Oral Answers to Questions

Andrew Griffiths Excerpts

Tuesday 28th January 2014 Commons Chamber

[Danny Alexander]

I know for a fact that the British public are better off than they would be if the hon. Gentleman’s party had stayed in office. He’s got a cheek, he really has.

Again, no welcome for the growth figures or the fact that, last week, we saw the largest quarterly rise in employment in our country’s history. No welcome for the big tax cuts for working people in this country or the range of measures that we have taken to ask the wealthiest to pay more. Those are the things that are getting this country back in the right direction, something that the hon. Gentleman’s party would fail to do.

[Andrew Griffiths (Burton) (Con)]

9. What assessment has he made of the effect on the brewing industry of the reduction in beer duty announced in the 2013 Budget.

[The Economic Secretary to the Treasury (Nicky Morgan)]

The Government reduced the tax on a typical pint of beer in the Budget 2013, and ended the beer duty escalator. A British Beer and Pub Association survey suggests that 76% of its members have increased investment, and 61% are employing more staff following the beer duty changes.

[Andrew Griffiths]

On Friday I will open a new bottling plant at Marston’s brewery in my constituency—a £7 million investment made possible because of the Chancellor’s decision to cut beer duty. In the past six months, beer sales have gone up for the first time in 10 years, and 120 million extra pints have been sold. Does the Minister agree that the Chancellor was right to cut beer duty to get growth, and can we have the same again please, George?

[Nicky Morgan]

I thank my hon. Friend very much indeed. He ran a magnificent campaign before the Budget last year in representing Burton, which I understand is the home of British brewing. By ending the beer duty escalator at Budget 2013, it is already assumed in the public finances that beer duty will rise by less than other alcohol duties this year. Pubs and brewers will also benefit from other actions that we have taken to support businesses, including support with business rates and ending employer national insurance contributions for those under 21, but I hear what my hon. Friend says.

Pub Companies

Andrew Griffiths Excerpts

Tuesday 21st January 2014 Commons Chamber

[Vince Cable]

I have met the hospitality industry and it has set out its case for a VAT reduction. As the hon. Lady will know, I do not make the decisions on what goes into the Budget on tax measures. I am sure that there are many other claims on the Budget in terms of tax reduction and spending. Certainly, the hospitality industry has been very effective in making its case.

[Andrew Griffiths (Burton) (Con)]

I thank my right hon. Friend for the measured way in which he is considering all the responses to the consultation. Does he understand the concerns raised by the Office of Fair Trading about the free-of-tie proposal as outlined in the consultation? It claims that it will increase rents and the price of beer and lead to the closure of more pubs.

[Vince Cable]

I have not seen those comments by the Office of Fair Trading, but I will certainly look for them. I am rather surprised by them because the whole purpose of that option is to increase competition and market forces. If my hon. Friend could send me the details, I would be interested to see the response of the competition authorities.

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[Paul Murphy (Torfaen) (Lab)]

In the last three Januarys, including this one, I have written to Mr Speaker to ask to speak in a debate on pub companies. In all three debates—I assume this one as well—there has been unanimity across the House of Commons on what measures need to be taken. I pay particular tribute to my hon. Friend the Member for Chesterfield (Toby Perkins), the hon. Member for Leeds North West (Greg Mulholland) and, although he is not here, the hon. Member for Northampton South (Mr Binley), and many others too, right across the political spectrum, who regard this as a very serious and important issue. There have been two unanimous votes in the House of Commons on this, although on the second one it took 24 hours before the Secretary of State decided that he agreed with the House of Commons, and he came along and gave us great assurances of what would happen.

There have been four Select Committee reports, more or less all arguing for the same course of action. Enormous numbers of people from our constituencies—I think of Mr Phil Jones who owns the Open Hearth in Griffithstown in my constituency—have written to us about the iniquities of the system. A large number of organisations support the basis of the Opposition motion, including the GMB, CAMRA and the Federation of Small Businesses—a whole host of them. The essence of it is that they all say—I understand that the Secretary of State agrees with this—that first of all there should be a statutory code of practice; secondly, a mandatory rent-only option for pubcos that own more than 500 pubs; thirdly, an open market rent review; and finally, an independent adjudicator. All those are meant to enhance the significance and importance of the role of pubs in our communities. That has already been mentioned a number of times, and I am sure will continue to be throughout the course of the debate.

A new institution that has come into the debate, which many hon. Members will have read about, is the Local Government Association, which talked about the importance of pubs in our communities, and, as the Secretary of State mentioned, the importance of the community right to bid for pubs. But the essence of my contribution is not what has been said and will be said, but why we have had a delay, which strikes at the heart of what was said by the Secretary of State—who clearly is not listening to me, but perhaps other hon. Members are.

The Secretary of State presides over one of the largest Departments in the Government. He has an army of officials and civil servants and a little army of junior Ministers. He tells us today that the reason why this has been delayed is that the consultation is so enormous, so vast and so unwieldy that they cannot make up their minds as to what to do, but in the same speech he admits that this was not an open-ended consultation. This was a consultation on the basis of the Government not having made up their mind but being very close to making up their mind on what the solution should be. In many ways it was a closed consultation, making it much easier.

[Andrew Griffiths]

I understand the right hon. Gentleman’s desire for movement and to see some improvement in this matter, but does he not accept that in 13 years of his Government, despite 6,000 pubs closing in the last three years alone, they did nothing at all, apart from a few weeks before the general election, when, amazingly, something appeared in the manifesto? Does he understand that at least this Government are listening to the consultation and looking to make some changes for the good?

[Paul Murphy]

Of course I accept that Labour could have done more when we were in government, but after three debates in the House of Commons during the last three years, and when the Government have already said that they want to take these matters into legislation, they are now using the excuse of a consultation being too burdensome to allow them to make up their mind. If we were at the beginning of a parliamentary Session, that would not be too bad, but we are not. We are 15 months away from a general election. We are possibly just months away from a Queen’s Speech. When my hon. Friend the Member for Chesterfield referred to the fact that this had been kicked into touch, perhaps he had a point. Unless the Government make up their mind relatively soon, time will run out and nothing will happen between now and the general election.

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[Mr Laurence Robertson (Tewkesbury) (Con)]

Let me declare a non-declarable interest, as it were. My sister, along with her husband, runs the local pub, The Village Inn, in Twyning, the village I live in, so although I do not have absolutely first-hand experience of the pub trade, I have what must pass as a close interest.

I echo what has been said about the value of pubs to communities. They are not only places where people drink; they are places where they eat and meet. Many golf societies, darts clubs and pool tournaments are hosted by pubs, and they are of great value to local communities in rural areas especially. Pubs also raise a lot of money for charities. Just this Saturday gone, I had the honour of presenting three cheques totalling almost £4,000 to local charities, and that picture is replicated across the country.

However, we have concerns. We are seeing many pubs closing, as has been said, and many landlords getting by on very little money. Their profits have been squeezed by the business model under which many of them are operating. There are no easy answers to the problem. As I said in an intervention, I held an Adjournment debate on this issue in the last Parliament, during which there were other such debates. The then Government were accused of not responding to a report that came out in that Parliament. I do not seek to make a party political point about that; I merely suggest that it is fairly unusual for the House to be almost in total agreement when discussing a problem, as it is today, yet for us all to be struggling to come up with a solution that will actually work.

As has been mentioned, the idea was tried with the beer orders in 1989, when breweries were barred from holding more than a certain number of pubs. That gave birth to the pubcos that we now see, which then bought pubs and other properties at high prices. As has been rightly said, they are now trying to recoup that money, in some cases quite desperately.

[Andrew Griffiths]

I completely concur with my hon. Friend’s point. He mentions the history of this. Would he be surprised to learn that the number of pubs owned by pubcos doubled under the last Government?

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[Andrew Griffiths]

The hon. Lady says that the tie is distorting. I point her to the Office of Fair Trading investigation, which clearly said that the tie does not distort and that it is not anti-competitive in any way.

[Alison Seabeck]

The hon. Gentleman raises an interesting point, and it would be interesting to hear what the Secretary of State says in response to that finding, which, to be honest, many Members find rather odd.

My hon. Friend the Member for Chesterfield highlighted other areas of business where there is a relationship similar to the one that exists between the pubs and the companies, but where things are much more open and fairer. Clearly, we need to get pubs put on to that type of footing. This motion encourages a move away from the current position. All hon. Members who enjoy visiting their local pub and drinking a good ale or beer should think carefully and support the motion.

With pubs struggling for a range of different reasons, we need to do something about it. We need to introduce independent rent reviews to stop this double rent charging, to put in place the mandatory free-of-tie option and to set up an independent adjudicator, which would make a massive difference. The Government keep telling us that they are not kicking this issue into the long grass—I have lost count of the number of times that has been said—and that everything is being handled in a timely manner. Timely for whom? The Government should tell that to the 26 pubs that are about to close. They are not acting in a timely fashion. How many pubs will have to go to the wall before we finally get legislation? Let us face it: at the moment, the legislative programme is virtually non-existent, and there is no excuse for the Government not to bring legislation forward. I urge the Secretary of State to get his finger out and do something about it.

