because wine has a much higher alcohol content and because people are often drinking not in pub measures but in much larger glasses at home, the health issues are a result more of wine and spirits than of beer, which has a much lower alcohol content?

[Mr Wright]

The hon. Gentleman makes an important point. Among even the strongest beers and ales, Cameron’s 6th Sense, which I mentioned earlier, is only 6%, but some of the bottles of wine that are being consumed in one go at home can be 13% or 14%. That has health implications, as does the departure from responsible and supervised drinking in pubs.

The switch from on-trade to off-trade purchase and consumption via the supermarkets has had major effects on the pub industry. The Treasury’s own analysis of alcohol consumption in the UK, which was published in December 2010, showed enormous price elasticity for off-trade beer. That illustrates the enormous competition between supermarkets, the price wars that are going on and the cutting of margins on beer by supermarkets, all to the detriment of the pub trade.

Pubs have an enormous disadvantage, in that they tend not to have the buying power, or the ability to achieve economies of scale, of the major supermarkets, and the nature of their business model means that they have to pass on increases in prices—whether in the form of additional duty, increased VAT or rises in the cost of raw materials—directly to the consumer. Supermarkets are, by and large, able to cross-subsidise, as the hon. Member for Shipley (Philip Davies) pointed out, and they often have the ability to absorb any price rises. Beers can even be used as loss leaders to encourage shoppers, a practice that the pubs cannot afford to compete with.

These problems arise not just from the beer duty escalator but from rises in raw material prices, and there must be concern that beer prices will rise still further because of the recent wet summer, which has had an impact on barley crops, and the increase in VAT last year by the Government. The rise in VAT must have put an extra 5p or 6p on the price of a pint, which in turn will put additional pressure on the viability of pubs. Has the Minister looked at the impact on pubs of that VAT rise, of the rises in barley prices and of the beer duty escalator?

On the point about raising revenue, it was estimated when the beer duty escalator was introduced in 2008 that it would generate between £500 million and £600 million for the Exchequer. Given the difficulties since then, and the squeeze on household incomes, has it actually generated that much revenue? What cost-benefit analysis has the Treasury put in place to determine whether the escalator is raising revenue for the Exchequer to the detriment of local economies and local pubs?

I appreciate that the duty is, and should be, a source of revenue for the Exchequer—about 2% of all Government receipts. I appreciate that beer has generated revenue for the Treasury for centuries, to the dismay of beer drinkers everywhere, and that it will continue to do so. I also appreciate that, in a free country, the manner in which people wish to consume a legal product is up to them and not up to the Government. If somebody wants to drink beer bought from the supermarket in their front room while watching the football or a film and having a takeaway, without causing any hassle or intimidation to anybody else, that is entirely up to them. However—this is my key point—if we as a country value the social and economic importance of the pub as a focal point for the community and a means of encouraging responsible and supervised drinking, what steps can the Government take to nudge consumers towards drinking beer in pubs?

In responding, will the Minister set out how he proposes to tackle the growing gulf in prices between pints in pubs and beer in supermarkets? I am not suggesting that he attempts to turn back the tide of social trends over the past 30 years, but I hope he will tell us how the Government value the pub as one of the great British institutions and how he will work with his colleagues, using the tax system, beer duty and any other means at his disposal, to ensure that the pubs and brewing industries of Britain have a brighter and longer-term future as part of a revitalised manufacturing base. I think we would all drink to that.

12:23

[Bob Blackman (Harrow East) (Con)]

It is a pleasure to follow the hon. Member for Hartlepool (Mr Wright), who has made an impassioned case for pubs and beer drinkers across the country. I have a passionate belief in beer drinking; I have been doing it, and keeping the brewers and the Treasury going, for more than 40 years. Pubs, working men’s clubs, social clubs, sports centres and students union bars all have an important role in our society, not only as places to meet and greet people but as social centres where people can sit down and have a quiet drink and a bite to eat, along with some social interaction. They offer a wide variety of drinks, including soft drinks, wines and spirits, although it is much better to drink beer. They also provide a place for families to get together.

One problem that has arisen in the past few years as a result of the pressure on pubs to make money is the loss of that social atmosphere and the emergence of vertical drinking establishments, whose aim is to pour as much alcohol as possible into individuals in order to maximise profits. That presents huge risks. Similarly, in urban and suburban areas, big pubs with car parks that occupied large plots of land have been bought by ruthless developers and turned into flats, destroying the local community. It is important to protect our pubs from those predatory developers, and I look to the newly appointed Economic Secretary to the Treasury to assist in that task.

[Neil Carmichael]

My hon. Friend is making some excellent points. Will he join me in commending the work of the Campaign for Real Ale, which does an outstanding job of promoting local pubs and sensible drinking? It certainly does that in my area of Gloucestershire.

[Bob Blackman]

I thank my hon. Friend for his intervention. I must declare an interest as a member of CAMRA. I have been a strong supporter of the organisation since I was at university. It is indeed important to promote the responsible drinking of real ale.

[Jane Ellison (Battersea) (Con)]

The problem that my hon. Friend has just raised about developers is particularly acute in London, where development land is so valuable. We have seen more than 40 pubs go in the past six months. A popular Battersea pub, The Castle, which has been in existence for more than 300 years, is now threatened with demolition, precisely because the land is worth more than the pub. Does he agree that this is an acute problem in London?

[Bob Blackman]

Indeed. Pubs in my constituency have been closed down and redeveloped as flats. The loss of those extremely valuable centres results in the destruction of the whole community.

Beer has a relatively low alcohol content. Those who promote the beer duty escalator talk about the health risks related to drinking, but I am a great supporter of responsible drinking and of transferring people to beer drinking, given its relatively low alcohol content. A person would almost have to drink more beer than their capacity would allow in order to damage their health, whereas relatively small quantities of spirits can cause immense damage.

The supermarkets have not only helped to destroy local pubs; they have completely eliminated off-sales from other environments. Anyone can wander into a relatively small supermarket in my constituency today and buy six cans of beer for a fiver, but if they go across the road to the local pub, The Duck in the Pond, they will have to pay £3 for a pint. Why would anyone do anything other than buy beer from the supermarket and wander off home, or drink it on the street? This is causing real damage to the people who are providing these important facilities.

Some people call for minimum unit pricing for alcohol, and I can understand why they do so. I believe that there are huge risks involved in minimum pricing, but we have to address the supermarkets’ predatory pricing and prevent them from subsidising alcohol sales. We need to ensure that they compete fairly with local pubs, rather than ruthlessly getting customers by selling alcohol as a loss leader.

The Treasury’s own figures show that the beer duty escalator will produce only a flat level of income. If that is the case, and if the duty is going to increase year on year, that can only mean that the Treasury is forecasting reduced volumes of beer sales in this country. That can only mean more threats to our pubs and our communities, and there will be implications for other forms of alcohol as well.

[Guto Bebb (Aberconwy) (Con)]

I have three breweries in my constituency—Bragdy’r Nant, Bragdy’r Gogarth and Bragdy Conwy—and for those slow on the uptake, Bragdy is Welsh for brewery. Those businesses are paying about 50% of their turnover in tax. They recently invested in a pub in the local community, but they will not be able to do that again because so much of their turnover currently goes in tax.

[Bob Blackman]

Indeed, and the potential of local pubs to contribute to growth in the economy is threatened by the beer duty escalator.

There is an alternative. If we abolish the beer duty escalator, promote the responsible drinking of beer, as my hon. Friend the Member for Leeds North West (Greg Mulholland) mentioned, and allow the price of a pint at the pump to be reduced, that will help people to move away from irresponsible supermarket drinking back into pubs. That would mean they consumed less over a longer period and in a more sociable atmosphere, while the Treasury would get more income as those sales increased. We would therefore see a better outcome—for health, for pubs and for the Exchequer—making this a win all round. I thus urge our new Minister to have a full and proper review of how to reduce the price at the pump and dissuade the supermarkets from cross-subsidising their sales, leading to much better social interaction in our society and encouraging pubs to grow, and make sure that it continues.

My final point relates to the growth of small pubs in areas where they are taking over empty shops. I think this is a potentially serious problem, when large groups of relatively small pubs become a threat to the local environment and to local communities. It is a threat to the big traditional pubs, which have served this country so well over many years, particularly in the suburban and urban areas. Landlords of these new pubs often do not have the same sense of responsibility as the previous landlords. We need to look at the impact of that and understand why this it is happening. I look to Ministers to review the situation so that everyone can see the benefits of the great British pub and, indeed, of all the social centres that we have discussed in the debate. We must ensure a fair and reasonable deal for pubs—from the Exchequer and in competition with supermarkets.

12:32

[Sandra Osborne (Ayr, Carrick and Cumnock) (Lab)]

I greatly welcome the opportunity to participate in today’s debate, and it is a pleasure to follow the hon. Member for Harrow East (Bob Blackman), who made an interesting and insightful speech. I would like to thank the hon. Member for Leeds North West (Greg Mulholland) and others who have kept the all-party group going for a number of years, providing a strong focus for this issue, which is important for all our constituencies. I shall concentrate my remarks on my concern about the pub trade in my constituency.

There are 86 pubs in Ayr, Carrick and Cumnock, which support 877 full and part-time jobs in my constituency. Pubs inject an average of £80,000 into the local economy each year, but these pubs will be under threat if the beer duty escalator remains in place, because, as hon. Members have said, this mechanism is making a pint in the pub unaffordable. In my constituency, many pubs have already closed.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

Was the hon. Lady as surprised as I was to learn that beer tax in the UK is 13 times higher than in Germany?

[Sandra Osborne]

I am not really surprised: I am well aware of it, and I was going to make a similar comment. I know that this will be of concern to many Members.

In their first Budget after the 2010 general election, as hon. Members will be aware, the coalition Government launched a review of the taxing and pricing of alcohol, including the beer duty escalator, which was first introduced by the former Labour Government in 2008. The coalition’s aim was to ensure that it

“tackled binge drinking without unfairly penalising responsible drinkers, pubs and important local industries.”

If the views expressed so far are anything to go by, we would all agree that that is simply not working. I am aware that the Government have stated that they intend to keep the escalator in place until 2014-15, although Treasury forecasts have shown that no additional revenue will be generated from beer duty, despite the increases of 2% above inflation planned in forthcoming Budgets over the next two years. The Government are not even going to make any money out of it. The planned 2% rise above inflation, equating to a 5% price increase, came into effect from 1 April 2012.

