Alcohol Taxation

Debate between Nigel Evans and Mike Wood

Thursday 7th July 2022 Commons Chamber

[Mike Wood]

There has been a long-term trend away from drinking in pubs and on-trade, and towards supermarket sales making up a greater share of the market. Some of that will be due to natural changes in consumer preferences and people’s lifestyles, but we should not allow the tax system to aggravate such trends, which have real social and economic consequences. Where we can tweak the tax system to make sure that our pubs, brewers and other producers get a fairer deal and where we can reduce some of the disincentives to people consuming drinks in well-regulated public houses, we should do so.

I welcome the alcohol duty review, which is a massive step forward. The level of duty, which is much higher than in most comparable countries, is compounded not only by VAT, but by extremely high business rates. I hope that we can look at how our system of local business taxation can be further modified. The Treasury has clearly been piloting attempts to charge digital and online companies. That is an important starting point, but we need to make sure that our taxes on clicks are comparable with our taxes on bricks, to help sectors that have to operate in the real world. Nobody has yet established a viable virtual pub. A few people tried during the pandemic, but I do not think that any of those experiences quite worked out. It is noticeable that in April and May last year, most people were quick to get back to the real thing rather than using the online equivalent.

On the duty review, the proposed reforms are hugely welcome, particularly the banding that recognises the progression through alcohol strengths, so that higher-strength drinks have, if not quite exponentially more, progressively higher levels of duty compared with low-strength drinks. The changes to the low-alcohol band for beer for 2.8% to 3.4% will make a big difference to the availability of good-quality, lower-alcohol beer. Brewers find it relatively simple to change recipes to bring a 3.6% or 3.7% real ale down to 3.4%. It is much easier than getting a recipe down to under a 2.8% threshold without changing the character of such drinks, although I agree with my right hon. Friend the Member for Vale of Glamorgan that 3.5% would clearly be preferable, if we are looking at those details.

Similarly, the proposals for small brewers relief are hugely preferable both to the system that we have and to the Treasury’s initial proposals, which would have caused a lot of difficulties for relatively small breweries. I accept that the changes will take a while to get our heads around—that is probably putting it lightly—but the current system has a distorting effect, with sharp edges that act as a very strong disincentive for growth and that impose an unnatural plateau at about 5,000 hectolitres. That means that unless businesses are confident that they will grow significantly beyond 5,000 hectolitres, they have very little incentive to invest in the extra staff and the extra capital to do so. The system that has been proposed is far better. It is very noticeable that what for a long time was probably the most contentious issue in the beer sector has now brought people together: although there are some details that each person might like to change, the overwhelming majority in the sector now feel that they can live with it.

I suggest that the Treasury look at whether it might be possible to extend some form of small producers relief beyond beer and cider, to include small wine producers. That would have particular benefits for English wine producers, and of course for Welsh wine producers; I must say to the SNP Front Bencher, the hon. Member for Gordon (Richard Thomson), that I do not know the scale on which Scottish wine producers are operating at the moment, but I imagine that they mostly fall within the smaller category.

The differential draught beer duty rate that the then Chancellor, my right hon. Friend the Member for Richmond (Yorks) (Rishi Sunak), announced in his Budget last autumn is a fantastic proposal. It has the potential to make a big difference to supporting responsible beer drinking in our pubs, cafés and bars, instead of our supermarkets and—let us be honest—our park benches, town centres and street corners.

The difference will depend on the scale of the differential. The 5p differential is a good start in establishing the principle, but getting a new system up and running is likely to mean that almost all of it will be retained by pubs and breweries. That will typically mean an additional investment of about £2,000 being available to pubs, but if we want our consumers and beer drinkers to benefit from the draught beer duty rate, the differential will need to be widened. Only once it gets to 10p or 15p will we start to see a real difference in what customers pay for a pint at the bar, which will also make a difference by encouraging people to drink on regulated premises instead of buying from the off-trade.

We would like to see the differential not only increased but introduced at the first available opportunity. I know that the Treasury was looking at introducing something in probably the spring of next year, but given the difficulties that we all know the hospitality sector has had over the past two years or so, if a suitable fiscal event or financial instrument could be found that would allow the measure to come into force before this year’s Christmas season, that would make a massive difference. It would help the pubs that the hon. Member for St Albans (Daisy Cooper) referred to, which may be struggling, on the edge of going under or just about managing to stay afloat through the winter. Bringing the differential in early would make a big difference.