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[Andrew Griffiths (Burton) (Con)]

Thank you, Madam Deputy Speaker, for allowing me to take part in this important debate. I have been struggling to juggle the task of opening a new business in my constituency with my membership of the Care Bill Committee, so I am grateful to you for giving me the opportunity to speak—which I do as the Member of Parliament for Burton, which is the home of brewing and of two important pub companies.

Given that I am the last Back-Bench speaker in the debate, it is unfortunate that it should fall to me to represent the voice of doom, but I must urge the House to think about the unintended consequences of what it calls for today. I listened intently to the very reasoned speech of my hon. Friend the Member for Tewkesbury (Mr Robertson), who uttered those words that strike fear into anyone who has been involved in the brewing and pub industry over the years: the Beer Orders. This is the single biggest factor that any Minister considering legislating in this area should consider. It is because of the Beer Orders and because of ill-thought-out legislation that we find ourselves in our present position, and I urge the House not to repeat those mistakes.

All Members who have taken part in today’s debate have done so for the same reason. They want to see a healthy and successful pub industry, and they want our pubs to thrive and to succeed. However, I believe that the unintended consequences of the proposed regulations will cause many more pubs to close.

It is important for the House to understand exactly what we are talking about when we refer to a free-of-tie option and to market rents. Let me cite the example of a pub company in my constituency, a brewery called Marston’s. It owns a number of pubs, which would be regulated under the proposed legislation. It has been operating for many years, and is a reputable business with a long and proud history. That brewery might have owned a pub for 30, 40 or 50 years, and run it extremely successfully. The tenant might retire or decide to do something else, and a new tenant might take over. Within months, that new tenant—despite having seen all the pub books and despite having had the business case assessed by his lawyer, his business adviser, his bank manager, and Uncle Tom Cobley and all, and despite knowing exactly what rent he would pay and what he would pay for beer—might decide that he wanted to become free of tie.

What is now being proposed is not only that the Government should tell Marston’s what it can charge for beer and rent in a property that it may have owned for 50 or 60 years, but that we should then allow that tenant, paying a rent set by the Government, to sell beer that is not Marston’s. We can see the unintended consequences of successful pubs, well run by brewers, no longer selling the beer on which they were built.

[Mr Jim Cunningham (Coventry South) (Lab)]

The hon. Gentleman has led a debate in the House on the same issue in the past, and it has still not been resolved. The situation he is describing actually happened between working men’s clubs and breweries. A number of clubs ran up a lot of debt that they owed to the brewers, and were then forced to sell their beer. How can we solve that problem? Many people in Coventry are concerned about pub closures.

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[Andrew Griffiths]

As a young boy, I was more or less brought up in a working men’s club. I went to it every weekend. I recognise the importance of our working men’s clubs, and I know that a situation arose whereby clubs were in hock to the brewers. What we must bear in mind is that this is intervention in the marketplace that we would see nowhere else in business.

[John McDonnell (Hayes and Harlington) (Lab)]

The hon. Gentleman is advancing a coherent argument, but surely he does not oppose the introduction of an adjudicator. We have done that in other contexts, such as supermarkets.

[Andrew Griffiths]

I am certainly open to the idea of an adjudicator. My question is, who pays? It is estimated that the administration of an adjudicator could cost £1 million, which is a huge amount of money to take out of the beer and pub economy. Who is going to pay for what could be described as just another piece of red tape and Government regulation?

I genuinely ask the Minister why she would want to sit in judgment on rent disputes or other commercial or contractual disputes between two businesses, especially when effective mechanisms are already in place that are unique to the pub sector, independent and funded by the industry. I ask her to consider carefully the Office of Fair Trading’s report to the consultation. It clearly expressed the view that the tie is not distorting the market, and states that the proposed intervention could result in a breakdown in economies of scale, leading to an increase in rents and prices that would affect tenants and consumers. I also urge the Minister to consider the report from London Economics, which her own Department requested. It suggests that more than 2,400 pubs could close as a direct result of the proposed intervention in the market.

The reality is that many pub companies are nursing pubs because they cannot find a tenant or buyer for them. The proposed economic model would mean that those companies would have to free themselves of those pubs, which could lead to thousands of pubs closing in a very short time. I ask the Minister: why regulate? Is there a consumer issue involved? Not according to the Office of Fair Trading. Would regulation help the smaller brewers? Certainly not, according to the Society of Independent Brewers. That organisation represents the micro-breweries. We have heard people rejoicing today that those breweries have flourished and blossomed. There are now 1,000 micro-breweries operating in this country as a result of the progressive beer duty introduced by the previous Government—I commend them for that—so why would we want to interfere in the market, given that those brewers have clearly stated that to do so would prevent their access to the market?

[Mr Donohoe]

I used to run a licensed premises myself, so I understand what the hon. Gentleman is saying, but he has not really addressed the issue before us today. Why are so many pubs closing? Why, in his opinion, is that happening?

[Andrew Griffiths]

I think that you would become apoplectic, Madam Deputy Speaker, if I were to wax lyrical on why pubs are closing. We all know that it is due to changing social demographics, to the fact that people are spending more time at home, to the drink-driving laws and to the supermarkets. There are many reasons—[Interruption.] And, yes, the smoking ban. The hon. Member for Central Ayrshire (Mr Donohoe) gesticulates as though he is puffing on a cigarette. I completely agree with him on that point. The previous Government introduced the smoking ban and, at a stroke, closed thousands of wet-trade pubs without putting in place any support for the pubs or the industry. He has pointed out another unintended consequence of legislation. It was a good idea that we stopped smoking in pubs—they have a nicer environment as a result—but the unintended consequence was that many of them closed.

The danger is that we repeat those mistakes in the proposed regulation. We would not expect McDonald’s franchisees to be able to sell Kentucky Fried Chicken products because they thought there would be more profit in doing so. Why, then, should we want a Marston’s pub to be forced to sell other people’s beer as a result of the proposed regulation?

[Bob Stewart]

Would it not help licensees if Marston’s could reduce the price of its beer to a market level? Would that not make their pubs more sustainable? Reducing the price of beer in that way would help a heck of a lot, without the need for any intervention.

[Andrew Griffiths]

I completely agree with my hon. Friend, and I am grateful to him for his support for our cross-party campaign to reduce beer duty. That campaign did a lot to help publicans, and I hope I will be able to call on his support again as we move forward.

[Mr Laurence Robertson]

My hon. Friend has mentioned the difficulties involved in reaching a solution, as I tried to do in my speech. Does he agree that one clear way for the Government to help pubs would be to cut the tax charged on beer, which can amount to 37% on the average pint? That is a huge amount of money, and any tax cut would benefit customers and landlords.

[Andrew Griffiths]

I completely agree with my hon. Friend. The previous Government increased the duty by 60% during their time in office, and it is no wonder that 9,000 pubs closed on their watch as a result.

[Mr Donohoe]

I recall a previous debate on beer, which I think was led by the hon. Gentleman. I made an intervention on that occasion to ask about whisky and other spirits. It is now known that spirits account for 40% of the sales in pubs, so would he include them in his calculations, as well as beer?

[Andrew Griffiths]

The hon. Gentleman will also be aware that the vast majority of a pub’s income comes from the sale of beer. We brew beer in this country; it is something that we are fantastic at doing. It is a British product—

[Mr Donohoe]

Whisky is as well.

[Andrew Griffiths]

Of course, and whisky is a great product, but the hon. Gentleman will also know that the whisky industry is growing and that the vast majority of that growth is coming from exports, whereas the beer industry is in decline, and beer is produced and sold uniquely in this country.

I recognise that I am in the wilderness here, but I urge the Minister, colleagues and all Members who are considering how to vote in this debate not to introduce red tape and regulation that will force more pubs to close and create a further decline in the great British pub.

National Infrastructure Plan

Andrew Griffiths Excerpts

Wednesday 4th December 2013 Commons Chamber

[Danny Alexander]

I think that the hon. Lady is being unkind to the Government. We have cut the tolls on the Humber bridge, which I know she and other Members from that region welcomed. Under this Government, 880 miles of railway are being electrified in this country, compared with a full 9 miles during Labour’s 13 years in office. The chair of the Humber local enterprise partnership, Lord Haskins, recently raised with me the importance of the electrification of the Selby to Hull line, which is something I am looking at right now.

[Andrew Griffiths (Burton) (Con)]

I refer the House to my entry in the Register of Members’ Financial Interests.

On behalf of business and residents in Uttoxeter, may I thank the Chief Secretary for the huge investment in road improvements on the A50? Does he agree that this kind of investment in roads can help not only to improve road safety and cut congestion, but to deliver growth, jobs and prosperity in the north?

[Danny Alexander]

I wholeheartedly agree with my hon. Friend and I pay tribute to him, because he has made a fantastic contribution to making the argument for the project to Ministers, which has led to its inclusion in the infrastructure plan. He is right: road improvements are not just about dealing with congestion for motorists, but about unlocking growth opportunities for the whole country, and I think that is precisely what the A50 investment will do.

Oral Answers to Questions

Andrew Griffiths Excerpts

Tuesday 5th November 2013 Commons Chamber

[Danny Alexander]

We set out in June the budget for HS2. We will absolutely stick to that budget. Using the excellent leadership we have brought in, with Sir David Higgins and others, we will make sure that the project is delivered under budget. The hon. Gentleman should be committed to the project because it will support growth all over the United Kingdom. It is the most significant investment in our railways for 100 years, and his party should support it.