The Campaign for Real Ale, which has 450 members in my constituency alone, and the British Beer and Pub Association have criticised the decision not to abolish the escalator in the Budget, claiming that the increase could cost thousands of jobs. CAMRA has also expressed concern about the impact of the escalator on the industry, stating that a third of the cost of a pint of beer goes to the Exchequer—as was said earlier, that is the second highest rate of duty in the EU—while 16 pubs now close in the UK every week. The Government need to recognise the harm this is doing to brewers as well as to community pubs.

Since the escalator was first introduced, beer sales in pubs and clubs have fallen by 23%, leading to more than 6,000 pubs closing. Since that time, so much has changed: inflation has risen, VAT has increased, brewing costs have risen and household incomes have fallen. According to the Beer and Pub Association, beer taxation now costs the average pub around £66,000 a year. As other Members have stated, this is having a terrible impact on towns already suffering from the current economic situation, as more people are purchasing alcohol from supermarkets, which is competitively priced, to drink within their homes rather than having a social drink in their local pub. I am aware that the most common complaint received by the local licensing department in my constituency is about the threat posed to the local pub trade by the volume of cheap sales of alcohol by supermarkets.

Given that beer and pubs support almost a million jobs in the UK and that 48% of pub employees are under 25, the Beer and Pub Association has stated that if the escalator is removed, the industry has a real capacity to create jobs, raise more for the Exchequer and contribute to growth.

[Heather Wheeler]

I am interested in the hon. Lady’s point about how many jobs are created by our pubs. The 115 pubs in South Derbyshire employ 1,040 people. It is a hugely important industry for us locally. I am grateful to the hon. Lady for making the point that this is about jobs, industry and growth. I am sure that Ministers will be listening intently to that.

[Sandra Osborne]

I thank the hon. Lady. Another problem is that when many of the small pubs that employ only a few people close, that is not highlighted. With bigger announcements about redundancies, it is always made clear that huge job losses are involved, but I would argue that this is just as insidious for those working in the smaller pubs.

I recognise concerns about alcohol-related harm and the serious problems that alcohol causes, of which we are very aware in Scotland. I recognise, too, that campaigners have called for some time for the Government to introduce a duty rate escalator on alcoholic drinks as part of a wider strategy to tackle the social impact of alcohol consumption.

[Mr Iain McKenzie (Inverclyde) (Lab)]

My hon. Friend makes an impassioned point about the alcohol problems that continue to be encountered in Scotland. Pubs are more sociable places for the consumption of alcohol and are more family friendly nowadays, but what we are seeing is the mass purchase of alcohol in supermarkets for home consumption.

[Sandra Osborne]

That is very true, and I think we should give some credit to UK pubs which they have made great efforts to be family friendly places where people can drink with the assurance that there will be no problem if they take their children with them. That is important.

I share the concern that continued increases would penalise only responsible drinkers and, as stated earlier, drive responsible social drinkers out of pubs and into supermarkets because the price of alcohol is increasing in pubs but decreasing in supermarkets. The current duty system ensures that higher-strength drinks are the cheapest drinks available to consumers. Pubs are already being hit hard by the current economic situation and are suffering further with the escalation of beer duty.

On 23 March 2012 the Government published their alcohol strategy, which seeks to reduce the UK’s relatively high drinking levels and the serious health and disorder problems that are caused by excessive alcohol consumption. The strategy contains a number of proposals to

“reshape our approach to alcohol and reduce the number of people drinking to excess”,

including the introduction of a minimum unit price. As Members will know, minimum pricing has already been introduced in Scotland, but is currently being challenged in court by the Scotch Whisky Association.

Following a recent Adjournment debate, a Minister said that abolishing the escalator would cost the Exchequer £35 million in 2013-14, and that that revenue formed

“a vital part of the Government’s plan to tackle…debt”.

However, the Government would

“continue to keep all taxes under review and monitor the impact of alcohol duty”. —[Official Report, 2 July 2012; Vol. 547, c. 733-36.]

I ask the Government to recognise the tough challenges that face the beer and pub industry, and to take them into consideration. I think it would be a good idea for the Government to cut VAT temporarily and to undertake a wider reform of the industry, including the introduction of a statutory code to regulate pub companies. The last Labour Government introduced a 12-point plan to support community pubs, which was backed by CAMRA, and my colleagues on the Opposition Front Bench have pressed the Government to build on it.

As we have already heard, there is an online “Stop the beer duty escalator” petition, which currently has 104,000 signatures. I ask the Government to note that significant number, to support the country’s beer and pub sectors by conducting a thorough review of the economic and social impact of the beer duty escalator, and to announce before the 2013 Budget that they will abolish it.

12:41

[Charlotte Leslie (Bristol North West) (Con)]

It is great that so many Members are in the Chamber today despite a one-line Whip. Let me begin by congratulating my hon. Friends the Members for Burton (Andrew Griffiths) and for Leeds North West (Greg Mulholland) on being such staunch campaigners. I know that there are other campaigners on the Opposition Benches.

All of us probably enjoy a pint, but why is this debate so important? It is about a bit more than a pint in the pub, although of course that is very important to a lot of us. The debate is important for several reasons. First, if we are to talk about the big society, we should recognise that the pub is at the heart of it. It is a little-known fact that pubs donate more than £120 million a year to charitable causes. That is impressive stuff. My local pub, the Bear and Rugged Staff, raised over £1,000 recently to help Lisa Fry, a lady who had tragically been diagnosed with cancer. Pubs are where people come together, they often support local sports clubs, and—another little-known fact—27% of couples first met in the pub, so I do not know what we are all doing here.

Empowering people also happens in the pub. The Bristol free school, which was one of the first free schools in the country, was started as a result of a conversation between me and some parents—guess where? In the local pub. Thank you very much, the White Lion and the Mouse. Moreover, I am sure that I am not the only Member present who, wanting to find out what is happening in the constituency, goes first of all to the pub and enjoys a nice pint at the same time. Pubs are also where discussions take place. In many ways, they are the Chamber of the real world, where there are proper debates about real things.

I have mentioned the social value and the big society value of pubs, but what about the economic value? Pubs not only donate £120 million a year to good causes but contribute £21 billion a year to the economy, and, as has already been said, each pub contributes an average of £80,000 to the local economy.

[David Rutley (Macclesfield) (Con)]

We are very fortunate in Macclesfield. Passionate Pubs owns pubs such as the Wharf, the Vale Inn and the Snow Goose, and there are vibrant micro-breweries such as the Storm Brewing Company, Bollington Brewing and the Wincle Beer Company. They have helped to make Macclesfield an important and distinctive destination. Does my hon. Friend agree that it is easy to underestimate the impact of such institutions on the visitor economy as well as the wider economy?

[Charlotte Leslie]

Absolutely. My hon. Friend has made an extremely good point. A tourist’s picture of Britain always includes the beautiful and the great British pub. The trouble is that once such institutions have gone, they have gone for ever. We are currently overseeing the decimation of the keystones of our culture and heritage, which not only have social and morale value, but are massively important to our economy.

I am probably not the only Member present whose first job was in a pub. In my case it was the Fox, in the constituency of my hon. Friend the Member for Filton and Bradley Stoke (Jack Lopresti). I was not brilliant behind the bar, so I moved swiftly on.

[Justin Tomlinson (North Swindon) (Con)]

My hon. Friend is making a very interesting speech. She has just mentioned first jobs in pubs. Having spoken to representatives of my local family brewery, Arkell’s, I know that they are crying out for young people—graduates, and those with hospitality management skills—who have the potential to become pub landlords. The pub sector is very important for young people.

[Charlotte Leslie]

That, too, is a good point. More than a million people are employed in the pub industry in this country, and more than half of them are young people. Pub employment not only constitutes an important first step on the jobs ladder, but provides a great opportunity for career progression. People learn a multitude of skills that will be useful in future careers.

I think that the Government have done quite well. The appointment of a pubs Minister was a very good move—I am sure that we all wish to pay tribute to the previous pubs Minister, my hon. Friend the Member for Bromley and Chislehurst (Robert Neill), for the work that he did, and to welcome the new Minister—and, having produced the Live Music Act 2012, localism and the right to buy, we are now making progress with minimum pricing. All that is good stuff. However, pubs are still closing at the rate of about 12 a week, and we need to do more.

Given that beer represents about 60% of sales in community pubs, it is not very surprising that the beer duty escalator is having such a dramatic impact. It is true that there are other factors, such as social and demographic changes and the fact that, as my hon. Friend the Member for Leeds North West pointed out, it is so easy to sell a pub and turn it into a Tesco—we have probably all seen that happen—and issues involving pub companies and pub ties also need to be considered. However, the escalator is a major component of the problem. Given that all the beneficial elements are being stripped away as pubs close, and that beer sales fell by 5.6% in the third quarter of this year, it is hardly surprising that the Treasury’s own figures show that the escalator is not doing what it is supposed to do and raising funds.

[Bob Stewart (Beckenham) (Con)]

We have already demonstrated that the beer duty escalator will not increase the finances going to the Treasury, so why the heck do we have to wait until the Budget? Why cannot a Minister make a decent decision and scrap it?

[Charlotte Leslie]

I think that many of us would like the Minister to make a snap decision and scrap it, but this debate is about a review, and that is an important first step if we want accountability. I should prefer a quicker decision, as I am sure would many other people, because my hon. Friend is right: every day while the escalator continues, pubs are closing, including historic pubs such as the Lamplighters in my constituency. We are struggling to save the Lamplighters, and Pete Bridle, of the local branch of CAMRA, has been fantastic in that regard. Although it is a review for which we are asking, there is definitely a degree of urgency.

So what can we do? Let us get the review done, and I think that its conclusions will be pretty clear. We must also press on with minimum pricing, and we must tackle the discrepancy between off-trade and on-trade alcohol prices. The damaging social effects of cut-price booze in supermarkets are plain for all to see. One solution may be to deal with the discrepancy between pub and supermarket licensing fees. At present, any pub with a rateable value of more than £87,000 pays fees two or three times higher than those paid by a supermarket with an equivalent rateable value, because the multiplier for pubs does not apply to supermarkets. If the Treasury is concerned about tax revenue, we could act now to produce a far more tax-neutral measure.

