Beer Duty

Steve Double Excerpts

Tuesday 7th March 2017 Westminster Hall

[Steve Double (St Austell and Newquay) (Con)]

I beg to move,

That this House has considered beer duty.

It is a pleasure to serve under your chairmanship, Sir Roger, and to open this debate on a very important matter. First, I must acknowledge and thank my hon. Friend the Member for Gower (Byron Davies), who secured this debate only to find that it clashed with other, unavoidable parliamentary business. He therefore asked if I would step in for him. His loss is my gain. I am sure he would want me to mention right at the very beginning Gower Brewery, which produces some excellent ales—I remember a very enjoyable evening with my hon. Friend, drinking Gower Gold. It is right to acknowledge that in his absence.

The debate is timely, taking place the day before the Budget. We hope once again for good news from the Chancellor and another cut in the much despised beer duty. There is no doubt that the brewing and pub industry has faced a great many challenges in recent years, which have brought a wind of change blowing through one of the oldest and best loved traditional businesses in the UK. Public houses—or, as we all more affectionately know them, pubs—and breweries have experienced enormous change and upheaval over the past 30 years or so. The vast and often overlooked brewing and hostelry industry is an icon of our nation, cited by tourists the world over as one of the reasons for visiting the UK. Almost 900,000 people work in pubs and the supply chain, from agriculture to brewing, logistics and the licensed trade.

[Dr James Davies (Vale of Clwyd) (Con)]

I congratulate my hon. Friend on introducing the debate. He rightly points to the vast number of jobs that the industry supports, many of which are in peripheral areas of the country such as our constituencies. Does he agree that action on beer duty, which is up to 10 times that of the duty paid in our neighbouring continental countries, is a vital step?

[Steve Double]

My hon. Friend is absolutely right. Whereas many other industries are centralised in very specific areas or regions of our country, the pub industry is spread right across it and provides much needed jobs in many of the more rural areas. He is also right that we need to reduce the gap between the duty we pay in this country and the duty paid in many other countries, and I will come on to that later.

[Mr John Spellar (Warley) (Lab)]

The hon. Gentleman rightly identifies the role of rural pubs, many of which serve those who come out to the countryside from our conurbations. What impact does he think the ill-thought-out proposals from the Local Government Association to cut the number from 2 pints or 1.5 pints to 1 pint will have on those pubs?

[Steve Double]

I assume the right hon. Gentleman is talking about the guidelines for alcohol consumption. I suspect that is a subject for another day, but I understand his point.

[Mr Spellar]

No, I am not talking about the guidelines; I am talking about the drink-drive limit. Most of the offences are recorded at the much higher level of about 150 mg. A reduction in the limit could have a dramatic effect on many rural pubs, let alone rugby clubs, Royal British Legion clubs and so on.

[Steve Double]

I now understand the point the right hon. Gentleman is making. I would never drink and drive at all. That attitude has become much more the norm in today’s society, where most people consider that drinking anything and driving should be avoided. I am not entirely sure that I agree with his point.

The brewing and pub industry not only employs 900,000 people but attracts many younger people to its workforce—in fact, 46% of those employed in the sector are under 25 years old. That level of employment among the young is a critical factor, especially in rural constituencies such as the one I represent in Cornwall. While many start out in basic roles, they go on to become professionals in the trade or elsewhere—for example, working as chefs, licensees or successful businesspeople in their own right, and employing others.

That said, the news has not always been good in recent times. Some 17,000 pubs have closed in the past three decades, and while the closure trend has slowed markedly of late, many communities will grieve the loss of their local, which all too often is the only pub in the area.

[Graham Stringer (Blackley and Broughton) (Lab)]

Although it is not the only factor, does the hon. Gentleman agree that cuts in beer duty increase investment and employment opportunities, particularly for the young, while increases do the opposite?

[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.

[Mr Spellar]

On the subject of craft breweries, will the hon. Gentleman, who rightly attacks the beer duty escalator, acknowledge the very considerable role played by the duty exemption for small breweries that are getting off the ground? That was a major factor in the explosion of the craft brewery business and was introduced by my right hon. Friend the Member for Wentworth and Dearne (John Healey) when he was at the Treasury.

