Beer Duty Escalator

Cathy Jamieson Excerpts

Thursday 1st November 2012 Commons Chamber

[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.

--- Later in debate ---

[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.