Let us look at what is at stake. If we end the escalator fast, we can save 5,000 jobs a year—an estimated 16,000 over three years—we can secure a national foundation stone of the big society, which I know is important to our Government; and we can secure our great British beer industry and the pride of Britain, our pubs. I urge the Minister and the Government to end this disastrous beer duty escalator with all speed.

[Several hon. Members]

rose—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. I am reducing the speaking time limit immediately to five minutes. There are still 13 Members wishing to contribute to the debate, and I shall do my best to ensure that they are all able to do so.

12:49

[Mr John Denham (Southampton, Itchen) (Lab)]

I am very pleased to have an opportunity to speak in this debate, and I commend the Backbench Business Committee on securing it. When I was briefly Secretary of State for Communities and Local Government at the end of the last Labour Government, we appointed my right hon. Friend the Member for Wentworth and Dearne (John Healey) as the first pubs Minister. His 12-point plan has been mentioned today, and it still sets the agenda on issues such as the community right to buy, the need to change the planning rules, and the relationship between pub companies and pubs. I am very pleased to have a chance to return to this issue today, prompted by not only the wider concerns, but the fate of one pub in my constituency that illustrates some of the wider problems.

The Castle pub in Midanbury in Southampton has been sold by Enterprise Inns to Tesco, which has just put in a planning application for the minor changes needed to develop a convenience store. That is deeply unpopular with the 600 people in the area who signed a petition against the move, partly because they did not want to lose the pub and partly because they do not want a Tesco. They have been utterly powerless to influence the decision, however.

Similar situations have been described by other Members. The latest figures I have from CAMRA show that its members have identified 189 conversions of pubs to supermarkets since the start of 2010, with a further 41 pubs under serious threat. Of those 189, Tesco has done 124 conversions, while Sainsbury has done 21.

In my constituency, in addition to the Castle pub, the Bulls Eye in Sholing and the Woodman were also owned by Enterprise Inns and are being converted by Tesco. Other pubs have been sold to the Co-op, the Best-one convenience stores, the Alfresco group and the One Stop group.

Beer duty is one of the factors contributing to this trend. Because it impacts on the profitability of pubs, for the big pub companies considering what to do about a pub it is one of the factors that tips the balance away from investing in it and strengthening the management and towards simply seeing selling the pub as a property deal, which is often what those capital-hungry companies are after. The bigger picture is of communities such as mine being left without any say when two giant companies —Enterprise Inns and Tesco in this case—have commercial strategies that they work on together and which suit them, but that give local people no voice and no say at all in the future of their pub and community.

[Greg Mulholland]

I congratulate the right hon. Gentleman on raising this serious problem. It is a tragedy to see our local pubs being turned into supermarkets. What is happening is predatory purchasing. I will send the right hon. Gentleman the Save the Pub group planning charter, which addresses this issue. I ask all Members to urge the community pubs Minister to make simple planning law changes to give communities the right to have a say, and to stop the nonsense of no planning permission being required for supermarket conversions. That would stop the collusion the right hon. Gentleman mentions between the giant indebted pub companies and the giant supermarkets. What is currently happening is certainly not an example of the big society.

[Mr Denham]

I commend the hon. Gentleman on his work on this issue. What he says is right. In the case I have mentioned—and, I suspect, in many others—there was never even an open disposal. There was never an opportunity for somebody else to come in and start up a microbrewery for instance. The whole thing takes place behind the scenes, and the deal is done. The first thing the community ever knows is that the property has already changed hands and is on the way to being converted.

[Greg Mulholland]

There are huge growth opportunities in the pub sector. Many pubs are being taken on by small pub companies, and their figures show they are doing well. The managed pubs sector is doing perfectly well. Lots of small breweries around the country are also buying pubs, but they are often prevented from doing so because of the situation the right hon. Gentleman describes. This can be solved through the planning system, and it must be, or else growth in the sector will be hampered.

[Mr Denham]

The hon. Gentleman again makes a fair point. I say to the Treasury Minister on the Front Bench, the hon. Member for Bromsgrove (Sajid Javid), that in addition to reviewing beer duty and changing the planning laws, the way in which these big companies operate needs to be looked at.

The hon. Member for Bristol North West (Charlotte Leslie) talked about the big society. We cannot have a big society if two big companies shut the community out. Labour Members talk about responsible capitalism; it is not responsible capitalism if big companies collude to stop small entrepreneurs starting up businesses of the sort we want to see in our communities.

In every one of the cases I have raised where a Southampton pub has been turned into a convenience store, that pub offered a safe, social environment for the responsible consumption of alcohol, and it was replaced by an off-licence that trades on cheap booze. I am not saying nothing ever goes wrong in a pub, but there are social constraints on how much people drink and how they behave. If the outcome of public policy is that we lose the places where alcohol is consumed responsibly and replace them with outlets for cut-price booze that encourage people to drink too much at home, where those constraints might not exist, there is something wrong with public policy. The message from Members on both sides of the House is that the Government need to look at beer duty and the wider context.

The Minister on the Front Bench and other current Treasury Ministers, along with previous Treasury Ministers over many years, have all said—because this is in the word processor in the Treasury—that it is difficult to untangle the impact of beer duty from the other factors affecting pubs. Of course that is true, but that is no reason for not looking at beer duty and all the other factors affecting pubs.

[Dr Julian Lewis (New Forest East) (Con)]

I thank the right hon. Gentleman, my near neighbour, for giving way. To encourage him in his line of argument, may I say that when my party was in opposition we had a standard letter to send to people who inquired about beer duty, saying we were launching a campaign entitled “save the great British pub” and urging them to sign the online petition? I am sure, therefore, that the Minister will want to give a positive response to the right hon. Gentleman’s excellent speech.

[Mr Denham]

I am sure the last thing the Minister would want to do is embarrass his party colleague by causing him to tear up the letters he was honestly, and with integrity, sending out just a few months ago.

12:57

[Stephen Gilbert (St Austell and Newquay) (LD)]

I am grateful to have been called to speak in this timely and important debate. I pay tribute to my hon. Friend the Member for Burton (Andrew Griffiths) for his work on this issue, and to my Liberal Democrat colleague, my hon. Friend the Member for Leeds North West (Greg Mulholland), for the work that he does with the all-party save the pub group. I also thank the Backbench Business Committee for responding to the legitimate calls from the public for the House to debate this topic.

I share the concerns expressed by other Members about the inevitable effect of the beer duty escalator, and I join them in calling for a review. Without a review, I fear many more pubs in my beautiful constituency might close, leading to job losses, mostly among younger people. The loss of these important institutions in our communities might also lead to cultural decline.

The pub is a gathering place for the local community. As has been said, it is the equivalent of this Chamber out there in the country, where debates are held every day. It is a place where people can gather to drink safely and responsibly. Speaking for my constituency, the pub is also part of Cornwall’s legendary charm. Many Members will have been to Cornwall and walked down the narrow streets and sat inside the solid granite walls of our local pubs, rich in history, legend and atmosphere. We need these pubs to survive to keep Cornwall full of character and competitive in the tourist market. Having spent the past few weeks talking to constituents about this subject, I can confidently say that if the beer duty escalator continues without review, jobs, community spirit and the local economy will be under threat.

The beer and pub industry contributes £45 million a year to the local economy in my constituency. St Austell brewery is a fantastic local family business that has more than 160 years of history, that runs 170 pubs, predominantly in Devon and Cornwall, and that employs a significant number of my constituents. Since the beer duty escalator’s introduction in 2008, the brewery has seen a 23% reduction in demand, and on an annual turnover of about £100 million, it pays £25 million in tax. The burden is too high not only for that brewery but for the countless independent and unique pubs from coast to coast in the heart of Cornwall. Some 2,500 people are employed in the sector in my constituency.

[Alison McGovern (Wirral South) (Lab)]

The hon. Gentleman is painting a wonderful picture of pubs in Cornwall. Does he agree that it is important that we visit and support not only local pubs, but local breweries such as the Brimstage brewery in Wirral, which has an excellent relationship with local pubs, ensuring that people in Merseyside can drink good, local beer?

[Stephen Gilbert]

The hon. Lady is, as ever, a firm advocate for her local brewer, just as I am for mine. I take on board the point she makes; she is entirely right.

I will not detain the House for too long, but it must be recognised that beer tax in the United Kingdom is high compared with that of equivalent countries in the European Union. Ours is nine times higher than France’s and 13 times higher than Germany’s. British consumers pay 40% of the total EU beer duty, and beer duty has increased by 42% since 2008. Of course, I share my right hon. Friend the Chancellor’s view that we are all in it together, but we need to redress the balance and ensure fairness.

[Sir Alan Meale (Mansfield) (Lab)]

Drinkers in Britain pay 40% of the EU beer tax bill, but consume only 13% of the beer.

[Stephen Gilbert]

The hon. Gentleman cites a stark contrast. When he makes the point in that way, the uneven spread becomes even more apparent and visible.

I support the motion, because we need to protect pubs, which are at the heart of our communities, not only in Cornwall, but across the country. We need to make sure that we are doing all we can to drive down youth unemployment, and the beer and pub sector plays a key part in that.

13:02

[Grahame M. Morris (Easington) (Lab)]

I wish to place on record my thanks to the hon. Members for Burton (Andrew Griffiths) and for Leeds North West (Greg Mulholland) for securing this debate, and I congratulate them on doing so. I also thank the Backbench Business Committee for allowing this important and timely debate to take place. I realise that the Minister is relatively new to his position, but he should know that these arguments were made when clause 186 of the Finance Bill was debated. Similar arguments were pursued by my good self and by my hon. Friends the Members for Livingston (Graeme Morrice), for Gateshead (Ian Mearns) and for Wansbeck (Ian Lavery). I ask the Minister to have a look at those arguments and to review the decision, as that would be extremely helpful.

I was rather alarmed to hear the hon. Member for Leeds North West suggest on a point of order earlier that the Government were not giving serious consideration to issues chosen for debate by the Backbench Business Committee. I hope that is not the case, because there is a powerful case for the Minister to consider the House’s decision on this motion.