[Andrew Griffiths (Burton) (Con)]

17. I refer the House to my entry in the Register of Members’ Financial Interests.I congratulate the Chancellor and his Government on their investment in infrastructure in the west midlands, which helped to deliver the Jaguar Land Rover plant, and thousands of manufacturing jobs in the process. I also draw the Minister’s attention to the A50, a key corridor in my constituency, connecting Stoke to Derby, which involves a number of manufacturing businesses that could hugely benefit from road improvements and infrastructure spending.

[Danny Alexander]

The hon. Gentleman is right that targeted infrastructure investment can unlock job creation in enterprise zones, including at JLR and in various places around the country. I am well aware of the particular scheme that he is promoting and I look forward to discussing it further with him to see how we can take it forward.

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[Mr Osborne]

The key thing is that people are getting into work. That is another Labour MP who has not acknowledged the fact that unemployment has fallen in his constituency. When will Labour Members acknowledge that our economic plan is repairing the mess that they left behind?

[Andrew Griffiths (Burton) (Con)]

T6. On behalf of brewers everywhere, I thank the Chancellor for being the man who scrapped Labour’s hated beer duty escalator and who cut beer duty for the first time since 1959. Last month saw the biggest growth in beer sales this century, with 1 million extra pints being sold and £60 million extra going to the Exchequer. I ask him to keep supporting Britain’s pubs and brewers.

[Mr Osborne]

This is a case of teamwork, because my hon. Friend has led a brilliant campaign involving many Members of Parliament in support of the local pub industry in their constituencies and the brewing industry, which is so important in Burton. The work that he has done has been fantastic. It was thanks to his campaign, which drew the evidence to my attention, that we were able to take the action that he has welcomed.

Living Standards

Andrew Griffiths Excerpts

Wednesday 4th September 2013 Commons Chamber

[Gemma Doyle]

I will not at the moment.

In my constituency of West Dunbartonshire, between 2010 and 2012 average wages rose by just 0.6%, while inflation hit 8%. With the cost of essentials such as food and energy continuing to go up and up, one does not need a calculator to work out that the figures just do not add up. In recent months, the community of West Dunbartonshire has come together to launch a food share project. People are so appalled by the need for that in our area that they do not want to call it a food bank. They do not want it to be just a food bank, so as well as collecting donations and redistributing supplies, the group has wider aims, such as campaigning on poverty and poverty pay. I am delighted to say that Labour-led West Dunbartonshire council is a living wage employer. I very much hope that other local employers will follow suit. I intend to have discussions with local businesses about how they can work towards that.

Earlier in the summer, figures published by Citizens Advice showed that one in five families feel that they cannot afford to feed their children. Frankly, that should shame us all. Its advisers are seeing people who have nowhere else to turn. The chief executive of Citizens Advice Scotland, Margaret Lynch, has stated that it is no longer unusual for advisers to see people in their offices who do not have enough money to pay for food, never mind other bills such as rent and council tax.

I have had men and women bring their bills to my surgery. Some have lost their jobs and many have had their hours cut. They are desperate for more hours or for a job that will pay them enough to make ends meet. They have trimmed their outgoings to the bare essentials. They put their bills on the table in my office and ask, “What should I do?” It is difficult, but I give them the best advice I can. I tell them about the food bank, although I have to think twice about that, because it embarrasses people so much. It is a dreadful situation for people to be in, because they feel a huge responsibility towards their families, but it is not they who are failing, it is the Government who are failing them.

At the same time as that is going on in all our constituencies, the richest people in this country have had a tax cut. Conservative and Liberal Democrat MPs have decided that they want to give millionaires a tax cut, which beggars belief.

[Andrew Griffiths (Burton) (Con)]

Will the hon. Lady give way?

[Gemma Doyle]

I will not, because I want to ensure that we have enough time for the Front Benchers to speak.

We have a living standards crisis in this country. The Government’s own figures show that things will continue to be extremely difficult for the foreseeable future. People are really struggling, and the Government have a moral responsibility to do something about it.

Budget Resolutions and Economic Situation

Andrew Griffiths Excerpts

Thursday 21st March 2013 Commons Chamber

[Andrew Griffiths (Burton) (Con)]

I recognise that time is short so I will do my level best to keep my comments as brief as possible. I speak as the Member of Parliament for Burton, the home of British brewing, and as the chairman of the all-party parliamentary beer group. It is therefore incumbent on me to put on record my thanks, and those of the brewing industry, for the Chancellor’s momentous decision yesterday to scrap the beer duty escalator and cut beer duty by 1p. We cannot underestimate the importance of the decision for brewers, for publicans and for beer drinkers across the country.

In his speech today, the shadow Chancellor dismissed the 1p cut in a bit of a flippant way, but I think that the 1,745 people who are employed in brewing and pubs in his constituency will be hugely grateful to the Chancellor, who has shown himself to be on the side of the publicans and beer drinkers of this country. The previous Chancellor of the Exchequer appeared on posters in pubs up and down the country stating that he was “barred from this pub”, because his Government had chosen to introduce the beer duty escalator, which has resulted in beer duty rising by an incredible 42% since 2008. That has contributed to the closure of many of our communities’ pubs in that period.

I am therefore delighted to support a coalition Government who have done more for brewers and pubs than any other Government for a generation. I went to the House of Commons Library yesterday and spoke to the Treasury expert. I asked him when a Chancellor had last cut the duty on beer. He replied, “Mr Griffiths, this might take some time, as it was so long ago. I shall have to go away and research it.” He came back with the answer: Derick Heathcoat-Amory was the last Chancellor to cut the duty on beer, in 1959. Someone who was just old enough to enjoy a pint of great British beer at that reduced price in 1959 would now be 72 years old.

It is important to applaud the campaign that has led to these changes. As the chairman of the all-party parliamentary beer group, I want to thank colleagues from all across the House who have supported it. Members on both sides have worked incredibly hard on behalf of their brewers, publicans and beer lovers. We all recognise the importance of the community pub and the role it plays in the heart of our constituencies. This measure provides us with a real opportunity to support those pubs.

[David Rutley]

I join many others in paying tribute to the great work my hon. Friend has taken forward. I received one tweet yesterday from the Wharf in Macclesfield saying this was

“a good Budget for pubs, the brewing trade and all industry”.

Has my hon. Friend received similar plaudits from people across the country?

[Andrew Griffiths]

I thank my hon. Friend for the support he has given to pubs and breweries as part of this campaign. I agree: I have been overwhelmed by the number of publicans, brewers and members of the Campaign for Real Ale and beer lovers who have welcomed this announcement. He quotes one brewer and I will quote another—Belinda Sutton from Elgood & Sons in Wisbech in Cambridgeshire who said:

“The result could be the saving of our brewery, as this was just what we needed to…stimulate trade in our pubs and hopefully increase production.”

That is so important: every brewery and every pub in our constituency are important employers, so it is fantastic that we can give them this boost. I am absolutely sure that when this cut is introduced on Sunday, beer drinkers across the country will be raising a glass to the Chancellor and toasting his health.

I am hugely sorry that the Economic Secretary is not in his place on the Front Bench, as we owe him a huge debt of gratitude. Within days of him becoming a Minister—I think it was his first ministerial duty—he spoke in a Backbench Business Committee debate to which many Members contributed. He said then that he was listening. He is a listening Minister who has listened on behalf of pubs and brewers across the land.

I would also like to pay tribute to CAMRA and its thousands of supporters who took part in this campaign and who participated in the mass lobby organised by Emily Ryan and Jonathan Mail to explain to Members of Parliament just how important their community pubs and great British beer are to them. I commend, too, the work of the Beer and Pub Association, which works tirelessly to build a bright future for pubs and breweries across the country.

I end my comments there. Let me just say that this is a great Budget for brewers, a great Budget for beer and a great Budget for beer drinkers in Britain.

[Jim Sheridan (Paisley and Renfrewshire North) (Lab)]

I want to raise an issue that is close to my heart—the Scotch whisky industry—not just because it is an excellent tipple when taken responsibly and because I am chair of the all-party group on Scotch whisky, but, more importantly, because that industry provides hundreds, if not thousands, of jobs in this country.

The Chancellor suggested yesterday that he was cutting beer duty to help boost pubs, yet as 40% of pub sales come from spirits and wine, his duty increases on Scotch whisky and other drinks mean that when it comes to pubs, he has given with one hand and taken back with the other.

[Andrew Griffiths]

Will the hon. Gentleman give way?

[Jim Sheridan]

No, I do not have time.

Like the Chancellor, I wish to see British businesses succeed to help to secure British jobs. The Chancellor talked about the opportunity for UK business that a successful free trade agreement would bring. He talked about backing businesses that are a global success. For the Government and the European Commission, improved market access and reduced discrimination are priorities for the Indian free trade agreement talks. In a spectacular lack of joined-up government, in one speech the Chancellor has attacked Scotch whisky—the one industry that is currently investing for international growth to India and elsewhere—by increasing discrimination against it here at home.

[Andrew Griffiths]

Will the hon. Gentleman give way?

[Jim Sheridan]

No.

What sort of signal does that send to overseas markets? British ambassadors around the world who are trying to help Scotch gain fairer trading conditions will be shaking their heads at the example set by our own Chancellor here in this country. This industry accounts for 25% of UK food and drink exports, generating some £134 a second for the UK balance of trade, yet the Chancellor’s only action is to penalise it in its home market. The UK is the third largest market for Scotch whisky in the world, and some companies depend on the UK market for success.

