Beer Duty

Claire Perry Excerpts

Tuesday 7th March 2017 Westminster Hall

[Steve Double]

I wholeheartedly agree. Lower taxes generally encourage investment and growth in a sector, and I will press for that as the debate goes on.

[Claire Perry (Devizes) (Con)]

Does my hon. Friend share my sense of pride that it was a Conservative Government who in 2012 finally put an end to the beer duty escalator—a measure that had led to duty going up 42% between 2008 and 2012? Following that, in 2014 beer sales increased and an estimated 21,000 jobs were created in the industry.

[Steve Double]

My hon. Friend may have been reading my notes, because that is a point I will come on to highlight.

There are many reasons why pubs have closed. Some of them were badly managed, and some lacked investment to keep the facilities up to date. Although I believe that the smoking ban was the right thing to do, and it is popular among many pub goers, we have to acknowledge that it stopped smokers visiting the pub quite so often. There are also changing social habits, with more people drinking at home as a result of cheap alcohol available in supermarkets and other outlets.

Those factors have all contributed, but it is also undeniable that the dreadful and despised beer duty escalator introduced in 2008 had a devastating effect on the industry. Annual duty rises under the escalator led to beer duties rising to among some of the highest anywhere. Even now, following successive years of duty reduction by this Conservative Government, our pints remain heavily taxed at around 52p on a 5% alcohol by volume pint, compared with 4p in other key beer-brewing nations such as Germany and Spain—an enormous and disproportionate difference that needs to be addressed.

There is much more happening now, with a revolution in the old craft of brewing and selling beer to the UK’s 32 million beer drinkers. Numerous microbreweries have opened up and craft beer and real ale are rising in popularity. I have the great privilege of having a great example of a local family-run brewery in my constituency. St Austell Brewery has been a roaring success in recent years, particularly since the launch of its excellent Tribute ale. It now makes many excellent beers, and I spent an enjoyable day during the recent recess assisting master brewer Roger Ryman in making a batch of Proper Job. I count the fact that I managed to make more than I drank that day as a notable success.

While it is right to recognise concerns about alcohol abuse, we must note that the majority of people enjoy healthy levels of drinking. Given the social benefits that come with a visit to the local pub, it makes no more sense to celebrate pub closures than it does to close roads because some motorists speed.

--- Later in debate ---

[Claire Perry (Devizes) (Con)]

I join others in congratulating my hon. Friend the Member for St Austell and Newquay (Steve Double), and my hon. Friend the Member for Gower (Byron Davies), who cannot be here, on securing this important debate.

I have spoken several times in similar debates over the years. As I am sure Members know, I am the proud representative of Wadworthshire. I have in my constituency Wadworth Brewery, which brews iconic beers such as 6X, Swordfish and Bishop’s Tipple. It has 240 pubs in its chain and employs about 500 people. Nobody who visits Devizes can fail to be struck by the incredibly iconic brewery building, in which brewing has taken place since 1875, and Max and Monty, its two dray horses, who often cause traffic chaos when delivering to local pubs, although nobody minds, because they are a symbol of a wonderful local business. As well as Wadworth, I have Ramsbury Brewery, Shed Ales, World’s End Ales, Three Castles Brewery, Stonebridge Ales and Eastbury Brewing Co. in my constituency, all of which report that things are definitely looking up.

Why did I come along today to support the call for a cut in beer duty? I must confess that I was a little sceptical about what the impact might be when the original tax cuts were announced, for many of the reasons that have been mentioned: we drink in a different way; we often prefer to drink at home; supermarkets have historically used alcohol as a loss leader to generate foot traffic; the smoking ban has hurt businesses; and the drink-driving laws, which I absolutely and heartily support, have changed people’s way of being entertained. However, it is obvious that since we abandoned the beer duty escalator and cut beer duty in 2013—I am thinking of the billboard outside the Red Lion pub that day with a big sign saying, “Cheers, George!”; the former Chancellor should indeed be applauded for it—there has been a material impact on the industry.

I know that the Opposition Members present would not have voted for this, but in 2008 taxes on beer were hiked twice: by 9% in March and then by 8% in December. The escalator was then whacked on at inflation plus 2%, which led to a whopping 42% increase in overall duty between 2008 and 2012. As we have heard today, thousands of pubs exited the industry. It was a significant hit to an industry that we all know and love, and that had a major impact on employment in many of our constituencies.

Since then, with relatively modest measures—the abandonment of the escalator and a reduction in duty—we have seen some really rather extraordinary things. In 2014, beer sales increased for the first time in a decade. Oxford Economics has estimated that more than 20,000 more new jobs have been created in the sector than there would otherwise have been. That shows that very small changes in taxes can have a material impact. I submit that what the Exchequer is giving up in tax duty is being more than recouped from the increased income tax paid by the now thriving businesses and the employment contributions coming in.

On the subject of employment, let me mention a couple of very important things that are happening in my constituency. As a result of the change in the business climate, companies such as Wadworth are now substantially increasing their own investment programmes; indeed, investment in Wadworth’s 240 pubs will increase by 30% this year. I am proud to have been associated with the reopening of some wonderful pubs that are now thriving, such as the Three Crowns in Devizes: morning, noon and night, groups of people are going in for coffee and sampling the wonderful beers and delicious food. That is happening not just in my constituency but right across the country. I was fascinated to hear from my hon. Friend the Member for Faversham and Mid Kent (Helen Whately) that it is also having an impact on the supply chain—a piece of good news for hop production that I did not know about.

I support future investment and the increase in apprenticeships. Wadworth now has 62 apprentices—it has been investing hugely in my area—but it is facing pressures, including the apprenticeship levy and the increase in rates that we have discussed. It seems to me that to support the industry, stimulate demand and encourage companies to invest their own capital so that we can have a thriving beer, pub and hospitality industry, this relatively small adjustment in the Budget would be very welcome indeed.