I must declare an interest as the vice-chair of the all-party save the pub group. I am also a member of the Working Men’s Club and Institute Union, and as such I am very concerned about the impact of the beer duty escalator on working men’s clubs—this was also raised by my hon. Friend the Member for Midlothian (Mr Hamilton). Nobody in this House can be in any doubt about the impact of the current economic climate and, in particular, the beer duty escalator on the pub trade—the Minister certainly cannot, unless, like the Olympic flame, he does not go out. [Laughter.]

It is apparent that since the beer duty escalator was introduced in 2008 a range of new and demanding costs have been applied across the industry. Like many hon. Members, I have received briefings from the British Beer and Pub Association and, through the all-party save the pub group, I have had discussions with stakeholders. It has been pointed out to me on numerous occasions that inflation has risen, VAT has increased and brewing costs have risen, whereas incomes have fallen right across the sector. The fuel duty increases have also had an adverse impact on delivery costs.

[Hazel Blears]

My hon. Friend is clearly well versed and an expert on these issues. As well as the economic costs, there are clearly important social costs to our pubs closing. A constituency such as mine has only a handful of remaining public houses, many of them intimidating places where the general public do not want to go. Will he therefore support communities that want to take over those pubs and bring them back to life, as we are trying to do with the Woolpack pub in Salford?

[Grahame M. Morris]

My right hon. Friend makes a really good point, and I hope the Minister is taking note.

As we all know from our constituencies, pubs are a vital part of our social life and a social hub. No matter what sort of area we represent, be it Labour, Tory, Lib Dem or nationalist, be it in the north or the south, be it countryside or urban and be it wealthy or poor, public houses are the hubs of our communities. Just as important is the fact that pubs and brewing are vital to the UK economy. Other hon. Members have mentioned the figures, so I will not repeat them, but the sector makes a huge contribution—I believe it is in excess of £20 billion. I believe that the Minister acknowledges that the proposals in the beer duty escalator would be revenue-neutral—they would not generate any additional revenue for the Treasury—so what can be the justification for continuing with it? The only answer I can come up with is that this is part of another public policy agenda—perhaps the Minister can enlighten us. Might it be an issue of public health? Perhaps the Government think it desirable to force up the price of alcohol to dissuade people from consumption. We have heard from various hon. Members that the consequence has actually been the reverse, so perhaps this is a perverse application of policy, resulting in the public buying beer, wine and spirits from the supermarkets in cut-price deals, and consuming them at home. There is a strong case for reviewing the escalator.

[Mr Jim Cunningham]

Does my hon. Friend agree that this issue affects not only pubs, but working men’s clubs up and down the country? We are in danger of destroying our cultural heritage, whereby the family could go out on a Sunday and have an entertaining afternoon in the pub as a family unit. That whole thing is being destroyed, as we have lost a large number of working men’s clubs in Coventry, as well as pubs.

[Grahame M. Morris]

I absolutely agree with my hon. Friend, and a similar point was made by my hon. Friend the Member for Midlothian. I am a strong supporter of working men’s clubs and the whole ethos of inclusivity, so I completely agree with that point.

In the limited time available to me, I want to mention something that has been alluded to by one of my colleagues: it is time for the Government to be much more proactive, not only to help the pubs struggling now, but to boost growth in the pub and brewing industry, as it could be a vital engine of economic growth. If that is the strategy, we have an opportunity to pick up the baton and run with it. The previous Government went so far as to appoint a Minister with special responsibility for pubs, as has been mentioned. That was my right hon. Friend the Member for Wentworth and Dearne (John Healey), who came up with some excellent ideas in a 12-point plan, which was agreed with the trade and CAMRA. I hope that the current Minister is familiar with that; it would be beneficial if he could build on it. That would create vital jobs and build on a great UK manufacturing success story.

Our British beer is famous around the world and our pub culture is envied by many countries. There is also the multiplier effect: one job in brewing supports one in agriculture, one in retail, one in the beer supply chain and 18 in pubs and clubs. We are all concerned about the wider economic implications and I urge hon. Members on both sides of the House to support the motion.

13:10

[Caroline Nokes (Romsey and Southampton North) (Con)]

I pay tribute to my hon. Friends the Members for Burton (Andrew Griffiths) and for Leeds North West (Greg Mulholland) for securing the debate. I agree with the hon. Member for Easington (Grahame M. Morris) that this is a powerful and important message for the Minister.

I also want to pay tribute to the right hon. Member for Southampton, Itchen (Mr Denham), my immediate constituency neighbour, who drew attention to the conversion of The Woodman pub in my constituency to a Tesco. I remind him that The Castle Inn has on occasion—I recollect this from the 2001 general election—played host to a polling station, which is evidence of a pub playing its role in the big society.

Historically, Romsey is a brewing town. I vividly recall from my primary school days the smell of the brew from Strong’s brewery hanging over the playground. On my 11th birthday the last brew began at Romsey brewery, but I am pleased to say that after a short gap Romsey is now host to a micro-brewery in Flack Manor, which brews some wonderful ales. The proprietor of Flack Manor, Nigel Welsh, and publicans in Romsey and Southampton North have forcefully told me that the beer duty escalator is deeply harmful to their commercial success. They are not alone; their opposition is shared by such august organisations as CAMRA and the Society of Independent Brewers.

The pub trade employs nearly 1,000 people in my constituency and contributes more than £14 million to the local economy, but publicans tell me that their trade is held back by a policy based on false assumptions about its social, economic and health benefits.

[Mr Robert Buckland (South Swindon) (Con)]

My hon. Friend highlights the contribution made to her local economy. In Swindon, 1,425 people are employed by the brewing and pub industry, which adds about £17.2 million to our local economy. The issue touches not just Romsey but every community in the country.

[Caroline Nokes]

My hon. Friend makes an excellent point. The economic argument is also flawed. As we have heard many times today, the amount of money raised through the Exchequer since the rise in beer duty in 2004 has failed to match the predicted levels of revenue. That has cost 5,000 jobs a year and VAT revenue has been lost through reduced beer sales.

The basic laws of supply and demand dictate that if the price of a commodity is increased, demand will fall. Demand for beer in pubs certainly has fallen. I am not suggesting that the beer duty escalator was the sole reason for the closure of pubs such as The Vine Inn in Stockbridge, or The Wheatsheaf in Braishfield, which has fortunately now reopened, but figures show that, despite the Olympic games and Euro 2012, in the three months to October this year pubs sold 117 million fewer pints than in the same period last year. I am not suggesting that nationally we are drinking less beer; we are simply changing our habits, giving an advantage to supermarkets over the traditional pub.

Before the introduction of the escalator, it was four times more expensive to drink in a pub than at home, but it is now 10 times more expensive. Beer sales in pubs are falling and the proportion of alcohol consumed outside that responsible, supervised environment is increasing. That brings me to my second point, about the benefits of the escalator to health and social policy. I believe that that merits close scrutiny. A recent study of the impact of alcohol pricing on consumption in Sweden produced some interesting results, showing mainly that increasing the price of alcohol in an attempt to reduce consumption might actually have the opposite effect, since drinkers who were buying more expensive brands simply switched to cheaper drinks and as a consequence bought and drank more. In other words, making it more expensive to drink in pubs simply pushes people to drink cheaper alcohol and possibly fuels binge drinking.

Binge drinking is a real and growing problem. Just last night Romsey police tweeted a picture of a massive quantity of alcohol they had seized from under-age drinkers. The beer duty escalator does nothing to prevent that. I give full credit to the local police for their action, and I encourage hon. Members to look at that photo on Twitter. It does not show alcohol bought at a pub—far from it. The cut-price bulk offers on alcohol in supermarkets often encourage parents to buy more, and that means easier access to large quantities of alcohol stored at home.

According to data from the World Health Organisation, alcohol consumption in the UK increased by approximately 4% between 1985 and 2003, whereas in Europe it decreased. Over the same period, alcohol-related harm has grown. For example, there were 8,758 alcohol-related deaths in 2006, twice as many as 15 years previously. The Government know this: in a preliminary assessment of the economic impacts of alcohol pricing policy, published by the Home Office in June 2010, the conclusion stated that duty increases are

“a ‘blunt instrument’ that does not target those drinkers who cause harms”.

The tax raises little revenue, causes unemployment and encourages binge drinking on cheap alcohol—and the taxpayer has to bear the burden.

I am on record as supporting minimum pricing for alcohol, but that does not in any way contradict my support for a review of the beer duty escalator. Major supermarket chains, such as Tesco, ruthlessly promote cut-price deals, so it is not the traditional public house, supplied by excellent local breweries, that promotes excessive drinking, but the supermarkets, which use their ability to buy and sell alcohol cheaply, often as loss leaders, to the detriment of the local pub, the local economy and the local community.

13:16

[Albert Owen (Ynys Môn) (Lab)]

It is a pleasure to speak in the debate and I pay tribute to the hon. Members for Burton (Andrew Griffiths) and for Leeds North West (Greg Mulholland) for securing the debate. I am happy to be a co-sponsor of the motion, which is very important.

I have only five minutes, so I cannot list the fine establishments in my constituency. I would be a fool to miss some of them out, so I will not attempt to list them. I do not have any major breweries, either, but I want to give the debate a different dimension and add something new. People have quite rightly promoted their public houses and breweries, but there is an important link between the breweries and the pubs—that is, between the suppliers and the distribution industry. In rural and periphery areas, they are vital in getting the product to the licensed outlets, whether they are clubs, pubs or hotels. In periphery areas such as mine, and in many other parts of the country, visitors make a very important contribution to the local economy. They use the public houses for their leisure activities and we need to put the multiplier effect into its proper context. Hundreds of millions of pounds are generated by the tourism industry and the public house is key to that. It is not just a local pub, but a centre of attraction for visitors.

[Mr Graham Stuart (Beverley and Holderness) (Con)]

The hon. Gentleman is making a very important point, particularly about the knock-on impact of pub closures in rural areas. The Great Newsome brewery, a small brewery in my constituency, has seen six of the pubs it supplies close in just the last two years. Evidence has shown that each pub puts £80,000 into the local community and makes the East Riding of Yorkshire a more attractive place for tourists. The hon. Gentleman is absolutely right and I hope that we will see a change of direction from the Government.

[Albert Owen]

I am grateful to the hon. Gentleman. I am very fond of going to Yorkshire. I went to university there and regularly visit York and the fine pubs in that area, so I might come to Humberside and the east coast at some point.