[Andrew Griffiths]

rose—

[Jim Sheridan]

As I have said, this industry employs people in areas where few alternative jobs exist. The Chancellor threatens jobs in such areas, as the Chief Secretary presumably told him. [Interruption.]

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[Seema Malhotra]

My hon. Friend makes her point extremely well. The £225 million proposed in the Budget to support “affordable” homes building is a fraction of the £4 billion that Labour would have invested.

The Government proposed change but this is more of the same. The policies of this Government have failed on jobs, on growth, on the deficit and in the lives of ordinary people. The Budget will do nothing for the 13,000 on the waiting list for a home in my constituency.

[Andrew Griffiths]

Will the hon. Lady give way?

[Seema Malhotra]

I am sorry, but I will not.

The Budget will do nothing for the 74-year-old woman waiting a week for a blood transfusion because of staffing cuts in the local hospital. The Budget will do nothing for the family I met recently who live in one room: two teenage brothers sharing a bed; a mother and father who put mattresses down on the floor; the father who goes to work at 4 in the morning until 2 in the afternoon; the mother goes to work at 11 am and comes back at 11 pm. They are not shirkers, they are hard workers and they will not be helped by the Budget.

The legacy of the past three years in my constituency is rising unemployment, Sure Start centres under threat, longer waiting times in local hospitals and police numbers being cut. Families are suffering for the decisions that the Government have made and are wondering where they will live as the bedroom tax kicks in and makes their homes unaffordable. It is not too late for the Chancellor to change his mind, change course and get a plan for jobs and growth that will deliver for Britain’s families and businesses.

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[Andrew Griffiths]

Does my hon. Friend share the joy of many first-time buyers in my constituency at the fact that this will give them a real chance to get on the housing ladder?

[Richard Fuller]

I appreciate my hon. Friend’s intervention, but I am not sure that I can share his joy. The impetus behind this Treasury document is the notion that enhancing loan-to-value ratios of 95% is somehow a good policy, and I need some more reassurance about that.

Let us compare the average house bought in 1997 at the average loan-to-value ratio of 80% with the average house bought in 2007—after all that price inflation—at a 95% loan-to-value ratio. Over the 20 or 25 years of their mortgage, the people who bought the average house in 2007 will have to spend £234,000 more than those who bought the average house in 1997. Increasing loan-to-value ratios depresses people’s ability to spend money on other things, because they are spending more on their mortgages. I want some more reassurance from the Treasury that this scheme will not have unintended consequences for their ability to spend money appropriately in relation to their incomes.

--- Later in debate ---

[Justin Tomlinson (North Swindon) (Con)]

Given the time constraints, this will, obviously, be a bit of a whistle-stop tour. However, I will set out some of my Budget highlights and, with each one, something on my wish list to try to be constructive for the Government. First, I very much welcome the £10,000 personal allowance. As we know, that is a tax cut for 24 million people and 2.7 million people will be completely taken out of paying income tax. This is genuinely a reward for people doing the right thing.

Some excellent work by the TaxPayers Alliance has highlighted a chronic lack of understanding of the impact of changes to taxation in people’s own payslips. In this week’s The Spectator, I set out a request that when changes to pay-as-you-earn made by any future Government, of any colour, kick in, they should be explained on the employee’s payslip. In that way, we can get greater engagement. I know through my work on the all-party group on financial education for young people that because we now have so many direct debits and standing orders, people are disfranchised from their own bank accounts. Therefore, setting out the information I suggest will help.

I welcome the various measures to support business, such as the 20p rate of corporation tax and the £2,000 employment allowance. It will make a huge difference in the south-west, as 85,000 employers will gain and 40,000 will be taken out of paying national insurance altogether. Some 1.25 million private sector jobs have been created and a quarter of a million new businesses have started since we came to power. My constituency has seen the fastest increase in the number of start-up businesses in the south-west. It is also crucial that we continue to support businesses looking to export to emerging economies such as Brazil, India and China, so that we are not so exposed to the turbulence in the European Union.

I also want more to be done to help promote young entrepreneurs. We all support that principle, but young people face a challenge, as I find when I talk to business students. I was the only one of the 350 who studied business on my university course who ended up running their own business and employing people. When I ask business students whether they would like to run a business, all the hands go up and they are extremely enthusiastic; they have been enthused by “The Apprentice” and “Dragons’ Den”. When I then ask how many will do it, all the hands go back down, because they simply do not know how. When people choose to go to university or take on an apprenticeship—the number of which has increased massively—a clear, defined career path is laid out for them. If they tick the box, get the grades and pass the application process, that is what they will do. We need to do a lot more in that regard.

A couple of weeks ago, I set up a scheme with Swindon college to support a local charity, the Prospect hospice. Those who took part were each given £10 to raise money by trading in the Blunsdon market, a tough trading environment, and between them they raised more than £711. One team was so successful that the market has asked them to come back in the summer holidays to give it a go. Our town centre is looking to use the high street money provided through the Mary Portas scheme to set up pop-up shops, and has also made an offer to that team of very successful girls. Those who are interested might like to hear that they ran a 1950s tea shop-style café, dressed in 1950s clothes and played 1950s music; they understood customer service. My request is that we do more to set out clear career paths in business.

I welcome the good news on fuel duty. People have mentioned the 13p price difference—it is 59p if we use gallons, and sounds even more impressive. Whenever I use cutting-edge social media such as Facebook to conduct a “Fantasy Chancellor” poll and ask about the one thing people would do, fuel duty is always the most popular issue. I ask for no return to the 12 hikes in 13 years we saw under the previous Government. They regarded motorists as an easy hit, but the cost has a tangible effect on people.

The excellent news on beer duty is a credit to my hon. Friends the Members for Burton (Andrew Griffiths), for Nuneaton (Mr Jones) and for Leeds North West (Greg Mulholland). I am a proud member of the save the pub group and the all-party group on beer. I had a text from the wonderful Arkell’s brewery in my constituency, which very much welcomed the move. It is important to the sector.

[Andrew Griffiths]

I thank my hon. Friend for his sterling support for the campaign to scrap the beer duty escalator. Earlier, he mentioned the work of the TaxPayers Alliance. Will he join me in congratulating the TPA on its “Mash Beer Tax” campaign, and The Sun newspaper on its fabulous campaign to scrap the beer duty escalator?

[Justin Tomlinson]

Absolutely. I also commend the constructive and proactive way they lobbied politicians on both sides of the House, so that they realised what a benefit such a move would be to the local economy, as well as for those who enjoy the odd pint in their local pub. It is cause for rejoicing.

I have two further requests. A considerable number of pubs are starting to provide food as a mainstream part of their offer. More needs to be done to encourage hospitality and catering students to consider becoming landlords, as a lot of breweries are struggling to find younger landlords. Secondly, I urge the Minister to consider the excellent work of my hon. Friend the Member for Burton and to commission him to look more widely than the beer duty: to consider why we are losing pubs and what more we can do in that regard, just as we commissioned Mary Portas to carry out the high street review.

Beer Duty Escalator

Andrew Griffiths Excerpts

Tuesday 5th March 2013 Westminster Hall

[Mr Marcus Jones (Nuneaton) (Con)]

It is a pleasure to serve under your chairmanship, Mr Caton. I am delighted to have secured this topical and most important debate in the run-up to this year’s Budget. Since I was elected to the House, I have taken part in a number of debates of this kind, and they are usually extremely well attended. Despite the fact that there are huge pressures on parliamentary time this morning, given the plethora of Select Committees, it is good to see how many hon. Friends and Members are here to support this debate. Given the debate title, I intend to keep to the narrow issue of the beer duty escalator, and I urge colleagues to do likewise. Just as none of us would want our beer watered down, I do not want us to temper our arguments by being distracted from the issue of beer duty.

I will set out a simple, clear case for why the beer duty escalator should be scrapped and beer duty should not be increased in the forthcoming Budget. In making that case, I will discuss the impact of the escalator on the beer and pub industry and the negative effect that the escalator is having on our economy and communities across the country. I will also discuss the positive story that our beer and pub industry has to tell and the reasons why that industry should not be compromised by further rises in the already excessive beer duty rate.

In the UK, 30 million adults drink beer each year and 15 million visit the pub each week. From my postbag, I know what an important issue it is for many of my constituents. Campaigns organised by the Campaign for Real Ale, the British Beer and Pub Association, the Society of Independent Brewers, the National Farmers Union, the TaxPayers’ Alliance and The Sun newspaper have captured the spirit—I probably should not use that word in a debate on beer—of public opinion. The campaigns have chimed with the breadth of public opinion on the subject, and the strength of feeling involved has been expressed by the 108,000 people who recently signed an e-petition calling for the beer duty escalator to be scrapped.

From my postbag, I know that popping down the local for a pint is becoming more and more expensive and out of reach for many of my constituents. Incomes have been squeezed over the past five years or so, and the cost of a pint has become more and more unaffordable. Beer is fast heading towards being a luxury item.