There has clearly been a very lively debate about container size; 20 litres is very obviously the correct answer. Having had discussions with the last Chancellor and the last Economic Secretary, my hon. Friend the Member for Salisbury (John Glen), I think they recognised that 20 litres was where we needed to end up. I very much hope that incoming Ministers will reach the same conclusion. I think that the last Chancellor broadly accepted the argument that 40 litres was probably not the right container size for the threshold: he was pictured with the Prime Minister holding 30-litre containers to launch the policy. The 20-litre level will make a big difference to the range and types of beer that can be made available, particularly for our smaller brewers. However, I also think we should look at the provisions on distribution mechanisms, and ensure that containers do not necessarily have to be connectable to either a gravity-pulled or an electrically pulled draught system. When it comes to the pins of the kind typically seen at beer festivals in all our constituencies, where there is just a tap in the side of a barrel, I think that applying the discount to a container of over 20 litres makes a good deal of sense. Brewers I have talked to estimate that less than 0.1% of their beer is sold through those taps. We are not risking a massive distortion in the market from people buying huge numbers of these containers for parties at lower rates of duty, and applying this to all containers of over 20 litres would constitute a minimal cost to the Treasury.

The system introduced a few years ago in Australia does have a requirement involving connectors, partly because the Australian market is very different and partly because there is a much lower threshold—from memory, I think it is as low as 8 litres—but I think that a provision for 20 litres would capture virtually all the beer that almost all the small brewers that we are trying to support supply through our pubs and our licensed premises, and that they would benefit. I therefore hope that the Treasury will settle on that, as the obvious figure, in its final decision.

Once again, I thank my right hon. Friend the Member for Vale of Glamorgan for securing the debate. I also thank the Treasury for all the discussions that we have had over the past couple of years, particularly since the publication of the duty review. We look forward to the speedy introduction of these measures so that our brewers, our publicans and UK hospitality as a whole can benefit, succeed and thrive.

[Mr Deputy Speaker (Mr Nigel Evans)]

We now come to the Front Bench winding-up speeches. First, I call Richard Thomson.

--- Later in debate ---

[Mike Wood]

On a point of order, Mr Deputy Speaker. I should have drawn the House’s attention to my entry in the Register of Members’ Financial Interests relating to the hospitality I have received from, appropriately, the hospitality sector. Can you advise on how I may put that on the record?

[Mr Deputy Speaker (Mr Nigel Evans)]

Thank you for giving me notice of your point of order. You have just done that, and I thank you for correcting the record at the earliest opportunity.

Public Health

Debate between Nigel Evans and Mike Wood

Wednesday 30th December 2020 Commons Chamber

[Mike Wood (Dudley South) (Con) [V]]

This morning’s news that the Oxford-AstraZeneca vaccine has been approved really is the best late Christmas present any of us could ask for. It is our best chance for the world to come out of the pandemic. It is testament to the genius and innovation that is possible when academic research works so effectively with the private sector in pursuit of a common goal. But the strong position the United Kingdom is in, getting early doses of the Pfizer vaccine and being well placed for the Oxford vaccine, and having robust contracts for all the leading vaccines under development, is due in large part to Kate Bingham and her fantastic team, as well as the effective leadership at the Department of Health and Social Care.

The vaccine provides a bright glimmer of hope after what has been the grimmest of years for families and businesses around the country. While there is light at the end of the tunnel, and very clear light, the tunnel ahead of us is still very long and the path still uncertain. Our immediate challenge is to minimise the number of tragic avoidable deaths until a vaccine can be fully rolled out and effective, but also to prevent our national health service from being overwhelmed by new waves and new variants of this debilitating virus.

Scepticism about national statistics and experts’ projections is not uncommon, particularly if one reads mainstream media or so much social media. There will never be a counterfactual that we can use as a control group and we will never know what would have happened if action had not been taken, but we can see what is happening in our local communities. When my local hospital in Dudley tells me that it risks being overwhelmed if numbers continue to rise at the rate they were last month, and when it tells me that a couple of weeks ago it had just four in-patient beds available in the whole of the hospital—and that is after relying on surge capacity—it would be the very height of irresponsibility and indeed callousness to dismiss those direct and dire warnings out of hand.

It is clear that action has been needed to tackle the virus. Looking at the rising infection rates we still see today, including in Dudley South, it is clear that further action is needed. However, we need to be clear about why the scientific and medical experts believe so firmly that the particular measures we are being asked to consider are necessary and, more to the point, why they would be effective.

In September, we were told that much of the spread was due to hospitality. As we know, most of that sector has been shut in much of the country for nearly two months, yet infection rates still rise. We have been told at other times that it is because of schools and universities, but most have been closed for two weeks, during which infection rates do not seem to have dropped off. We have been told that some of the transmission has been through retail, but in tier 4 areas, where shops have been closed for nearly a fortnight, we still see very high infection rates that are, in some areas, still rising. So we need to know where the infection is spreading, why it is spreading and why these measures will help to stop it. We know that the measures taken so far, and the new restrictions that are going to be introduced in Dudley South and throughout much of the country tomorrow under tier 4, are devastating for many families and many businesses—for economic, social and mental wellbeing. So we need to be sure that what we are doing is both proportionate and necessary for the very real and serious challenge we face. For us to be sure of that, we need to be sure that these measures have the best chance of being effective in helping to save lives and reduce the pressures on our national health services.

[Mr Deputy Speaker (Mr Nigel Evans)]

I am sorry we lost a bit of the video there, Mike, but we heard you loud and clear, with a nice picture on the screen.