The suppliers are important small and medium-sized enterprises. A family business in my constituency, Joseph Keegan and Sons, wrote to me. It has been established for many years and supplies the area and its concerns are about beer duty and fuel duty, too. Many companies have been hit by the high levels of fuel duty when transporting their goods, so there is a double whammy of which the Minister must take note in his review.

The motion before the House is very moderate, because all it calls for is a review. The hon. Member for Leeds North West, in his measured contribution to the debate, was right to say that Members across the House have supported escalators when there was a need to do so. The beauty of an escalator is that we can get on or off it when the conditions are right, so the Government would not lose face by coming off it. A previous Conservative Government brought in the fuel duty escalator and then came off it when they thought that was necessary, so that can happen quite simply.

[Andrew Griffiths]

I agree completely with the hon. Gentleman’s point about the rising cost of fuel for brewers. He will also be aware of the rising cost of the raw materials that brewers must purchase and the falling incomes of households across the country.

[Albert Owen]

The hon. Gentleman is absolutely right. We are talking about the business of pubs, clubs, hotels and suppliers, but we must also consider the producers. Much of the problem is beyond the control of Governments and the terrible weather this summer has affected the price of raw materials, and that all has an impact on costs.

I want to talk, as many Members have done, about the social value of the pub as a hub in our towns and villages. My hon. Friend the Member for Hartlepool (Mr Wright), who is no longer in his place, said that Hartlepool once had the highest concentration of pubs in the country, a claim that many of us could make for our constituencies. In the port communities of Holyhead and Amlwch in my constituency there is certainly a tradition of pubs, but they are more than just public houses serving food and drink; they are social hubs. Many local sports clubs meet in the public houses, particularly in the winter when they cannot train. I have known one or two rugby and football clubs that spend an awful lot of time in pubs; they get their business over with very quickly and then get on to the drinking and the sandwiches. The pub is an important place for people to meet in those communities.

I pay tribute to the hon. Members who tabled this important motion. Yes, it is specifically about beer duty, but I am sure that the Minister and the Treasury will take on board all the points that have been made today. It is nonsense to impose a duty that does not make any money for the Treasury. That is the nub of the debate. But many other issues have been raised by Members in their contributions. It is worth emphasising the importance of the pub, but we must not forget the supply chains that help the pub, hotel and catering industries across the United Kingdom, which are major contributors to the British economy.

I will draw my remarks to a close as I know that other Members wish to speak. I do not want to walk past pubs in my constituency with “For Sale” signs outside, and I do not want to see empty pubs; I want to be invited by members of the local community to open a pub, because I want to see a renaissance of the great British pub in both rural and urban communities across the country. The Government can make a difference by having the review and looking at its results and, if it shows that the duty is cost-neutral or loses the Treasury money, they will have my backing for coming off the escalator and putting the emphasis on the great British pub.

13:23

[Peter Aldous (Waveney) (Con)]

I am grateful to my hon. Friends the Members for Burton (Andrew Griffiths) and for Leeds North West (Greg Mulholland) for securing the debate and for their hard work and to the 104,000 people who signed the e-petition. I wish to speak in favour of the motion, and there are compelling reasons for doing so. First, if we do nothing and carry on regardless, an iconic British business will wither on the vine—or should I say the hop? Secondly, small businesses will close at an accelerating rate, with a devastating impact on individuals, families and communities, both urban and rural. Thirdly, it is important to base fiscal policy on well-founded and up-to-date research. Times have changed significantly since 2008.

Indeed, the face of the industry has changed dramatically over the past 30 years. In East Anglia, great names such as Lacon’s, Bullard’s, Mann’s, Tollemache and Cobbold have long gone. Visionary and iconic businesses remain: Adnams, St Peter’s brewery and Green Jack in my constituency, the latter being the most easterly brewery in Britain. We owe it to them to promote a level playing field on which they can develop their businesses, play a full role in the economic recovery and create new jobs.

If we go on as we have been doing, we will kill the goose that lays the golden egg. Beer duty has risen by 40% since 2008, yet the pub trade has shrunk by a third over the same period. Britain pays over 40% of EU beer tax but consumes only 13% of beer sold in Europe. Investment in the beer and pub sector has shrunk dramatically, from over £2 billion in the late 1990s to £600 million in 2010. A sector that employs 1 million people, often young people, needs nurturing, not suffocating.

If there was a rationale for introducing the escalator in 2008, it has long since gone. Time are very different: inflation, VAT and input costs are all higher; there has been a poor harvest; energy costs are higher; and these are compounded by a fall in household incomes. The escalator today is in many respects a straitjacket; it is no longer fit for purpose in these straightened times.

It is important to bear in mind the unique nature of the industry, the effect of the punitive form of taxation and its potential for growth if properly nurtured. It is very much a British industry, with a supply chain that creates a significant number of jobs. As we have heard, one job in brewing supports one job in agriculture, one job in retail, one job in distribution and 18 jobs in pubs and clubs. In my constituency, more than 1,200 people are employed directly or indirectly as a result of the industry, and there are nearly 100 pubs and the industry puts £26 million into the local economy. Some 85% of pubs are small or medium-sized enterprises, the foundation stone on which we must build the recovery. They are particularly vulnerable to rises in duty, being less able to absorb duty and other cost increases. It is also important to take into account the community and social benefits of pubs, both in villages and in urban areas.

Pubs are under attack on all fronts. The landlords who lease from pub companies find themselves confronted with excessive rent increases. Landlords find themselves strangled by red tape; lock-ins have long since gone, having been replaced by late-night sessions of burning the midnight oil and completing VAT returns. Many are told, “You don’t want to rely on beer; you want to get into food.” Yet landlords find themselves competing on an unlevel playing field with supermarkets as they have to charge VAT on their sales.

[Andrew Percy (Brigg and Goole) (Con)]

On that point, I commend the Percy Arms in Airmyn, a pub that has transformed itself, but purely around food, because making money out of beer has become almost impossible.

[Peter Aldous]

My hon. Friend makes a good point.

It would be churlish not to commend the Government for the good work they have done. They have made it easier for pubs to put on live events, they have introduced the community right to buy through the Localism Act 2011, and the forthcoming proposed introduction of a minimum unit price for alcohol will help to provide a level playing field.

However, the elephant in the room remains. This brings me back to the motion and the need for a full review of the economic and social impact of the escalator before decisions are made in next year’s Budget. Tax policy must be underpinned by proper research. The research that has been carried out shows that there will be devastating unintended consequences if the escalator is retained. Oxford Economic Research Associates has shown that if the rise goes ahead, there will be 5,000 job losses and the additional beer duty received will be offset by a loss of employment, lower revenues from other taxes and an increase in social security spending. I urge the Government to carry out the review with all haste.

13:28

[Sir Bob Russell (Colchester) (LD)]

I wish to pay tribute to Mr John Parrick, the doyen of Colchester’s publicans and the town’s longest-serving landlord, who in little more than three months will celebrate 27 years as “mine host” of the Odd One Out public house, which I had the honour to open officially on 16 February 1985. The former Mermaid pub had been shut almost a year earlier by the late brewers Ind Coope and John Parrick, a former military policeman who at the time was a staff sergeant at the military corrective training centre in Colchester, left the Army and took the bold step, alongside his wife Bridget, of taking on the abandoned hostelry, which he has turned into an incredible success story, a dream establishment for those who appreciate real beer and real cider.

Under Mr Parrick’s stewardship, The Odd One Out has won many local and regional awards from the Campaign for Real Ale for its range of real beers and ciders. His is a traditional pub, which resonates with a bygone age and has been in the “Good Beer Guide” for 25 consecutive years. However, such is the plight of community pubs—and not exclusively because of the high taxation imposed by successive Governments—that Mr Parrick’s reward is lower than the minimum wage, given all the long hours that he is putting in. He made that clear to me last night that, having studied the economics and the balance sheet. The situation must be even more dire for many other community pubs that do not have the niche appeal of The Odd One Out, particularly if they are tied to the onerous terms of pubcos and brewers.

I hope that this debate will lead to the Government’s restructuring of the taxation on alcoholic drinks. If the coalition is serious about localism, it should know that the local pub is an important part of many of our urban and rural communities. Fiscal policy should be tailored to help small community businesses, including neighbourhood public houses, which are shutting at the rate of a dozen or so every week.

Sadly, a cut in the tax levied on beer sold in community pubs is too late to save The Maypole and The Drury Arms in my constituency, which both shut earlier this year—or, for that matter, The Beer House and The Clarendon, which are currently closed, although many hope that the closures will be temporary. There is uncertainty at The Britannia, which shut recently, although there is talk of its reopening as a gastropub, and at The Lord Nelson, which displays a “For Sale” sign.

I am grateful to Colchester historian Mr Jess Jephcott, author of “The Inns, Taverns and Pubs of Colchester”; he has provided me with useful comments about the decline of the local pub, that great British institution, because of the actions and inactions of successive Governments. Today’s debate about the beer duty escalator must not be viewed in isolation as we look at this sorry saga. Mr Jephcott is an authority on public houses, both historic and contemporary, so I value what he says. He told me:

“Whilst the Beer Escalator issue is an important one, and does play a part in the loss of our pubs, there is a far more damaging issue—that of pubcos imposing unrealistic terms on their tenants. I have this week been reading about Vince Cable’s frustrations with self-regulation over this. It is the pubcos that are killing our pubs, to my mind.”

With great emphasis, he added:

“Tenants are tied to the pubco and cannot shop around and negotiate prices. That is precisely what is killing many of our pubs.”

He says that free houses, or those free of tie arrangement, thrive:

“Cases in Colchester are The Odd One Out, Fat Cat, etc. No tie, no problem.”

Mr Jephcott concluded, with a sigh:

“This is our heritage as well as our way of life. Yet Colchester is plagued by drunks who get drunk before they go out and by bars that make matters worse with their special deals to get them drunker.”

That scenario, of course, afflicts towns and cities throughout the country. Successive Governments have failed to address the scandal. Taxation policies have made matters worse. We need to amend the tax levy on beer sold in our traditional public houses. We should have a tax-neutral approach to keep the Treasury happy and bring huge social benefits, including job retention and creation, rather than there being the loss of jobs that we continue to witness in the sector.

Most publicans of neighbourhood and village public houses run responsible establishments. Their customers should be rewarded, not financially penalised because of the irresponsible marketing carried out by supermarkets and mega-drinking establishments.

