Beer Duty Escalator

Richard Fuller Excerpts

Tuesday 5th March 2013 Westminster Hall

[Mr Jones]

I thank my hon. Friend for that extremely pertinent comment. I will come to that.

In my constituency, the sector accounts for 1,441 jobs, employing 431 young people. It also contributes £33.7 million in gross value added to the local economy. Nationally, the sector adds £19 billion to the UK economy, and it currently contributes £10 billion in taxation to the Treasury. Since the previous Chancellor introduced the beer duty escalator in 2008—my right hon. Friend the present Chancellor continued it in May 2010—beer duty has risen by a staggering 42%. If the planned increase is effected in April following the coming Budget, beer duty will have increased by an eye-watering 50% in five years.

[Richard Fuller (Bedford) (Con)]

I join others in congratulating my hon. Friend on securing this debate. He mentioned that the escalator principle of the beer duty was introduced by the last Labour Government. Does he not agree that there is something profoundly un-Conservative about having a tax that automatically increases year after year? Would it not be a mark of a Conservative Government to scrap that principle on both the fuel duty and the beer duty?

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[Greg Mulholland]

The hon. Gentleman is absolutely right, and that is what I was alluding to when I mentioned the marketing claim that Magners Irish cider is made with Irish apples, when it clearly cannot possibly be.

A pint serving of beer is subject to 41p of duty, whereas cider is subject to 19p. I want to reiterate that when we are talking about those wonderful, small producers of cider and perry, they should have our support, but we cannot have a situation where the huge producers—as the hon. Gentleman has said, many of which are not using British or Irish apples—are being given the subsidy that they are getting, frankly, from overpriced beer. As well as protecting small producers, we need that issue to be looked at.

We need to remember that the beer duty escalator is not the only issue facing pubs, and I am delighted that the Government have now pledged to deal with the behaviour of large pub companies. I reiterate the message that the Minister must send to the large pub companies, which is that if the Government go ahead, as they must, and get rid of the beer duty escalator, pub companies need to pledge that they will pass on the reduction in duty and cost directly to their lessees on their so-called wholesale and list prices. That is fundamental, or frankly, those pubs will not see any benefit, because the money will simply deal with the debts that the companies have got themselves into. The Minister must put that message out, as well as listening carefully to the figures on investment that have been put in front of him, when considering the effect of his decision.

[Richard Fuller]

To help our hon. Friend the Minister, we know that money is short and that taking this action will cost the Treasury money, so what suggestions does the hon. Gentleman have on how the Government can make countervailing savings? It is unfair for us to go into a Budget discussion and ask the Government to make a cut in the duty that will be raised without coming up with suggestions on how the shortfall will be made up.

[Greg Mulholland]

The first point is that this tax does not make economic sense, because it is not bringing in what it is predicted to bring in. That simply is not sensible. A great deal of work has been done—this was a conversation that happened after last year—to show the effect that it will have on investment. In the end, we all agree that taxation is there to encourage. That is really what we would like taxation to do—to encourage positive decisions. What we are saying is, “Get rid of this tax and have fairer beer duty to encourage the sort of investment that has been demonstrated at the smaller end, where people do have lower and slightly fairer beer duty.” The prediction is that 10,000 new jobs would come from doing that. Then there would be the employment tax and the increase in business rates.

At the moment, instead of that, we have declining sales, which means lower duty and lower VAT. We have pub closures, which means a loss of business rates, council tax, employment tax and so on. We must turn this vicious circle into a positive one, and this is an opportunity to start to do that, but the hon. Gentleman is right to say that we must be focused on those economic issues. Let us look at the unfair subsidy provided to the huge producers of mass-produced cider. That would be one way of equalising things. We need to take the opportunity to look at that.

I have had conversations with the Minister about specific ways to assist pubs through the tax system. I hope that he has been looking at that. I hope that he has been trying to find a way, perhaps through rates, to have relief for the community value of a pub. I hope that he will continue to look favourably at anything that can encourage people to consume alcohol responsibly in pubs, as opposed to buying it from supermarkets.