[Steve Double]

I will happily agree. The support given to microbreweries to develop right across the country—they are now producing very high-quality, excellent craft beer—is a success that should be noted.

[David Mackintosh (Northampton South) (Con)]

Does my hon. Friend agree that larger breweries, such as Carlsberg in my constituency, also play an important role in providing beer for people, but the beer duty also has an impact on them?

[Steve Double]

I wholeheartedly agree that the beer duty affects the whole industry. That is why I believe it needs to be addressed.

One interesting statistic I read was that communities that have a well loved pub are happier. Pubs have that very positive effect on local communities. I was dismayed when a local Liberal Democrat councillor in St Austell recently suggested tightening up the local licensing regulations and limiting the number of pubs to curb incidents of antisocial behaviour. That misses the point entirely, because well run pubs promote responsible drinking, and in my experience they have a positive impact by reducing crime and antisocial behaviour, rather than being the cause of the problem.

[Liz McInnes (Heywood and Middleton) (Lab)]

I am pleased that the hon. Gentleman has mentioned St Austell —I am very partial to a pint of Clouded Yellow myself. A family brewery, John Willie Lees, is a major employer in my constituency. I fully support the comments that the hon. Gentleman is making about social drinking. I am sure that he will agree that we should be promoting pubs, keeping them open and stopping people buying cheap alcohol and drinking alone at home.

[Steve Double]

I wholeheartedly agree. Not only are pubs great places for community cohesion, but they promote responsible drinking in a safe environment, which we should wholeheartedly support.

[Jessica Morden (Newport East) (Lab)]

I thank the hon. Gentleman for giving way again; he is very generous. On responsible drinking, another change has been the move to lower alcohol beer. Is the hon. Gentleman aware that beer with an alcoholic strength of less than 3.5% is subject to 66% more duty than very high-strength cider at 7.5%? Does he agree that we could do more to incentivise the consumption of beers under 3.5%?

[Steve Double]

I agree. We do need to look in particular at the amount of duty on high-strength ciders, because it is disproportionately low and should be increased. The duty on lower strength beers should also be looked at, to encourage their consumption. The industry was challenged by the Government to reduce consumption of alcohol units by 1 billion by 2015. By reformulating and introducing lower alcohol drinks, the industry surpassed that target ahead of schedule, which we should acknowledge and welcome. There is also a fall and clear downward trend in problems relating to under-age drinking in pubs, as licensees—pub landlords—have become more responsible in their approach to that matter.

The problems associated with drinking have less and less to do with pubs and more and more to do with sales of cheap alcohol in supermarkets and other off-licence establishments. It is clear that pubs can and do have a very positive impact on their local communities. Pubs are experiencing a revolution. They have caught the spirit of the times and of this Government: there is a belief and a strategy about getting best value for money and a happier, better outcome for everyone by making best use of what we have and combining our efforts.

Let us take as an example the village of Nanpean in my constituency of St Austell and Newquay. Once a bustling, busy community, almost solely reliant on the booming china clay industry, it has declined in recent years. That and changing shopping habits over the years meant that the Co-op supermarket, four general stores, the butcher’s, the bakery, the fish and chip shop and the post office all had to close. No shop remained—none was viable as a stand-alone unit; none could survive with separate overheads and wage bills. Thanks to innovation, though, the Grenville Arms pub in Nanpean now houses the post office and a shop, and the combination of the three has proved a great success. Each one helps the others to provide key services to the local community of about 2,000 people. The shop sells essentials and locally produced food, and the return of the post office is a real asset to the whole community. The scheme has created new jobs and, with its fresh role at the centre of village life, the pub has become a community meeting point.

All that was achieved by converting a disused room. Of course, there was a cost. That was met by the licensee and an organisation that was originally the inspiration of His Royal Highness the Prince of Wales. Pub is The Hub is a voluntary, not-for-profit organisation helps pubs in rural communities to innovate and thrive. By working with all interested parties—breweries, licensees, councils and local communities—it has had success in bringing together talents and opportunities and meeting needs. It gives guidance to groups seeking to buy their local pub to save it from closure. Besides advice, it gives grants—modest sums of money that make a big difference. Pub is The Hub says that, on average, for every pound in grant provided, an additional £1.60 is forthcoming from other sources.