On the economic impact of the escalator, the beer and pub sector is vital to our country; nearly 1 million people across the UK work in the industry. Some 46% of those are younger people aged 16 to 24. The beer industry is also a true success story for British manufacturing: 87% of all beer consumed in this country is made in the UK. If only we could do the same for other products that we consume, our economy would be far more balanced. That is one reason why we should encourage the beer and pub industry and the manufacture of great British beer in our country.

[Andrew Griffiths (Burton) (Con)]

I congratulate my hon. Friend on the speech that he is making. The pub industry is a fantastic way to get young people into work, give them work experience and teach them the business model. Does he not agree that supporting the pub trade is a fantastic way to tackle our problems with youth unemployment and young people not in education, employment or training?

[Mr Jones]

My hon. Friend is absolutely right. Young people can enter the beer and pub industry at the bottom by pulling pints behind the bar, an extremely important role, and work their way up within companies to become managers or work for pub companies and breweries. It can be an extremely fulfilling and constructive career for many. We should encourage the industry to take on more and more young people.

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[Joan Walley (Stoke-on-Trent North) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Caton. I hope that you, the Minister and the hon. Member for Nuneaton (Mr Jones) will understand if I have to disappear for part of the debate to attend a meeting relating to my work on the Environmental Audit Committee, but I hope to be present for the closing speeches.

I congratulate wholeheartedly the hon. Member for Nuneaton on securing this timely debate. Only last week, in relation to a briefing in the Palace of Westminster, many of us sent postcards to the Chancellor, with the support of CAMRA and the Society of Independent Brewers, to say that the time has come for the Government to review the escalator. As the hon. Gentleman set out, the debate is relevant not only to the Chancellor and the Treasury but to the Department for Business, Innovation and Skills, because we are talking about British manufacturing and a sector that is at the core of all our constituencies. During the preparations for the Budget, it is vital that the sector’s contribution to the economy is recognised. In recent years, we have had lots of leaks in advance of the Budget statement, but in this instance I hope there might even be an early celebration of the Government looking again at what needs to be done.

In my constituency, the brewing and pub sector is a historic yet dynamic and vibrant part of the local economy; it creates jobs and is at the centre of the local hospitality industry. It is part of our cultural heritage and the social life of every community. For those reasons alone, the Minister should listen hard.

[Andrew Griffiths]

I congratulate the hon. Lady on taking part in the all-party beer group’s campaign to get MPs to work behind the bar of their local boozer. I know that she learned a great deal from that. Almost 100 MPs took part in that scheme. Does she agree that that shows how strongly MPs want to support our local pubs and that they value them greatly?

[Joan Walley]

I am grateful for that intervention. Many hon. Members belong to that all-party group and regularly attend its functions. I do not know, Mr Caton, whether you are one of them, but I know that you have many wonderful pubs in your constituency of Gower.

Members of Parliament join all-party groups not just to go along for half an hour or so, but to represent their constituents. They would not be part of such groups or put postcards into a barrel to send to the Chancellor if hundreds of people had not contacted them by e-mail and letter and through local pubs. I have visited many local pubs in my constituency and, as a Member of Parliament, have become involved in resolving all sorts of issues. If he listens to anyone, the Minister should listen to Members of Parliament who have first-hand experience of how important the issue is.

My constituency has 93 pubs and one brewery, and I want to speak on behalf of that brewery—the Titanic brewery. It has won awards and works alongside local pubs. The total number of jobs in the beer and pub sector in my constituency is 1,290, of which 668 are direct jobs and 327 are direct jobs for 16 to 24-year olds. It is very much part of local business. The total value that it adds to the local economy is a grand £32.1 million with £0.9 million invested in the local economy.

I am particularly proud of Titanic, and of Keith Bott and the employees, who play a leading role in the Society of Independent Brewers and have been at the forefront of campaigning for the Government to consider their industry during this economic recession. Times have changed since the escalator was introduced, and the Minister should tell us what progress he has made on the review since the last debate in Parliament back in October or November. I hope that he will give assurances on that.

Titanic plays an important and vibrant role in the life of my constituency. It is 27 years old and has grown from two to more than 130 employees, including 35 jobs in Stoke-on-Trent North alone. I draw particular attention to the Bulls Head, where anyone who wants to taste good real ale goes, particularly before a good football match.

The majority of that employment has been enabled by investment in pubs. It is worth noting that although the hon. Member for Nuneaton wanted to talk about the escalator, the value of the small breweries relief has made an enormous difference to many small breweries all over the country. If ever there was evidence that investment in a sector can bear fruit, it is that small breweries relief, which has made such a difference since its introduction back in 2002. The Government should now go one step further and examine the escalator.

The current policy of increasing duty above inflation may seem to be one way of raising revenue, but the Treasury’s figures show that that is misguided. They forecast a very small increase in duty revenue from this policy—small enough that no additional revenue is predicted. The policy is changing societal behaviour. An unintended consequence of duty increases—we heard about this during interventions—is that more and more people are choosing to drink at home or on a park bench, unregulated and unsupervised, and they are switching from beer to wine and spirits. Part of my career many years ago was working with homeless alcoholics, and I cannot stress enough the importance of having supervised places where people may drink responsibly. Pubs are such places.

This debate is critical not just for small breweries such as Titanic, but for the beer and pub industry as a whole, and the supply chain that contributes to it. Since the introduction of the beer duty escalator, excise duty has increased by at least 20p a pint. Beer sales in pubs and clubs have fallen by 23% and more than 6,000 pubs have closed. Beer taxation now costs the average pub around £66,000 a year. Instead of that, we should be creating more jobs, employing more people, and creating more wealth locally. That is possible if we do not have excessive taxation, which is simply not working in a time of economic austerity. For those reasons, I hope that the Government will listen to what is being suggested today.

[Greg Mulholland (Leeds North West) (LD)]

I congratulate my hon. Friend the Member for Nuneaton (Mr Jones) on securing this debate. He is a big supporter of beer and pubs and it is a great pleasure to be working again with him and colleagues from across the House who support our national drink and our community pubs. This seems to be a case of here we are again, and here we go again.

As chair of the all-party save the pub group, it is always a pleasure to discuss these issues, but I hope that this is the last time we have to discuss the beer duty escalator in Parliament, because I hope that in two weeks this ill-conceived tax—it has not done what the Chancellor in the previous Government predicted, but has caused damage and held back our brewing industry—will become a thing of the past and that we need not ever discuss it again.

I am pleased to see the Minister in his place, and I thank him for the way he has engaged in the matter and listened. He is a supporter of beer and pubs, and he has acknowledged the important role of the brewing sector and pubs, and the opportunities for growth and to be part of getting the British economy back on its feet. I warmly welcome that. He has been listening carefully and reflecting, and I hope that that can also be said for the Chancellor and the Chief Secretary to the Treasury. I urge coalition Members particularly to ensure when we bump into them in the Lobbies that they are also listening. However, the listening must be coming to an end, because there has been a lot of it, as well as a lot of reflecting and campaigning. It is now time for action, and the message from this debate is that nothing other than announcing the abolition of the beer duty escalator in the Budget in two weeks will be acceptable. We urge the Minister to ensure that.

I want to emphasise to the Minister, the Chancellor, the Chief Secretary to the Treasury, the Prime Minister and the Deputy Prime Minister that this is a hugely positive opportunity. Too often in debates, MPs say that they want a tax break here and a tax break there, or a favour and a leg-up. That is not what this argument is about. It is simply about two things. From an economic point of view, the tax simply does not add up. It does not make sense. Even the Treasury’s figures have shown that if the predicted rise in beer duty goes ahead in two weeks’ time, the revenues from beer duty will fall, yet we do not need to be geniuses to see what effect the duty is having on brewers, particularly medium-sized brewers. We need to remember that the tax is a producer tax; it is levied on brewers at the point of production, so it directly affects that sector. Taking it away would lead to a change in investment decisions by those companies.

I had a very powerful and stark conversation with Lancaster brewery—it is not in my constituency. The brewery has done incredibly well to get above the level of small breweries relief, to the extent that it is helping either very little or not at all. I heard about how much the brewery would have to pay in duty, and where it would spend that money otherwise. It would spend it on investment, on employment, on increasing production, on taking on more people, and on supplying more beer around the region, and no doubt, around the country.

If the Minister wants clear evidence—I know that he is both a pub lover and a very capable economist—he only has to look at the astonishing effect of small breweries relief since it was introduced in 2002, and I am not churlish enough not to give credit to the previous Government for doing that. I did so at the time, and it has been hugely important. Some people have the idea that small breweries relief is simply something that has helped small breweries—these cuddly microbreweries—to brew beer, and that that is great for beer lovers, but actually, we are talking about incredibly powerful facts.

Figures from the Society of Independent Brewers—SIBA—show that volume sales of locally brewed SIBA beer, against a declining level of sales in the on-trade, were up 6.8% in 2012. Those local brewers already employ nearly 5,000 people, and the really stark figure is that on average, SIBA brewers invested 23% of their turnover back into the business, and into employment, increasing production, and growth. Clearly, there is a direct link between the level of beer duty and the level of investment that brewers are able to make into their business, and that has a huge knock-on effect. As the chairman of the all-party save the pub group, I am deeply concerned about the number of pub closures in this country. It would be wrong to suggest that that is down to one factor, when a number are involved, but clearly the unfair level of beer duty is a factor, and it is time to address it.