I should declare an interest: Adnams Broadside, brewed on the Suffolk coast at Southwold, is my favourite tipple. Some have suggested that I should promote the former Essex brewer Ridley’s Old Bob beer, which has now been absorbed within Greene King’s product range, but I will stay loyal to Adnams and Broadside.

In conclusion, I should say that this debate is taking place in British pub week. I commend those who have secured the debate. I shall resist the temptation of listing every public house in my constituency, but they are all doing a grand job and I hope that they can all be saved.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I will have to drop the time limit to four minutes. I ask hon. Members not to make interventions so that we can get everybody in.

13:33

[Pauline Latham (Mid Derbyshire) (Con)]

I congratulate my hon. Friends the Members for Burton (Andrew Griffiths) and for Leeds North West (Greg Mulholland). I know that my hon. Friend the Member for Burton has a large brewery in his constituency, but I want to speak up for micro-breweries. My understanding is that there are more micro-breweries and members of CAMRA in Derbyshire than anywhere else. In Derby we also have a beer king, whose ceremonial role includes opening the annual beer festivals in Derby and representing Derby when the city mayor and others go to our twin city of Osnabrück in Germany.

In my constituency of Mid Derbyshire, the brewing and pub sector is a vital and dynamic part of the local economy. It creates jobs, adds to the local economy and is at the centre of the hospitality industry, our cultural heritage and the social life of every community. A world heritage site runs through my constituency.

The beer and pubs industry is a vital part of the local economy in Mid Derbyshire. There are 75 pubs and three micro-breweries, which generate 1,076 jobs—some 307 of those are filled by young people between the ages of 16 and 24. The point about the employment of young people is important, because in spite of recent good news on the employment front, people in that age group continue to find employment very hard to come by.

Some 65% of staff at the Derby Brewing Company are under 25; the company also operates entry-level management schemes that have promoted many promising young people from bar-staff to senior-manager level, none more so than at my local, The Queen’s Head in Little Eaton, which has recently reopened. The brewery is working towards brewing real ales with a much lower alcohol content; it is working down towards a 4% beer.

This debate is critical to business in Derbyshire. Representatives of the Derby Brewing Company, which owns three pubs, have told me that since the introduction of the beer duty escalator, excise duty has increased by 42%—almost 20p per pint.

My husband and I are supporters of the Campaign for Real Ale because we believe that going to the pub, particularly the local, is a core British tradition and so is enjoying great beer, although personally I am not a beer drinker. Unfortunately, however, beer sales in pubs and clubs have fallen by 23% and more than 6,000 pubs have closed. I believe one of the main reasons for that is that beer taxation now costs the average pub around £66,000 per year. I strongly believe that those unintended consequences go completely against the Government’s strategy for economic growth. The Treasury forecasts a small increase in duty revenues from the policy—so small that no additional revenue is predicted in the Budget document.

I recognise that we have alcohol-related problems in our society that we need to tackle, as they cost the NHS billions of pounds every year. There is also the crime and disorder associated with alcohol and the fact that alcohol is the second biggest risk factor for cancer after smoking. But trying to tackle those problems with increased tax at this time is not the right way forward. The issue is having a profound effect in Derbyshire; pubs continue to close across the county. Brewing and pubs are fundamental to British industry, generating a huge amount locally and nationally to GDP. In these troubled times, local pub owners are urging me, as their MP, to ask for their industry to receive some relief from the excessive duty increases. In Derbyshire, a change to the policy could make a big difference and safeguard jobs.

13:37

[Richard Fuller (Bedford) (Con)]

I very much welcome this debate and would like to draw attention to two aspects. I want to call for the economic and social impacts, both of which are equally important, to be covered in the review.

On the economic impact, there is the principle of the automatic above-inflation tax increases enshrined within the escalator principle. I shall address myself directly to the Minister, who is new to his post. I do not wish to test his mettle today, but he will be keen to make an impact so I ask him this. What ethics lead to a Government’s presuming that they should increase taxation—automatically, year on year—on such staples of life as beer and fuel? I can think of no more regressive taxation than to continue with above-inflation increases on those items.

We have already had a debate on the automatic fuel duty escalator; I am sure that the Minister heard the strong voices of those on the Government Benches arguing that the Government should abandon that policy. The same applies to beer duty. Many hon. Members have talked about the economic impact of the brewing sector in their constituencies. My constituency of Bedford is home to the largest family-owned brewery, Charles Wells, maker of Bombardier beer. What could be more patriotic than drinking Bombardier beer on St George’s day—or, indeed, any other day of the year?

Brewing is now taxed at 50% of its turnover. A 50% tax on brewing turnover will almost certainly tax our brewers out of existence. This is not an issue that the Treasury can avoid, and that is why so many hon. Members have spoken in favour of the motion.

[Charlie Elphicke (Dover) (Con)]

Will my hon. Friend give way?

[Richard Fuller]

I will not, if that is all right, because time is limited.

I would like to mention the social aspect of pubs. As part of “MP in a pub” week, which must be one of the easiest campaigns to organise that I have heard of, I met Nickie and Roger McGlory at The Half Moon. I am sorry for the impact on the profitability of The Half Moon during my session there! I have also spoken to Nigel and Sue Anstead at The White Horse, who, every single week, do something to support local charities and endeavours. This Saturday, many of us will be joining Paul Davies at The Cricketers Arms as Bedford Blues rugby club gets ready to thrash Newcastle in a very important game. Whether it has to do with sports or charities, pubs are an essential part of what we do in our communities.

The vital point, as several hon. Friends have said, is the role of pubs in ending pre-loading. When the Minister deals with this issue, will he also consider the imposition of minimum pricing such that the health benefits can more than outweigh the reduction in revenues from scrapping the beer duty escalator?

13:41

[Dan Rogerson (North Cornwall) (LD)]

It is a pleasure to follow the hon. Member for Bedford (Richard Fuller). As a Cornish exile in Bedford for a number of years, I am well aware of the great contribution that Charles Wells, and Wells and Young’s, make to the economy. I once saw the Blues beat Newcastle at Goldington Road, and I wish them every success this weekend.

Beer is part of the culture of this country. I do not mean that in the sense that the tabloid press would have us see it in focusing on the sad events we see on streets around the country, when most of the problem is not due to beer but to alcopops and novelty drinks, irresponsible promotions in the night-time economy, and people pre-loading before they go out in the evening. I am talking about the centuries of beer culture that we have in this country in producing an incredible, natural product. When the water was not safe to drink, beer was, and people would brew it at home. In the Victorian era, there was a huge growth in regional and family brewers, which—those that remain—are well- loved institutions in the parts of the country that they inhabit.

The pub is very much at the heart of the community, whether in a village or in an urban neighbourhood. In North Cornwall, they are where charitable events take place and huge amounts of money are raised, where clubs and societies meet, and where the fabric of the local community is stitched together. I was recently at The Bullers Arms in Marhamchurch, where the owner of the pub, having lost his most recent tenant, is concerned about its future and putting forward plans to build housing on part of the site. People in the village are very worried, but I know that by coming together they will guarantee the future of that pub and keep it there.

I am very fortunate to have in my constituency such small, innovative brewers as Penpont and Tintagel, and, more recently, Harbour brewery on the edge of Bodmin, and Frys. That is adding to the diversity of the beers on offer to local people and visitors to the area alike. We also have a great success story in Sharp’s, which was acquired a couple of years ago by Molson Coors. I was apprehensive about that. I feared, as did many local people, that it would buy the brands and shut the brewery down, but it did not. Instead, it has invested in those brands, and Doom Bar is now a fast-growing brand across the country. It has also created jobs for young people who are now getting into a career in brewing. It has brought increasing numbers of skilled jobs to the low-wage economy of North Cornwall. We need to underpin the industry by supporting pubs but supporting brewing too.

We have heard about the growth in wine drinking, which has happened without the need for any economic support. Can you imagine, Mr Deputy Speaker, a similar situation in France or Italy, with the wine industry needing to have a debate to try to get support from its own Government? I cannot imagine such a scenario, so why do we need to have a debate about the urgent need to support our brewing industry, which is the equivalent in this country?

Because our beer industry is so innovative and forward looking, with the growth in craft brewing, many people from across the world are coming here to learn these skills. As a result, we now see craft brewing in places such as Italy, America, Australia and New Zealand, where people look to the styles of beer that we brew—the stouts, the milds, the IPAs, and all those kinds of products. We must be proud of the contribution that our beer is making to the culture of the world, let alone the culture of this country. It would be such a small thing for the Government to take account of that by getting rid of this punitive and unrealistic levy on a core industry that could create many more jobs and do far more to underpin the lives of our towns and villages. I urge the Minister to listen to what everybody has said today.

13:45

[Richard Drax (South Dorset) (Con)]

Thank you, Mr Deputy Speaker, for calling me to speak in this debate. It is a pleasure to be tail-end Charlie, and to follow the hon. Member for North Cornwall (Dan Rogerson).

[Chris Ruane (Vale of Clwyd) (Lab)]

You’re not tail-end Charlie!

[Richard Drax]

In that case, I am probably the gunner instead.

It is a great sadness to me that a great friend of mine, David Woodhouse, who was the boss of a brewery in Dorset, has died before the beer duty escalator was removed, as I hope and believe that it will be. Aged 49, he died prematurely of a heart attack. This tax was one of his main concerns, fears and worries, because, sadly, every time it went up, he had to lay people off.

The beer duty escalator provides the perfect illustration of the law of diminishing returns: the higher the duty, the lower the volume of beer sold. Yet despite the evidence, brewing has been cruelly lumbered with a 2% above-inflation increase every year since 2008. That means a 27% increase in beer tax in the life of this Parliament alone. Beer taxation now costs the average pub about £66,000 per year, with 35p in every pound taken over the bar being passed on in taxes, most of them duty, and while beer prices have risen, sales have fallen sharply by 23%. Over 6,000 pubs, or thereabouts, have closed, and a pint of beer is, sadly, fast becoming an unaffordable luxury. In fact, the Office for Budget Responsibility forecasts very limited additional revenue from beer tax in the next two years, and the wider costs—the loss of jobs and reduced VAT and corporation tax payments—have not been accounted for.

