Beer Duty Escalator

Chloe Smith Excerpts

Monday 2nd July 2012 Commons Chamber

[The Economic Secretary to the Treasury (Miss Chloe Smith)]

I must take the opportunity, after that last reference, to invite hon. Members to drink at the Iceni brewery in Norfolk, at which I am sure they would be extremely welcome.

I congratulate my hon. Friend the Member for South Staffordshire (Gavin Williamson) on securing the debate. It has been interesting and I thank him and all hon. Members who have contributed tonight. It will not be a surprise, as I have the rather thankless task of being the final speaker tonight at this late hour, if I suggest that he can buy us all a drink when we have finished. I am sure he can do that.

In all seriousness, I want to compliment my very fine brewing and drinking city of Norwich. I regularly go into pubs—indeed, I drink the odd beer—I run politics in the pub surgeries and my local newspaper also runs a very fine “Love your local” campaign, so I am very much in tune with the spirit of what we are discussing tonight.

I regret to say that I must turn to the burdens about which my hon. Friend spoke and do my duty in providing some background on my hon. Friend’s proposal to end the beer duty escalator. As hon. Members will be aware, the inflation plus 2% annual increases were first announced in the 2008 Budget by the previous Government and were extended in the March 2010 Budget. Those pre-announced increases applied to all alcohol types, not only beer, and the additional revenue from the increases was included in the public finance projections at that time. Let me put some numbers on that for your edification, Mr Deputy Speaker. The value of removing the escalator would be £35 million for 2013-14 and £70 million after that.

[Greg Mulholland]

Does the Minister not accept that beer has been treated particularly unfairly when compared with spirits and cider? Ludicrously, the global cider producers who knock out mass-produced products, often not using British apples, pay half the duty even of the smallest micro-brewers on the lowest small breweries’ relief rate. That is simply not fair.

[Miss Smith]

I hear the hon. Gentleman’s argument and pay tribute to him for his work with his all-party group. Let me answer his question with the main question posed at the end of the speech made by my hon. Friend: I would of course be happy to meet hon. Members who are present tonight to discuss these matters further.

There are many points to go into—more, I regret to say, than I have time for. The key point that I must make first is that the duty increases that we are talking about—the increases through to 2014-15—form a vital part of the Government’s plan to tackle the debt left by the previous Government. It would be worse for everybody if we did not tackle that debt. When I say “everybody”, I mean beer drinkers, cider drinkers, spirit drinkers, wine drinkers, brewers, publicans and, of course, all those who never touch a drop. The high interest rates that would result if we abandoned our credible plan to tackle the deficit would not help anybody.

[Dan Rogerson (North Cornwall) (LD)]

The Minister will no doubt have seen in the business section of The Times today the piece on the Sharp’s brewery in Rock. Doom Bar is now a famous brand around the country, and is enjoyed, the article tells us, by the Prime Minister. The Minister has rightly set out the situation facing the country. However, the brewing industry is very keen to take on young people, train them up, and give them a career. That is what Sharp’s is doing. Does she agree that being more sympathetic on beer duty might allow companies to invest in taking on more employees?

[Miss Smith]

Again, a fine point is made. I am the first to support the notion of encouraging young people into work and work experience, but we have to be realistic. The Treasury and the Government face a number of proposals from different industries that say, “Ours is the industry that holds the key,” and I am sympathetic to those arguments. There is, of course, much evidence to go into for all such proposals, but it is important to proceed as a responsible Government, and to try to take into account the revenue that is required to fund vital public services and that, as I say, helps everybody.

[Alec Shelbrooke]

To expand on my intervention on my hon. Friend the Member for South Staffordshire (Gavin Williamson), perhaps we can look at a tax-neutral way of getting more people into pubs, which create so many jobs. As there is an onus on landlords to ensure that people drink sensibly on their premises, that, rather than minimum pricing for alcohol, may help to tackle alcohol abuse.

[Miss Smith]

On that note, let me come on to some of the factors affecting the state of the industry. It is important to be clear that duty is not the only thing affecting the state of the pub industry. We have all, I am sure, been in good pubs and terrible pubs, and the price of the beer is not the only factor involved. On the price of a beer, I point out that the pre-announced alcohol duty increases in question added only 3p to a pint of average-strength beer, including VAT. The total duty on a pint of beer is now 47p. I think that hon. Members will agree that, especially as alcohol consumption does, after all, carry its own costs and concerns, that addition in the Budget this year is not an overwhelming or unreasonable amount. It is something that we can consider in the context of the public finances and the challenges relating to them that have to be met.

As I say, alcohol duty is only one of a wide range of factors that determine the final price paid by the customer. Let us be clear about the position of the industry. The decline in the beer and pub industry that some talk of is influenced by a number of factors. Lifestyles are changing. People’s choices when they walk into pubs and other establishments are changing. People have more choice about whether they go to a pub or somewhere else. Removing the escalator, which is what has been asked for tonight, and the pre-announced duty increases would not solve those problems. There is very much a wider context.

My right hon. Friend the Member for Putney (Justine Greening)—my predecessor as Economic Secretary to the Treasury with responsibility for alcohol duty—and I have met a wide range of representatives from industry. As I said, I am happy to continue doing so. I recognise the important contribution that pubs and breweries make to local communities and to the wider economy. Many groups that have been prayed in aid tonight, such as the Campaign for Real Ale and the British Beer and Pub Association, have welcomed the work that we have done to date, such as the review of alcohol taxation in November 2010. We continue to keep all taxes under review.

[Andrew Griffiths]

Will my hon. Friend give way?

[Miss Smith]

I am sorry. I must complete my remarks within a few minutes, but as I said, I am happy to continue the conversation, whether in the bar or elsewhere.

CAMRA’s figures show that the net rate of pub closures has slowed dramatically over the past two years. I believe the BBPA’s figures support this. I support pubs as places where people can drink sensibly in a supervised environment and enjoy themselves responsibly. I want to reverse the trend towards pre-loading on cheap alcohol at home. I was out with Norfolk constabulary in my neighbouring constituency, Norwich South, on Saturday night, observing some of the problems in action in places that are not as friendly as the community pubs that have been spoken about tonight.

In my view, minimum unit pricing will help to tackle the issue of excessive alcohol consumption and heavily discounted alcohol sold in supermarkets and off-licences. I strongly believe that that will benefit pubs and the responsible on-trade once we can tackle the demand for cheap alcohol in supermarkets. It is of interest to hon. Members here tonight that we have introduced a 50% reduction in alcohol duty for low-strength beers. That may be a growing sector in the industry.

In brief response to my hon. Friend the Member for Amber Valley (Nigel Mills), the Government are committed to tackling alcohol fraud and avoidance, and have been working in collaboration with the industry to address that. There are a number of measures that we wish to take to act on that.

At the Budget, this Government knew that it would be unfair to place further burdens on the alcohol industry, on pubs and on responsible drinkers. This is why we did not go further than the pre-announced duty increases. But I return to my main point. There is an important question of the public finances. The revenue from these increases was included in the public finance projections at that time. It would now require the raising of other taxes to pay for removing them. That is the question that I ask hon. Members to consider. I am sure that many pub conversations come up with the best answers to that, which hon. Members may like to go on to discuss.

This year’s duty increase and those to 2014-15 form part of our vital plan to reduce Britain’s debt, which is required to ensure low interest rates and a stable platform for growth for everybody—drinkers, businesses and households. We will continue to keep all taxes under review and monitor the impact of alcohol duty—