Beer Duty Escalator

Chris Ruane Excerpts

Thursday 1st November 2012 Commons Chamber

[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.

--- Later in debate ---

[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.