In my constituency, more than 2,000 people are employed in the brewing and pub trade. They form a small but vital part of the quarter of a million people who work in the sector in rural constituencies. The Dorset brewery that I mentioned, Hall and Woodhouse, has just invested £5 million in a new brewery, which will safeguard more precious jobs. Its reward? Yet more duty on a pint of beer. In the struggle for growth, how can it make sense to strangle this vital part of the UK economy?

Pubs have historically been a focal point for a community—a place to meet, eat, drink and socialise. Our naturally brewed ales are world renowned, and pubs are high on every tourist guide’s must-see list. Smaller, tenanted pubs, in particular, are suffering, and each new rise in duty is nothing less than a kick in the teeth. We are penalising one of Britain’s oldest and most cherished industries. This is not a recipe for growth—something that this Government have banged on about day after day—nor is it fair. As we have heard, UK consumers now pay 40% of the total EU beer tax bill, yet we consume only 13% of the beer. I could argue that perhaps the EU officials are guzzling too much, but that would be facetious. We are driving people out of pubs, where, in the main, law-abiding citizens consume a low-alcohol drink in a controlled environment.

I see that my time is running out because, being the gunner, we are now down to four minutes. I shall therefore end by making this appeal to the Minister: on behalf of the breweries and all those in the business, not least in my constituency, and my friend David Woodhouse, who has sadly passed away, please get rid of this dreadful tax.

13:49

[Jane Ellison (Battersea) (Con)]

Thank you for calling me to speak, Mr Deputy Speaker. I am now officially tail-end Charlotte.

I want to make two brief points, the first of which concerns the nature of the debate, which is an ideal use of Back-Bench time. I congratulate the hon. Members who secured it from the Backbench Business Committee, of which I am a member. The Government have reasonably taken the view that, for the most part, Thursday debates are advisory and give them a steer on what people think about policy, and this really is an advisory debate. It has painted a picture—a vivid mosaic—of the micro-economic growth that is taking place in lots of constituencies all over the country, and many hon. Members have spoken on behalf of enterprises that are far too small to employ clever lobbyists like so many of the big industries do. It is therefore an ideal use of Back-Bench time to allow hon. Members to talk about the incredible enterprises that are growing and generating wealth.

In Battersea, Sambrook’s brewery, which I saw start when I was a parliamentary candidate in 2008, has grown. It is employing more people and brewing more beers. It has gone from being an enterprise that started in 2008 to winning a world beer award last month. We have heard from other hon. Members that that is happening all over the country. Sixty-eight per cent of the small breweries—the micro-breweries—in this country are investing and growing and reporting that they are planning for growth. This is an important area for driving growth, but it is in danger of having too small a voice, because we perhaps tend to focus on bigger industries with more organised lobbies. We as Members of Parliament are, I hope, the organised lobby for our small enterprises—our pubs, small breweries and micro-breweries. I hope that that is what we have done today by painting a picture of lots of individual enterprises throughout the country that, in their own way, are making important contributions to economic growth in their area.

In 2012, the number of breweries in Britain has exceeded 1,000 for the first time since the great war, which is extraordinary, but that success story cannot continue unless there are pubs in which to serve the ale. I therefore hope that the Minister will consider the picture that has been painted and use this opportunity to say that this is the very moment to back this important engine of economic growth in Britain.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I call Graham Evans.

13:51

[Graham Evans (Weaver Vale) (Con)]

Thank you, Mr Deputy Speaker.

[Chris Ruane]

Are you the penultimate?

[Graham Evans]

Was that a penultimate, or just a Charlie?

I must confess that I have stopped many barrels of beer going sour over the years. Indeed, I met Mrs Evans in my local pub, The Church House inn in Bollington near Macclesfield, when I was a wee slip of a lad—I was 20-something—serving behind the bar. My mother worked in a pub, by brother and sisters worked in a pub and my father spent most of his time in a pub, so it is fair to say that I grew up in pubs.

Many hon. and right hon. Members have mentioned socialising and communities during this excellent debate, which was ably secured by my hon. Friend the Member for Burton (Andrew Griffiths). As has been said, pubs are often at the heart of the community. They are not just watering holes, but the glue that binds the fabric of local society. The decline in the number of pubs across Britain is, rightly, a source of concern for us all, so I welcome the steps that the Government have already taken to halt that decline. The right to buy has given many local communities the agency to control their own environment, and I sincerely hope that the rate at which pubs are closing continues to drop, as it has done in the past two years.

We are here to discuss the economic value of the beer and pub industry. It has contributed £21 billion to the national economy this year, with some 60% of that coming from beer sales alone. It is understandable that groups such as the Campaign for Real Ale believe that the impact of the beer duty escalator will result in reduced beer sales and a reduction in profit for our hard-working publicans.

We are all aware that society’s relationship with alcohol has changed. With less money in people’s pockets, the appeal of cut-price booze from supermarkets is clear. Many hon. Members have touched on the social and health implications of that change in drinking habits. I welcome the Government’s commitment to a minimum unit price, which will encourage responsible drinking and, I sincerely hope, realistically allow pubs to compete with supermarkets.

It is also worth considering that the previous Government increased beer duty by 60% while spirits duty increased by a mere quarter. Unit for unit, spirits are becoming cheaper and cheaper, and their increased consumption makes it much harder to encourage responsible drinking.

Of course, we are in a difficult economic position. Alcohol excise duty makes an important contribution to reducing our inherited deficit, but it is clear that the escalator is of concern to publicans, constituents and hon. Members. I therefore urge the Minister to carefully consider the duty’s impact on the profitability of pubs, responsible drinking and the future of local communities before making recommendations for the 2013 Budget.

13:54

[Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)]

I first congratulate the Members who secured this important Backbench Business debate. We have heard a number of thoughtful, well-informed and impassioned contributions from hon. Members of all parties. I am sure that the various groups in the beer and pub industry that have provided briefings, met with hon. Members and given them information ahead of the debate will be pleased that their comments and concerns have been not only taken on board by Members from all parties, but reflected during the course of the debate. By my reckoning, there have been 20 speeches plus numerous interventions, and I think that that demonstrates the level of concern and the interest in this issue. The question now is whether the Government will not only take those concerns on board, but take some action in response to them. I look forward to hearing what the Minister has to say.

As we have heard, Backbench Business debates are important because they give everyone the opportunity—perhaps in a less partisan way—to explore issues and to come together and agree on certain things that need to be done. We may have differences of opinion from time to time, but none the less we are able to give advice and guidance on how we would like the Government to take things forward.

As we have heard, the beer and pub industry is a vital part of the economy, both nationally and locally. Many hon. Members have mentioned how local establishments in their areas contribute to the community. I will say more about that shortly.

In 2009, the industry paid more than £6 billion in tax, and the average pub will employ—we have heard this figure repeatedly today—about 10 people, many of whom will be young people who are trying to find their way into the job market or who are having difficulties in finding work at present. We have also heard that, according to the Beer and Pub Association, nearly £21 billion a year is contributed to the UK economy by the production and sale of beer. Worryingly, CAMRA’s latest figures—it released them only today—show that 18 pubs close every week across the UK. The hon. Member for Burton (Andrew Griffiths) referred to that in his opening speech and the point was repeated and reinforced by a number of other hon. Members, including my hon. Friend the Member for Hartlepool (Mr Wright), who gave an interesting history lesson on the number of pubs that used to be in his constituency. I am sorry that I have not yet had the opportunity to sample any of them; perhaps he will invite me.

[Mr Iain Wright]

indicated assent.

[Cathy Jamieson]

I think that I have just been invited. In order to take my duties as a shadow Minister seriously, I have now identified a whole list of areas throughout the UK where I have not yet had the chance to sample the local hostelries. It would be remiss of me if I did not plan a tour at some point over the coming months.

To return to the important points, I have also heard from my local publicans and CAMRA members. Some of them spoke to me about the beer escalator in particular at the recent Ayrshire real ale festival, which was held in the constituency of my hon. Friend the Member for Central Ayrshire (Mr Donohoe) at which I had the very difficult Friday afternoon task of judging one of the beer contests. I am sworn to secrecy as to which beer won the Scottish heat. All will be revealed in due course. CAMRA members and, indeed, many other people who had travelled to the beer festival took the opportunity to make their case to me.

We have heard about the e-petition, which now has more than 104,000 signatures. I am sure that all Members appreciate the work of both the British Beer and Pub Association and CAMRA in providing information by constituency, and I believe that important information from Oxford Economics has been circulated to all of us, showing how the beer and pub industry affects our own areas.

In my constituency, which is next door to that of my hon. Friend the Member for Ayr, Carrick and Cumnock (Sandra Osborne) and not dissimilar from it, there are about 88 pubs. As she said, they provide an average of £80,000 a year to the local economy, and they support about 894 full and part-time jobs. I am aware that that is not as many as in the Economic Secretary’s own constituency, where I understand there are slightly fewer pubs but also a brewery. I am sure he is well aware of the importance of jobs in the industry to his local area, as I am in my area.

I want to put the Opposition’s position on record. I do not want to introduce a discordant note, because everyone has spoken in favour of the motion so far. I hope that the Economic Secretary will take that on board. However, it is incumbent on me to explain why we will support the motion. [Interruption.] I hear somebody say from a sedentary position that it is because we are in opposition, but I have some important points to make that are pertinent to the debate.

A number of Members have referred to the impact of VAT, and we believe that the Government made a mistake in increasing it back in January 2011. That hit families hard, costing a couple with children the equivalent of £450 a year. It also hit confidence, cost jobs and undermined the economic recovery.

The extension to the beer duty escalator was introduced when VAT was 17.5%. The rise in VAT was equivalent to a 12% increase in duty, and in 2011, the coalition Government’s first full year, there was the biggest ever pence per pint annual increase in the beer tax. A couple of hon. Members have mentioned that the VAT rise increased the price of a pint in a pub by some 5p but the price of a can of beer in a supermarket by less than 2p. It has hit pubs harder than supermarkets, and it risks hitting the pub trade harder than the duty increases have.

As hon. Members will know—we have said it in a number of previous debates—as part of the five-point plan for growth and jobs that we set out back in 2011, we called for a temporary VAT cut back to 17.5% until the economy was growing strongly again. We wanted to ease the squeeze on families and ensure that the economy was moving. That would have had an effect on the price of beer in pubs, and I hope that the Government will take account of VAT when considering whether to support the motion.

