Beer Duty Escalator

Brandon Lewis Excerpts

Thursday 1st November 2012 Commons Chamber

[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.