I am very grateful to the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Brigg and Goole (Andrew Percy), who is responsible for pubs. He continues to champion Pub is The Hub and has this year supported the organisation further with a £50,000 grant. Heineken matched the funding, giving Pub is The Hub further assistance to continue its excellent work across England and Wales and now, I believe, in Scotland.

A revolution is under way in the pub trade, and we need to do a lot more to support it. The simplest and best way to do that is by continuing the process of reversing the crazy, punitive, unfair and mean-spirited hikes in beer duty imposed by the previous Labour Government. The UK’s excise duty rate for beer is much higher than that in most European countries. Despite the three duty cuts by the Conservative Government in recent years, the UK has the third highest duty rate in the European Union. Forty per cent. of all beer duty paid in the EU is paid by the UK, yet we drink only 12% of the beer.

Tax on beer has been a sorry story. From 2008 to 2012, there were steep and relentless tax increases, with a staggering 9.1% hike in March 2008 and an 8% increase in December of the same year. Then came the beer duty escalator, which increased beer duty by 2% above inflation every year. By 2012, beer duty had increased by 42% since 2008. Although other factors played their part, that was a disaster for the industry, with thousands of pubs closing and tens of thousands of job losses. Despite the hike in duty, revenues rose by just 12%. Punitive taxes do not work.

In 2013 the beer duty escalator was, mercifully, dropped. Then came further relief with three 2% cuts and a freeze in 2016. There is revived confidence in the sector. Beer sales have increased, which in turn has led to higher levels of investment in pubs and breweries. Tax cuts work. They boost trade at home and give this major exporting industry extra confidence in its future. In 2016 the value of UK beer exports was a healthy £584 million; it was up 17% on the previous year. So there we have it: a multimillion-pound industry that exports the world over, employs the young in record numbers, attracts visitors to our shores and yet has in its sights ensuring that villagers still have a post office and the lonely have a place to go and be part of the local community.

I and many other hon. Members present want to thank the former Chancellor and the Government. Despite the enormous task of deficit reduction and the difficulties that lay ahead, they chose to reduce beer duty, seeing the beneficial effects that that would ultimately have. Confidence and investment are returning but now we need another hand up—we need a further reduction in beer duty. Seven out of 10 alcoholic drinks sold in pubs are beer, and 82% of those are brewed in the UK. The most effective way of keeping our community pubs open and trade buoyant is by continuing to support them and giving them the confidence they need. I am calling for a revival of the beer duty escalator, but escalators go in both directions. I want an escalator that goes the other way and reduces beer duty significantly.

--- Later in debate ---

[Steve Double]

I thank all hon. Members for their contributions to this debate, which has been positive. There has been a great deal of unity among all parties on the importance of the sector to our economy, to jobs particularly for our young people, to our communities and to the Exchequer, and on the vital role that pubs play. I can reflect on the comment that the Minister made and recognise the reduction in beer duty and the drop in the amount of beer duty going to the Exchequer because of that. However, because the industry has grown and employed more people, I suspect that the overall tax take by the Exchequer has not dropped too much because extra income tax, national insurance and other taxes have been paid as a result of the growth. So there is a balancing act.

There has been a clear message from the debate today. Lowering beer duty has a positive effect on the industry. We have heard about an increase in confidence and about increasing investment to enable the industry to produce better beer and more beer more efficiently. That contributes to the overall growth of our economy and will become even more important once we have left the EU. We must ensure we have a very robust beer and pubs industry in this country that can play its part in making sure our economy is strong going forward.

I am grateful to the Minister, who has listened and taken on board the points made. I am grateful for her reassurance that the industry is in the minds of Government as they make decisions. I am sure we all look forward to—let us hope—good news tomorrow from the Chancellor.

Question put and agreed to.

Resolved,

That this House has considered beer duty.