Beer Duty

Owen Thompson Excerpts

Tuesday 7th March 2017 Westminster Hall

[Owen Thompson (Midlothian) (SNP)]

I congratulate the hon. Member for St Austell and Newquay (Steve Double) on introducing this debate and the hon. Member for Gower (Byron Davies) on securing it.

It is clear from hon. Members’ contributions today that there is a large degree of agreement among us all. We have heard about the benefits of the local pub in our constituencies—I certainly support the pubs in mine as much as I possibly can. A strong case has been made this morning for minimum alcohol pricing, given the dangers from the very high levels of alcohol in alcopops and other such drinks.

I have recently noticed an increase in the number of craft beers being produced with 0% alcohol, including Tennent’s Hee Haw and BrewDog’s Nanny State—I think the brewers were having a deliberate go at the establishment when they came up with that name. Many such beers are coming into the market, demonstrating that a 0% alternative that still retains flavour is possible.

It is clear that there are many points that we agree on, and the one thing that we can be absolutely certain of agreeing on is that beer is good. It is good for our economy, it is good for our communities and it is definitely best served while watching Scotland win the rugby. Like most worthwhile inventions, it has been suggested that it was invented in Scotland, in some form at least; evidence has been discovered of fermented beverages being brewed in Scotland, possibly as early as 400 BC. In my constituency, Midlothian, there was a brewery in Dalkeith that had been there since at least 1789. The last remaining brewery, McLennan and Urquhart, brewed what I am led to believe was a very fine selection of sweet ales, and the business thrived in Midlothian for the best part of a century. Unfortunately, it closed in the late 1950s and was demolished in the 1960s, and sadly brewing left Midlothian for quite some time.

That was a common picture in Scotland. The economic situation in the ’60s and ’70s made it impossible for breweries and pubs to survive, and closures were savage. The ’60s may have been swinging, but there was not much for brewers to smile about. High unemployment, shipyard closures and the decline of traditional industries were common throughout Scotland, and for breweries the picture was just as bleak. In 1920, there were 62 breweries in Scotland; by 1960, there were just 26, and in 1970 only 11 remained. What we must learn from that period is that not nurturing the right business environment for breweries creates consequences that can be far-reaching across communities, have an impact on national, local and micro-economies and have knock-on effects on pubs and jobs.

We are now witnessing something of a beer revolution, as the hon. Member for St Austell and Newquay put it. More consumers are searching for new flavours, or simply for good beer, and new breweries are starting up more and more frequently. I am pleased that new breweries are flourishing and growing in Midlothian. I positively encourage all hon. Members to visit my constituency, have a look around the breweries and taste their products. The first brewery to rekindle Midlothian’s brewing history is Stewart Brewing in my home town of Loanhead. It was founded in 2004, led by a team of ambitious, passionate and hardworking beer enthusiasts, and its business has grown and expanded considerably—some may suggest that my own contribution and appreciation of its very tasty craft IPAs has contributed to that. I have also been fortunate to have the opportunity to visit the newly established Cross Borders brewery in Eskbank. It was clear from speaking to the team there that they have an absolute desire to expand, to contribute to the local and national economy and to be a key player in the beer market.

In fact, all over Scotland there is a rapidly growing industry, which we are embracing. The food and drink sector is vital to Scotland’s economy, with one in five people in Scottish manufacturing working in it. The SNP Scottish Government have been working hard to support this key sector: since 2008, they have supported 173 food and drinks companies and organisations to achieve a 77% improvement in their access to local suppliers and a 62% increase in new market penetration. Scottish food and drinks exports are now worth some £4.8 billion every year. In February, the SNP Scottish Government announced business rates relief for the hospitality sector, which will save Scottish pubs around £6 million. The package also included a one-year cap on business rate increases in Scotland for the hospitality sector at 12.5%, which will benefit a further 8,000 businesses. Brigid Simmonds, chief executive of the Scottish Beer and Pub Association, said:

“The introduction of a business rates cap, set at 12.5 per cent, is welcome, and shows that the Scottish Government has listened to the concerns of Scottish pubs and other hospitality businesses.”

The association’s analysis suggests that the cap will save Scottish pubs around £6 million, with pubs standing to benefit by an average of £4,700. Many microbreweries may also benefit from the small business bonus scheme, which will give up to 100% relief in many cases.

What can we do to help this very important industry, and what can we learn from Scotland’s approach? I agree with many hon. Members that a cut in beer duty is essential, but I fear that that alone may not be enough. I would like the UK Government to go further. The evidence is compelling. Of course businesses should pay their share in tax, which should be fair, but in 2015 beer duty comprised 49% of a brewer’s turnover, and the British Beer and Pub Association calculates that the beer and pub sector is one of the most highly taxed in the country. Brewers also face more tax: business rates, employment taxes and corporation tax are added on top. Once costs of production are taken into account, a brewer makes an average profit of just 2p or 3p a pint. For all brewers, but particularly the types of brewer in my constituency, this situation stifles the potential for growth and the ability to employ more staff.

The SNP supports a better, fairer, evidence-based way of taxing alcohol. We need to find the right balance. I very much hope that today’s debate will provide the Chancellor with beer for thought for his Budget tomorrow.