Clause 186 - Rates of alcoholic liquor duties

Part of Finance Bill – in a Public Bill Committee am 6:00 pm ar 19 Mehefin 2012.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Photo of Grahame Morris Grahame Morris Llafur, Easington 6:00, 19 Mehefin 2012

I am grateful to have the opportunity to raise a subject that is dear to my heart. The clause increases the rate of excise duty charged on spirits, beers, wines and other alcoholic beverages. I am sure that hon. Members from both sides of the Committee, and Officers and Clerks, will be enjoying some alcoholic beverages in an activity that has become popular, which is known as chillaxing—I think the Prime Minister is fond of that phrase. Perhaps they will be doing so while watching the Euro 2012 football and, I hope, celebrating success for England this evening.

I declare an interest not only as someone who obviously loves beer—hon. Members can tell that from my shape—but as vice-chair of the all-party save the pub group. I am also a member of the working men’s club and institute union, the CIU, and of various working men’s clubs, including the Murton Victoria club; Easington colliery working men’s club; Peterlee Labour club, hon. Members will not be surprised to hear; and Deneside working men’s club in Seaham. [Interruption.] Hon. Members opposite are probably members of very exclusive London clubs, but the clubs that I have listed are very inclusive establishments.

The amendment tabled by my hon. Friend the Member for Livingston requires a review of the impact of the proposed duty increases. The clause’s effect is to substitute new rates of excise duty in the Alcoholic Liquor Duties Act 1979, ALDA, which is not to be confused with  Aldi, the discount supermarket. I certainly do not want to get into a debate about minimum price on alcohol, which is a separate issue, but it is relevant to a couple of points that I shall make shortly.

The previous excise duty rate on spirits of £25.52 was replaced by the new rate of £26.81 from March of this year, and the previous beer duty rate increased from £18.57 to £19.51. For the Committee’s information, perhaps the Minister can equate those figures to a price increase per pint or bottle of alcoholic spirits. Unless hon. Members are like the Olympic flame and never go out, it cannot have escaped their notice that the pub industry has been one of the hardest hit sectors during this economic downturn. Across the country, pubs are closing their doors for the last time, which has a considerable social and economic impact on villages, towns and cities. It looks like it is becoming irreversible.

Since the beer duty escalator was introduced in 2008, a range of new and demanding costs have also been applied across the industry. I have received a briefing from the British Beer and Pub Association and I have had discussions with it through the all-party group. It has pointed out to me that inflation has risen, VAT has increased, brewing costs have risen and incomes have fallen right across the sector. There has also been the impact of the fuel duty increases, which have impacted on delivery costs.

As we all know from our constituencies, pubs are a vital part of our social life and are a social boon. No matter what sort of areas we represent—whether it is Labour, Tory or Lib Dem, north or south, countryside or urban, wealthy or poor—our public houses are the hubs of those communities. Just as important, pubs and brewing are vital to the UK economy. It is a little known fact that more than 1 million jobs depend on this sector. Again, according to the British Beer and Pub Association, beer duty has increased by 42% since 2008, while household incomes have fallen, making a pint in the pub increasingly unaffordable for many.

I know from my constituency of Easington that pubs are struggling in these tighter economic times. I understand that 16 pubs a month are closing across the north-east. Clubs are struggling, too. Many places have closed, never to reopen. That all contributes to the changing habits of people across Britain, with more alcohol being consumed in the home. Some may judge that to be a good thing. I make no moral judgment about it, but this is a fact: the change in excise duty is having an impact on the whole sector, on unemployment and on Treasury revenue. More alcohol is being consumed in the home, with cut-price loss-leaders filling the shelves of our supermarkets.

Can the Minister confirm that over the course of this Parliament the Government are planning to increase beer tax by a further 27%? Treasury forecasts show that there will be no additional revenue generated from those tax increases over the next two years. Government Members have referred to the Laffer curve of diminishing returns, and it certainly applies here. I understand that Professor Laffer is giving a lecture in the building this week.

The time is right for a pro-active strategy—not just to help those pubs that are struggling now but to boost growth in the pub and brewing industry. The previous Government went as far as appointing a Minister with  responsibility for pubs, my right hon. Friend the Member for Wentworth and Dearne (John Healey), and I hope that this Government will go even further.

There is a real potential to create vital jobs and build on a great UK manufacturing success story. Our British beer is famous around the world, and our pub culture is envied by many countries. There is also the multiplier effect. One job in brewing supports one job in agriculture, one job in retail, one job in the beer supply chain and 18 jobs in pubs and clubs. Freezing beer duty in the 2013 Budget would save more than 5,000 jobs, mainly in pubs and clubs, and 16,000 over the next three years. That surely supports the Government’s growth agenda. In the Finance Bill 2012, the Government have committed to continuing the beer duty escalator, resulting in a 5% rise in beer duty in 2012-13. The turnover of the beer and pub sector is £28 billion, and the sector makes a massive contribution to the Treasury already. Sales in pubs have fallen sharply, so why, just at a time when demand is being driven down and sales are falling, are the Government once again clobbering pubs and brewers with higher and higher taxes? Last year alone, it resulted in the loss of over 5,000 jobs and hundreds of pub closures.

I am also concerned about the wider economic and social impact of beer tax, which needs to be taken into account when policy is developed. The amendment is not revolutionary; it is a request for a review of the wider economic impact of the escalator on the beer and pub sector before any decision is made to continue the policy in the 2013 Budget.