The reason why pubs are affected in a powerful way is that supermarkets can absorb any increase in duty that the Treasury throws at them. They have ways of doing that and even now, they are selling alcohol at a price that many people believe is not responsible. The difference between the price of a pint in a supermarket and a pub is now tenfold—it is ten times cheaper to buy alcohol in a supermarket, compared with in the controlled, sociable environment of the British pub, which as we know, provides community value. The Institute of Public Policy Research published an excellent report, which estimated that the wider social value provided per pub was between £20,000 and £120,000, on top of the economic benefits. An interesting fact for the Treasury and BIS about the local pub is that for every pound spent in a pub, compared with a supermarket, twice as much is then circulated and invested in the local economy.

Therefore, it really is a win-win situation. We all know that the Budget has to focus on growth—I look forward to some of the excellent suggestions from Lord Heseltine being included—and here is a simple opportunity to send the message to Britain’s brewers that we want them to invest, to continue to succeed, and not to fall into the trap that we currently have with small breweries relief, where if brewers start to be too successful, they find themselves being penalised.

I also ask the Minister to look carefully at the levels of duty for all drinks, because when it comes to beer, there has been a blind spot that many of us simply do not understand. Beer has been seen as a cash cow for the Treasury, and that must end. However, I also urge the Minister and his colleagues to look at other levels of duty, and particularly to consider the situation with cider. Cider is, of course, another wonderful drink, which is often produced by small producers. There is also a relief for small cider producers, but interestingly, it does not go as far as the relief for beer.

However, I need to bring the Minister’s attention to the situation we have in which huge, mass-produced cider brands—the likes of Magners and Bulmers—pay a fraction of the duty that equivalent large beer brands pay, and that is simply because of the idea that all cider is produced by small producers. I am afraid that there is a lot of dishonesty in the cider market. When it comes to Magners, so-called “Irish cider”, if it really was Irish cider made from Irish apples, every Irish apple would be making something like 20 litres of cider. Some marketing kidology is going on—I say that as someone who used to work in marketing—and there is a profound unfairness.

I want to see a way of helping our wonderful small cider and perry producers. That is absolutely important, and perhaps the relief to them could be extended, but we must also ensure that someone buying a pint of Marston’s Pedigree or Fuller’s London Pride is not paying significantly more—currently more than double the duty—than someone buying a pint of Strongbow, Magners or Bulmers. There is no justification for that, and that inequality must end.

[Andrew Griffiths]

The hon. Gentleman is making an important and strong case. Does he share my concern about figures that I have recently discovered showing that one of the largest producers of cider in this country imports 77% of the apples that it uses in production? On the argument that we need to support the cider industry with special pleading because of its importance to UK apple production, does he not agree that those figures demonstrate that all we are doing is subsidising apple production overseas?

[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.

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[Andrew Griffiths (Burton) (Con)]

I am grateful to be bringing up the rear in the debate today. I am mindful that time is short; it always frustrates me when I sit in a debate and the Minister has less time to contribute than the others who have spoken, so I will keep my comments brief. Everybody knows that I bang on for Britain about beer.

We are at the culmination of a hard-fought campaign to support British brewing and save the great British pint. I do not think that we can overestimate what a perilous situation our brewers and publicans find themselves in. It is for that reason that so many people have come together in support of the campaign. We all recognise how important it is for the future of British society, as well as being an important part of the economy.

[Dan Rogerson (North Cornwall) (LD)]

I am grateful to the hon. Gentleman for giving way. I wish him a gool Peran lowen—a happy St Piran’s day. In regard to his point about traditional British culture, does he agree that the British brewing industry is looked at by other parts of the world for its innovation and the diversity of its products? There is a huge export market and we need to encourage the growth of the brewing industry.

[Andrew Griffiths]

Gool Peran lowen to my hon. Friend. He has been fantastic in supporting the British brewing industry and the all-party beer group. He is right to say that massive innovation is taking place in British brewing. Only this month, a beer innovation summit organised by The Publican’s Morning Advertiser was held in my constituency at St George’s Park. It showed the depth and breadth of new ideas and the potential for the industry to export a great British product overseas. It is interesting that almost 90% of all the beer brewed in this country is drunk in this country. That is because we recognise brilliance and what a great product it is. We can export it overseas and create jobs as a result.

The campaign has brought together the British Beer and Pub Association, the Society of Independent Brewers and the Campaign for Real Ale, and all those we would expect to support the brewing industry, but it has also brought others together. The TaxPayers Alliance has got on board and put together a fantastic campaign—“Mash Beer Tax.” I encourage hon. Members to go online to www.mashbeertax.org. The TaxPayers Alliance has a reputation for standing up for the British taxpayer and has done a great job in getting behind this important campaign.

Hon. Members will have noticed the support we have from The Sun, which has launched its own campaign to scrap the beer duty escalator and save the great British pint. I am sure that the Minister will have noticed the contribution to the debate yesterday, made by Sabine from London on page 3, “News in Briefs.” She railed against the unfairness of the duty that British beer drinkers pay compared with what Spanish beer drinkers pay, and quoted:

“Beer is proof that God loves us and wants us to be happy.”

The Minister could make a great many people across the country happy at the Budget by scraping the hated beer duty escalator.

Let us look at the impact of the beer duty escalator since it was introduced by the previous Government. Sales are down 17% in the off-trade and sales are down 24% in pubs. That equates to 1.5 billion fewer pints sold in pubs across the country. Those are jobs. Every time we do not sell beer, jobs are lost in my constituency and in constituencies across the country.

I notice that we have had a fantastic game of “brewery bingo” today; hon. Members have named the breweries in their constituencies.

[Lilian Greenwood]

Before the hon. Gentleman goes on to list the many breweries in his constituency, will he say what impact he thinks the 2.5% VAT increase had on sales of the pint down the pub?

[Andrew Griffiths]

Since the beer duty escalator was introduced by the hon. Lady’s Government, we have seen beer duty increase by 42%, and anybody can work out that that will have a very damaging impact. I am a little disappointed that she is trying to score political points. The debate has been notable for its cross-party support.

[Andrew Bingham]

My hon. Friend is well known for his support of the industry. If we are going to start playing politics, does he share my delight over the number of coalition Members here compared with Opposition Members?

[Andrew Bingham]

They may be.

[Andrew Griffiths]

This important debate has united the House. Some 151 MPs from all parties have signed my early-day motion on the beer duty escalator, and it has support from across the House. It is notable that when we debated the matter on the Floor of the House, only one Member spoke in favour of the beer duty escalator, and I hope that the Minister will repent and change his mind, because he was isolated in that debate.

In the final quarter of last year, 138 million fewer pints were sold in this country compared with the previous year. That is significant, and that is why we must support the brewing industry.

My hon. Friend the Member for Bedford (Richard Fuller) asked from where the money would come to replace the beer duty escalator. I will say two things: first, it is clear that the beer duty escalator is not raising money, because it impacts on beer sales. Beer sales are plummeting, and the Treasury is not raising the money that it expected from the beer duty escalator. Secondly, let us look at the sectors that are growing: cider is in substantial growth, and vodka, which is the drink of young people now, is in growth. We need to have fairness across the duty system that encourages a great British manufacturing success story.

I will point the Minister to some important facts. In his constituency, 2,370 people are employed in the brewing and pub trades, and 898 16 to 24-year olds in his constituency are employed as a result of brewing and pubs. That could be boosted; the brewing and pub industries could help support growth and employ young people. We all recognise the importance of brewing in our constituencies as an economic driver and employer. We also recognise the cultural importance of the great British pint.

There has been some talk today about the impact of drinking on health and antisocial behaviour. I think that the great British pub is the answer here, not the problem. Drinking in a supervised environment with a landlord who would tell someone, “I am sorry. I think you’ve had too much. I am not serving you any more,” is a far better way for young people to be introduced to alcohol than, as the hon. Member for Stoke-on-Trent North (Joan Walley) mentioned, drinking on a park bench or unsupervised at home when mum and dad are not there.

Drinking a pint of beer in a great British pub is one of life’s simple pleasures. It should be enjoyed by every British man and woman across the country and they should do it more often, but they are being priced out of that simple pleasure.

The point about the beer duty escalator—or any escalator—is that when one reaches the top, it is time to get off. We have seen from the falling revenue and sales and the number of pubs that are closing up and down our country that it is time to get off the beer duty escalator. By scrapping it in the Budget, the Minister will be able to promote growth and jobs and put a smile on the face of British drinkers across the country.

--- Later in debate ---

[Cathy Jamieson]

I hear what the hon. Gentleman says about the deficit, but the last Labour Government had a very good reason for doing what they did at the time; the circumstances are now different. Far be it from me to try to defend the Minister or give him a way out of dealing with the difficult issues, but I say gently to hon. Members that, as a responsible Opposition, with a stream of people saying, “You must not raise this, tax that or do anything else,” at the same time as dealing with the deficit, there are hard choices to be made.

In the debate in the Chamber on 1 November, I said that it was right, in the present economic circumstances, for the Government to undertake a review of the economic impact of the escalator. Indeed, I have called on them to do the same on a range of other matters, one of which is air passenger duty, about which many people are making representations. I simply make that point because we must address the wider economic issues.

[Andrew Griffiths]

The hon. Lady criticises the Government for what she says was the introduction of the biggest ever increase in beer duty. Will she tell us which Chancellor announced that increase?