We will not oppose the motion, because we believe that there should be a review of the beer duty escalator and its impact on the economy and jobs in the pub trade. It would clearly need to include an examination of the impact of VAT as part of the wider debate and discussion. As a number of Members have said, VAT amounts to half the total tax paid on beer in pubs. A review would also provide an opportunity to consider other issues that have been raised today, including barley prices.

A number of Members, including my hon. Friend the Member for Midlothian (Mr Hamilton), have made the point that pubs are at the centre of our local communities. He had been doing some research—desk research only, obviously—by comparing prices in local establishments and supermarkets. I note that Dalkeith miners club is a responsible establishment that is well worth visiting.

A number of hon. Members have mentioned their concerns about the traditional community-based pub disappearing, not only in the rural areas to which many Members have referred but in urban ones, where the issues are slightly different. In rural areas, many pubs are closing because they find it difficult to sustain custom for a range of reasons. In urban areas, as we have heard from a number of Members including my right hon. Friend the Member for Southampton, Itchen (Mr Denham), supermarkets, off-sales and other forms of licensed trade are appearing instead of the traditional pub. As Members have said, that changes the culture and our approach to alcohol and can bring different problems to local communities. Those points have been made powerfully during the debate.

I realise that time is short, so I will conclude. I ask the Minister to give thought to all the points that have been made today, and specifically to ensure that he links up with Ministers in the Department for Business, Innovation and Skills to ensure that the wider economy of the pub trade and the brewing industry is seen as an important issue for BIS, not simply a matter for the Treasury.

14:05

[The Economic Secretary to the Treasury (Sajid Javid)]

I congratulate my hon. Friends the Members for Burton (Andrew Griffiths) and for Leeds North West (Greg Mulholland) on securing what has been an excellent debate, and on the excellent work that they do through chairing the all-party beer group and the all-party save the pub group respectively. I also thank all Members who have contributed to the debate—I, too, counted 20 Back-Bench colleagues—as well as the 104,000 people who have signed the e-petition and all Members who are in the Chamber today.

[Richard Graham (Gloucester) (Con)]

Does my hon. Friend agree that the British brewing sector, British pubs and the British people have paid a heavy price for the previous Government’s beer duty escalator? May I urge him to hold a review and then do what Treasury Ministers have done to the previous Government’s fuel duty escalator, which is to stop it? In that way, he will deserve a celebratory pint from all my constituents in Gloucester, a pint of beer from the—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. The Minister will not have time to drink the pint if we have such long interventions.

[Sajid Javid]

I thank my hon. Friend, and I will come on to that point.

The Government really do recognise the importance to the British economy of pubs and brewers. I fully support the industry, and I know that Members of all parties would like to see it prosper. We have heard a lot from hon. Members about beer duty, but let us be clear that the previous Government introduced the escalator. They increased beer duty by 60% while they were in office, and in fact for the poorest households it went up by 80%. That was the inheritance that we had to deal with. At the same time, as we all know, we were burdened with a huge budget deficit of £159 billion, or 11% of gross domestic product, which was greater than that of any other developed country. That inevitably meant that the incoming Government had to take some difficult decisions that the Labour party dodged. We had to deal with that legacy.

We set out a clear plan to deal with the deficit, part of which was the planned increase in beer duty rises until 2014-15, about which we have heard so much today. We have announced no changes to that policy. Cancelling the planned 2% duty rise represented by the escalator portion of beer duty would cost £35 million next year and £70 million the following year. If that tax were cancelled, the revenue would have to be recouped one way or another, either through further public spending cuts over and above what is already necessary or by finding increases in other taxes or duties.

[Richard Drax]

The whole point is to reduce taxation and thereby encourage growth and employment. That will create wealth, which will inevitably end up in the Treasury’s pockets. Is that not the Conservative way forward for the long term?

[Sajid Javid]

My hon. Friend makes a good point, but I think he will accept that the Government need to raise taxes to pay for public services in one way or another. However, we continue to keep all taxes and duties under review, including the ones that have been discussed today, and we regularly monitor alcohol duties to ensure that we are on top of their impact on the industry and consumers.

[Cathy Jamieson]

I hear what the Minister says about keeping matters under review, but in my experience that sometimes means keeping something on a shelf. Is it not time to dust down some of that information and hold a review that reaches a conclusion?

[Sajid Javid]

I assure the hon. Lady that, as an incoming Minister who is new to this portfolio, I plan to keep nothing on the shelf. I will be looking at everything, which includes all duties and taxes for which I have responsibility. That would be a sensible thing for any Minister to do.

Let me say a word about the importance that the Government attach to pubs and brewers in the wider economy. The sad truth is that pubs have been closing for many years, and that decline has been influenced by many factors, not just alcohol duty. Lifestyles and consumer tastes are changing and individuals have increased choice in their leisure activities. Those things have an impact, and those factors—not just alcohol duty— determine the size of the pub sector. The number of pubs continued to decline in the early 2000s, despite relatively flat alcohol duties in real terms. The Government are rightly doing a lot to support pubs and brewers, and those businesses will benefit from many decisions taken in the tax system and elsewhere.

Let me give a couple of examples. Changes to business rates mean that small pubs can benefit from small business rates relief, or rural rates relief. The Government have extended the small business rates relief holiday until March 2012. We have also legislated to allow local authorities to give grant discounts to businesses, including pubs and brewers, as appropriate.

Other wider actions will also benefit the pubs and brewing industry, and the cut in corporation tax from 26% to 22% by April 2014 will help brewers. Small businesses such as pubs benefit from the small profits rate, which has fallen from 21% to 20%. The change in machine gaming taxation will affect the majority of pubs. From February 2013, machine games duty will replace the current system of taxation on gaming machines, and more than 70% of pubs will benefit from that move to MGD through reduced tax liabilities.

My hon. Friends the Members for St Austell and Newquay (Stephen Gilbert) and for Mid Derbyshire (Pauline Latham) mentioned small breweries’ relief, which helps small brewers up and down the country, and that is vital to our economy. The right hon. Member for Southampton, Itchen (Mr Denham) mentioned entrepreneurship. The Government have supported entrepreneurship by lowering beer duty for small producers, and helping small brewers invest and grow. There were 394 small breweries in 2002 when that relief was introduced, and today there are more than 730. My hon. Friend the Member for Bristol North West (Charlotte Leslie) mentioned the Live Music Act 2012, which came into force on 1 October and is already making it easier for pubs to play live music. The Government have launched a £90 million support programme to help eligible community organisations take on the community ownership and management of assets that are important to them, including pubs.

A number of hon. Members, including the hon. Member for Midlothian (Mr Hamilton) and my hon. Friend the Member for Harrow East (Bob Blackman), mentioned the Government alcohol strategy. Alcohol drunk in moderation can have a positive effect on the well-being of adults, but excessive consumption has negative consequences on both individuals and wider society. The Government published their alcohol strategy earlier this year, which includes plans for minimum unit pricing. Setting a floor price for alcohol will prevent heavily discounted alcohol from being sold in supermarkets and off licences. Raising the price of cheap alcohol will help tackle excessive alcohol consumption, and I hope that pubs will benefit from minimum unit pricing once the demand for cheap alcohol in the off-trade has been tackled.

The Government recognise the importance of pubs and brewers to their local communities and the wider economy. We have done much to try and support that industry—I have given a few examples, which I hope was helpful—and it makes sense for us to keep looking at other ways to continue that support.

May I thank again those who sponsored the debate and all hon. Members who took part, as well as all those who signed the public petition? In conclusion, I will respond to a comment that was made by the mover of the motion, my hon. Friend the Member for Burton at the start of the debate. If I remember his words correctly, he challenged me to become known as “the Minister who saved the great British pub.” I am very tempted, although I would have to compete for that honour with the Under-Secretary of State for Communities and Local Government (Brandon Lewis), who has responsibility for pubs. I am sure, however, that we can work well together and perhaps jointly take that title.

I assure all hon. Members who have contributed to the debate that I have been in listening mode. This debate has been valuable and showed just how important debates tabled by the Backbench Business Committee can be. I will take on board a lot of messages from the debate, and ensure that the Government do even more to help the pubs and the brewing industry.

14:15

[Andrew Griffiths]

I thank all colleagues who have contributed to the debate so passionately and knowledgably, and I thank the Economic Secretary to the Treasury and the Minister responsible for community pubs, who has been present throughout. Both I and my colleague, the hon. Member for Leeds North West (Greg Mulholland) have been encouraged by the positive way in which both Ministers have engaged with the issue in the few short weeks they have been in office.

We are clearly disappointed that the Minister was not able to give us more positive news from the Dispatch Box, but he should be in no doubt about the clear view of the House. Every Member who has contributed to this over-subscribed debate, has spoken out against the beer duty escalator and in favour of Britain’s pubs and brewers. Let me assure the Minister that we will not let the matter rest there, and he would not expect us to. We will continue this campaign because it is not just a business or brewery that is at stake, but the future of a central part of our communities. We will continue to campaign and do all we can to save Britain’s pubs and breweries.

Question put and agreed to.

Resolved,

That this House welcomes the essential contribution of brewing and pubs to the UK’s economy in providing one million jobs; notes the 42 per cent increase in beer duty since 2008 and HM Treasury forecasts that have shown that there will be no additional revenue generated from beer duty despite planned increases over the next two years; is therefore concerned about the effectiveness of this policy in tackling the Budget deficit, its impact on valued community pubs and the continued affordability of beer in pubs; and therefore urges the Government to support the UK’s beer and pub sector by conducting a thorough review of the economic and social impact of the beer duty escalator to report back before the 2013 Budget.

[Sir Bob Russell (Colchester) (LD)]

On a point of order, Mr Deputy Speaker. Would it be possible for you to discuss with Mr Speaker the conduct of the previous debate? Injury time was given on numerous occasions owing to hon. Members almost wandering in off the street, lobbing a bit into the debate and then disappearing. Perhaps injury time should not be allowed. In particular, the hon. Member for Bedford (Richard Fuller) and my hon. Friend the Member for North Cornwall (Dan Rogerson), were prevented from giving their thoughtful speeches in full, yet they were signatories to the motion.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

I have a lot of sympathy with the hon. Gentleman, although as he knows, that is not a point of order. He may wish to take the matter up with the Procedure Committee and it will then be for the House to decide.