I hope that this is the last time that we need to discuss this issue. It is great to see the faces supporting this campaign around the table, but I genuinely hope that the next time I see them will be with the Minister and that we will all be able to have a pint of excellent, locally produced British beer, knowing that it no longer has been subject, at the point of production, to the unfair, unnecessary and illogical beer duty escalator.

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[Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship this morning, Mr Caton. I thank the hon. Member for Nuneaton (Mr Jones) for securing this important debate. As a number of hon. Members have suggested, there is a certain sense of déjà vu, given the number of debates that there have been on the issue, but the timing of this debate, ahead of the Budget, is critical.

I stress at the outset that a number of my hon. Friends have let me know that they would have liked to participate in this debate, but they were not able to do so because of other parliamentary business or commitments that they had already made. I hope that we can continue with the generous spirit in which the debate has been conducted, and focus on a number of issues that Members on both sides of the House would like the Minister to answer—although that is not to say that I will not make some reference to the previous Government’s position or press the Minister on some questions that I think all of us would like to be answered.

It is important to recognise, as many hon. Members have, the organisations that have briefed Members and allowed them to make visits and listen to representatives of the industry in their constituencies. Those organisations include the British Beer and Pub Association, the Society of Independent Brewers, the all-party groups on beer and on pubs and the Campaign for Real Ale. I have worked closely with CAMRA in my constituency; I had the joy of judging one of the beer competitions at a local real ale festival, for which I thank the local CAMRA organisation. We also heard about representations made by the TaxPayers Alliance and The Sun.

I always enjoy such debates, because they allow us to have, as one hon. Member suggested, not just a brewery bingo, but a pub bingo. They give us a list of places to visit when we travel around the UK when not involved in parliamentary business.

A number of hon. Members have talked about the importance of the wider brewing industry and of manufacturing. There is also, of course, the bottling sector, from which representations have also been received. We have discussed small and medium-sized enterprises, micro-breweries, the rural economy, and the focus of the pub trade as a base for the local community. The hon. Member for Montgomeryshire (Glyn Davies) recognised the impact on elderly people and the important social role that pubs play in the community. We also heard about the charitable events and the various activities that pub goers regularly get involved in.

In his opening speech, the hon. Member for Nuneaton praised the Minister as a listening Minister. He recognised the need to deal with the deficit and welcomed, as I have, some of the actions taken on fuel duty. He urged the Minister, as other hon. Members did, to assess whether the escalator was disproportionate. I will return to that issue with some specific comments for the Minister to consider.

My hon. Friend the Member for Stoke-on-Trent North (Joan Walley) talked about responsible drinking, which is important. Like her, I spent some time working in the voluntary sector before becoming a Member of Parliament. I have worked in a project that dealt with homeless people with drinking problems. I have also spent some time, when I was a social work student, working at a drinking problems unit in a psychiatric hospital. I have seen the difficulties and problems that emerge when people get involved in problem drinking. One theme that has come out from the discussion is the importance of the pub sector in providing a different ethos, culture and way for people to consume alcohol enjoyably and responsibly. We are all concerned to ensure that that continues.

Whatever regimes are put in place—this is where there is a VAT issue—to support responsible drinking, we all want to ensure that supermarkets are not given an unfair advantage over the pub sector. A number of hon. Members have talked about that. Regarding VAT, I do not think my hon. Friend the Member for Nottingham South (Lilian Greenwood) intended to make a hugely party political point—perhaps a slightly party political point. This important issue needs to be addressed.

The Opposition believe that the Government made a mistake in 2011 in increasing VAT, which had an impact not only on the pub trade, but more widely on families and businesses around the country. That rise, which was equivalent to a 12% increase in tax for the industry, was in the same year that the coalition introduced the biggest ever pence per pint increase in beer duty.

[Richard Fuller]

We all know that the last Labour Government left a crippling deficit for this coalition Government—I am being slightly party political—who have had to clear up the mess that they left behind. The escalator increases taxes on working people who enjoy a pint. Does the hon. Lady think that it was a mistake in principle for the last Labour Government to introduce that to our taxation system?