[Cathy Jamieson]

The hon. Gentleman knows as well as I do the history of the increase, and I simply say that it was at that stage. This Government have to accept responsibility for the decisions that they have taken: they have not chosen to change the escalator that was introduced by the previous Government.

I am all ears to hear what the Minister will say this morning. I have heard a couple of such debates. In the last one in the Chamber, he was in “listening mode”, as he reassured us several times. He said that

“as an incoming Minister who is new to this portfolio, I plan to keep nothing on the shelf. I will be looking at everything, which includes all duties and taxes for which I have responsibility. That would be a sensible thing for any Minister to do.”—[Official Report, 1 November 2012; Vol. 552, c. 439.]

I agreed with that at the time, because I thought that it gave him the opportunity to introduce changes.

As has been mentioned, The Sun is undertaking a campaign about the increase. In a recent article, a Treasury spokesman was quoted as saying:

“Revenues from alcohol excise duty make an important contribution to reducing the deficit. But where we can take action we have.”

I want to hear from the Minister whether that means that any change has been ruled out or is still being considered. I also want him—I will give him plenty of opportunity to respond—to answer the question asked by the hon. Member for Leeds North West (Greg Mulholland) about the amount of savings and the effect on investment. Is it not now the time for a proper review of the economic impact of the escalator, to give us an evidence base in today’s economic climate? Will the Minister give us his latest assessment of the economic impact of the cancellation of the escalator? Will he simply give us the information that he and his officials have already worked on? Will he address what the impact would be of the Government acceding to our request to cut the rate of VAT temporarily?

--- Later in debate ---

[The Economic Secretary to the Treasury (Sajid Javid)]

May I say what a pleasure it is to see you in the Chair, Mr Caton?

I thank my hon. Friend the Member for Nuneaton (Mr Jones) for, and congratulate him on, securing this important debate. I note with interest that he is holding this debate only 15 days before the Budget, so I congratulate him on his excellent timing. I thank all hon. Members—I counted seven—who contributed to the debate. I recognise the work done on this subject by institutions outside Parliament, particularly the British Beer and Pub Association, CAMRA and the TaxPayers Alliance. That work adds to the quality of the debate, and that quality is always welcome in our debates in Parliament.

My hon. Friend made some excellent points. One of the most interesting, which I recall from the debate in November, was that he met his future wife in a pub. That shows that pubs really are rich institutions that play an important role in social cohesion, a point that was well made by my hon. Friend the Member for Montgomeryshire (Glyn Davies). His focused point was on how the issue is about not just the economy or the cost of beer but the social contribution of pubs throughout the country, particularly in rural communities—like his and, I might add, mine—in which pubs are a key part of the local community. Pubs and brewers up and down the country should be assured that they have some passionate advocates in Parliament.

In the time available, I will try to respond to all the issues raised today about beer duties, the actions taken by the Government to help pubs and brewers in general, and the Government’s alcohol strategy. In response to the shadow Minister, the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson), my hon. Friend the Member for Burton (Andrew Griffiths) said that, understandably, he wanted this to be a cross-party discussion. I think that that is right, so I will not point out that I did not hear the hon. Lady apologise for introducing the escalator in the first place.

I will first focus on beer duties. The Government inherited the current rises in alcohol duties from our predecessors, as has been said. The 2008 Budget announced that alcohol duties would rise by 6% that year, and then by the retail prices index plus 2% in the next four years. The Budget in March 2010 extended those rises for a further two years, until 2014-15. If the Government were to cancel the planned 2 percentage point rises for beer, it would cost the Exchequer £35 million next year and £70 million the following year. Given the current public finances and the sums involved, it would be prudent for the Government to think carefully about the consequences of making any such tax changes. The Government continue to keep all taxes under review and regularly monitor the impact of alcohol duty rates on both the industry and consumers.

At present, our monitoring suggests that the decline in the nation’s beer consumption predates the increases in duty and is a reflection of how consumer tastes have changed. Beer’s share of the total alcohol market has declined by nearly 30 percentage points since the mid-1970s. More than 85% of the beer consumed in the UK is brewed in the UK, which was a point made by my hon. Friend the Member for Nuneaton, and we want to continue to support such business.

Brewers will benefit from a number of actions this Government have taken to support all businesses. The reduction in the rate of corporation tax and the temporary increase in the annual investment allowance, for example, will enable them to invest in new machinery. As my hon. Friend the Member for High Peak (Andrew Bingham) highlighted, the small breweries relief supports microbreweries by reducing their beer duty by up to 50%, and it has contributed to an increase in the number of such breweries. Both consumers and pubs benefit significantly from the diversity of products produced by the 730 microbreweries in the UK, and the Society of Independent Brewers estimates that small breweries relief has increased the number of jobs by 1,000 since it was introduced in 2002.

There are many ways in which the Treasury supports brewers. For example, my right hon. Friend the Chief Secretary to the Treasury recently helped to launch the Ginger Rodent beer at Aviemore brewery. Perhaps that is what my hon. Friend the Member for Nuneaton meant when he mentioned innovation in the industry. We must recognise, too, the contribution made by the right hon. and learned Member for Camberwell and Peckham (Ms Harman) in helping to promote and popularise that product.

[Andrew Griffiths]

I thank the Minister for giving way and for his support for the industry. He will know that beer and pubs pay £11 billion in tax, and that some brewers are paying 50% of their turnover in tax and duty. If we compare what those brewers are paying with what some UK businesses pay, perhaps he should consider scrapping the beer duty escalator and introducing a coffee tax.

[Sajid Javid]

My hon. Friend is always full of innovative ideas, but he makes a serious point about tax avoidance, which this Government take very seriously and will continue to do. Clearly, the more we clamp down on tax avoidance and tax evasion, the greater our scope to act more flexibly with measures such as beer duty. May I take this opportunity to thank him for the work that he does in chairing the all-party beer group and my hon. Friend the Member for Leeds North West (Greg Mulholland) for his work in chairing the all-party save the pub group?

The Government recognise the importance of brewers and the contribution that pubs make to our local communities and the wider economy. Unfortunately, the number of pubs has been declining for decades, but that reflects the changes in consumer tastes and in lifestyles. The number of pubs continued to decline in the early 2000s, despite relatively flat alcohol duties in real terms. None the less, we continue to support pubs through our policies. For example, the drop in the small profits rate from 21% to 20% in April 2011 has supported thousands of small businesses such as pubs. About a fifth of pubs currently receive a reduction in the business rates they pay. Small pubs can also benefit from small business rates relief or rural rates relief, and the Government have extended the small business rates relief holiday until March 2014.

The majority of pubs have also benefited from the reform of gaming machine taxation introduced on 1 February, and they have the opportunity to benefit from the Live Music Act 2012, which came into force last October, making it much easier for pubs to put on live music events. On top of that, in January the Government announced plans for a statutory code alongside the independent adjudicator to ensure fair practice between large pub companies and their tenants on issues such as rent and the price publicans pay for their beer. The Government will be consulting on those plans shortly, and I hope that Members present will make pubs and publicans in their communities aware of the proposals.

Let me talk about our wider economic policy, which includes the strategy to reduce the record budget deficit that we inherited. That strategy has led to lower interest rates, which benefit people who have mortgages. If interest rates were just 1 percentage point higher, the average mortgage would go up by almost £900 a year, which is money that could be spent in pubs, and companies up and down the country would pay another £10 billion in interest in servicing their loans. Clearly, low interest rates have been helping companies, especially small and medium-sized companies. Our record increase in personal allowances has also put more money in people’s pockets, which they can use in their local pub. My hon. Friend the Member for Amber Valley (Nigel Mills) mentioned the change in fuel duty, which means that rises that we inherited from the previous Government have not gone ahead, and that again has meant more money in people’s pockets.

I want to say a quick word about our alcohol strategy. Moderate alcohol consumption can be positive for people’s well-being, but the Government are committed to tackling cheap alcohol and irresponsible alcohol consumption. We have therefore reformed beer duty to support responsible drinking. In October 2011, duty was halved on low-strength beer, while duty on high-strength beer increased by 25%. That was warmly welcomed at the time by many hon. Members and by CAMRA.

The Government have also had a consultation on minimum unit pricing, and we will be announcing the results very shortly. My hon. Friend the Member for Burton made some excellent points about responsible drinking.

In the interests of time, I shall conclude my remarks. I am glad that we have had the opportunity to discuss beer duty, brewers, pubs and the alcohol strategy, and we have had, I think, a constructive debate. I hope that I have reassured hon. Members that the Government fully support pubs and brewers. As I have shown in some of the examples that I have cited, the Government have already taken action in that regard, and, despite our tight fiscal situation, I am keen for them to go further. Hon. Members will understand that I cannot make any specific commitments on action; we have to leave that for the Budget. None the less, as one of my hon. Friends mentioned, I like to be seen as a listening Minister, so please be reassured that I take the matter seriously, and that today’s debate has served to underline its importance.

Beer Duty Escalator

Andrew Griffiths Excerpts

Thursday 1st November 2012 Commons Chamber

[Andrew Griffiths (Burton) (Con)]

I beg to move,

That this House welcomes the essential contribution of brewing and pubs to the UK’s economy in providing one million jobs; notes the 42 per cent increase in beer duty since 2008 and HM Treasury forecasts that have shown that there will be no additional revenue generated from beer duty despite planned increases over the next two years; is therefore concerned about the effectiveness of this policy in tackling the Budget deficit, its impact on valued community pubs and the continued affordability of beer in pubs; and therefore urges the Government to support the UK’s beer and pub sector by conducting a thorough review of the economic and social impact of the beer duty escalator to report back before the 2013 Budget.

I begin by thanking the Backbench Business Committee for giving us the opportunity to debate this important issue on the Floor of the House. I know from the number of e-mails and telephone calls that I have received that publicans, brewers and people in pubs up and down the country are tuning into the Parliament channel to listen to the debate, such is their level of interest. I commend the Backbench Business Committee for giving us this opportunity.

Colleagues will know that the debate is a result of the fact that 104,000 people have signed a petition demanding the scrapping of the beer duty escalator and calling for the issue to be debated on the Floor of the House. I congratulate everybody who took the time and opportunity to familiarise themselves with these issues and sign in support of their pubs and breweries. Of course, 104,000 signatures do not appear overnight. I pay particular tribute to the work of the British Beer and Pub Association; CAMRA, the Campaign for Real Ale; SIBA, the Society of Independent Brewers; and brewers such as Hobgoblin, which has done so much to raise the profile of Britain’s brewers.

[Mr Brian H. Donohoe (Central Ayrshire) (Lab)]

I must declare an interest as secretary of the all-party Scotch whisky and spirits group. This issue affects Scotch whisky as well as beer. The whole whisky industry employs some 34,000 people in this country, and they are being affected too. Will the hon. Gentleman include them in his plea to the Government to look again at the escalator?

[Andrew Griffiths]

I completely understand the hon. Gentleman’s wanting to defend an important industry in his constituency, but I gently point out to him that the Scotch whisky industry had a 10-year freeze on duty under the previous Government, that 95% of Scotch whisky is exported, and that spirits have now become the drink of choice for young people across the country. I am making the case on behalf of the brewing industry, which has been so badly served.

[Thomas Docherty (Dunfermline and West Fife) (Lab)]

On the hon. Gentleman’s point about the choice that young people are making, Dunfermline Round Table recently held a beer festival that raised more than £20,000 for local good causes and charities, and I assure him that very many young people came along to support that event and had a very good evening drinking beer.

[Andrew Griffiths]

I thank the hon. Gentleman not only for making that important point—I agree that the pub offers a safe environment particularly for young people to be introduced to alcohol—but for the work that he has done on behalf of the all-party beer group, as have other colleagues in the Chamber, particularly my hon. Friend the Member for Leeds North West (Greg Mulholland), who, with the all-party save the pub group, has done such a lot to champion our pub industry.

[Sir Tony Cunningham (Workington) (Lab)]

With 16 pubs a week closing, it is important to remember that is what is really at risk is the football team, the cricket team, the golf society, the theatre at the back of the pub, the small library, the shop, the bowling green—the list goes on and on. The pub is a huge part of the community. I hope that the hon. Gentleman agrees with that.

[Andrew Griffiths]

Clearly, the hon. Gentleman has read my speech. We all recognise the value of the community pub in our communities. Be it the last pub in the village, the pub on the council estate, or the bar on the high street, we recognise that those establishments are at the heart of our communities. They not only provide employment but give people an opportunity to come together to celebrate and to meet friends, and they run football clubs, for example.

[Dr Julian Huppert (Cambridge) (LD)]

I congratulate the hon. Gentleman on securing this important debate. He is right to mention not only the social role but the economic role of pubs. Is he aware that each pub injects an average of £80,000 into a local economy? In my constituency alone, pubs employ just under 1,500 people, many of them young.

[Andrew Griffiths]

I thank the hon. Gentleman for that intervention. He is absolutely right. Some 85% of pubs across this country are small and medium-sized enterprises—small businesses that are trickling that economic impact down into our communities.

I draw the hon. Gentleman’s attention to the statistics released today by CAMRA, which show that there is an alarming increase in the number of pub closures. We all thought that we had seen the back of the bad old days in 2010 when 26 pubs per week were closing, once the figure had fallen to 12 per week. However, the new figures released by CAMRA show that 18 pubs per week are closing. That means that since March this year some 450 pubs have closed, and since the introduction of the beer duty escalator in 2008 some 5,800 pubs have closed.

[Christopher Pincher (Tamworth) (Con)]

A regrettable statistic—and I remember the days—is that one used to be able to buy six pints for a fiver. [Interruption.] I did not drink them all, I might say; I was buying a round. Since then, the cost of beer has increased and, as my hon. Friend says, the number of pubs that have gone to the wall and are going to the wall is increasing. As a result, revenue to the Exchequer is falling. Does he agree that the beer duty escalator is not simply raising money? It is losing money for the Exchequer.

[Andrew Griffiths]

My hon. Friend has put his finger on the nub of the problem. I want to remind the House that when the then Chancellor, the right hon. Member for Edinburgh South West (Mr Darling), introduced the beer duty escalator he said that,

“as incomes have risen, alcohol has become increasingly more affordable…In order to ensure that alcohol duties keep pace with rising incomes, alcohol duty rates will increase by 2 per cent above the rate of inflation”.

[Mr Donohoe]

Will the hon. Gentleman give way?

[Andrew Griffiths]

If I could finish my point, I will then give way. The reality is that since the introduction of the beer duty escalator in 2008, beer duty has increased by a crippling 42%.

[Jesse Norman (Hereford and South Herefordshire) (Con)]

I congratulate my hon. Friend on securing this debate. Herefordshire has wonderful pubs, which are hard-pressed, breweries and some of the finest hops in the country. Does my hon. Friend agree that part of the review’s solution must be to include a rebalancing of duty away from pubs and towards retailers?

[Andrew Griffiths]

My hon. Friend makes an important point. The gap between prices charged at the pub and those charged at the supermarkets has widened. The supermarkets have driven the price down, as they did with milk, which affected our dairy farmers, and every time there is a duty increase it is the brewers who are forced to stand it.

[Several hon. Members]

rose—

[Andrew Griffiths]

I think I am in danger of breaking the record for the number of interventions taken, but I will give way to the hon. Member for Coventry South (Mr Cunningham).

[Mr Jim Cunningham (Coventry South) (Lab)]

I thank the hon. Gentleman for giving way. As he has said, since March 2008 the duty has gone up by 42%, which is surely not sustainable. It has had an effect on pubs since 2008, and over the past 10 years at least 18,000 pubs have closed.

[Andrew Griffiths]

The hon. Gentleman makes a valid point. We should consider the impact that the beer duty escalator has had on our brewers.

[Mr Donohoe]

Will the hon. Gentleman give way?

[Andrew Griffiths]

I would like to make a little progress, if I may.

Since the introduction of the beer duty escalator, beer sales have reduced by 16%. To put that in perspective, it is the equivalent of the loss of 1.5 billion pints as a result of the beer duty escalator. To put it another way, it is the equivalent of one major brewery in our country closing every year since the introduction of the beer duty escalator.

[Mr Donohoe]

Will the hon. Gentleman give way?

[Andrew Griffiths]

The hon. Gentleman is quite exercised, so I will give way to him.

[Mr Donohoe]

I am very grateful to the hon. Gentleman for giving way. Will he reconsider his previous answer to me? Scotch whisky is the heaviest taxed of all the spirits, beers, ciders and wines in this country. [Interruption.] It is the heaviest taxed.

[Madam Deputy Speaker (Dawn Primarolo)]

Order. The hon. Gentleman will sit down. We are not discussing duty on whisky, as much as some Members would like to discuss it. We will keep to the debate, which is about beer duty and pubs.

[Andrew Griffiths]

Thank you, Madam Deputy Speaker. What I would say to the hon. Gentleman is that 95% of all Scotch whisky is exported. In the UK, 87% of all the beer that is drunk in this country is brewed in this country. Beer is a great British manufacturing success story, which is why we need to support it.

[Sir Roger Gale (North Thanet) (Con)]

Shepherd Neame, a Kent family brewer, and Thorley Taverns in Margate are both major employers in one of the areas of highest social deprivation in the south-east. They are both under threat, paying huge amounts of their revenue in tax while companies such as Starbucks pay virtually nothing at all. Putting the beer duty escalator to one side, I remember going to see John Cope—now Lord Cope—when he was a Treasury Minister about 20 years ago, and our parliamentary delegation demonstrated then that the more we tax, the less revenue we take in the end. Is that not the nub of this argument—it is counter-productive?

[Andrew Griffiths]

I agree completely with my hon. Friend. The point about an escalator is that we stop when we get to the top. We have reached the top of the escalator and we are in danger of going off the edge of a cliff. That is why we must do something about the beer duty escalator.

[Robert Halfon (Harlow) (Con)]

I congratulate my hon. Friend on securing this debate on the cost of living. I recently attended the Campaign for Real Ale’s Harlow beer festival, which was supported by small independent breweries. Does he accept that the big breweries have a role to play, and that we need evidence to understand whether they are partly responsible for keeping beer prices high?

[Andrew Griffiths]

I commend my hon. Friend for supporting CAMRA, but I do not think there are such things as a bad brewer and a good brewer. We need large breweries just as we need micro-breweries, because we need a mixed economy. The problem is that all brewers are being hammered by the escalator.

The figures speak for themselves. In the last quarter alone, beer sales reduced by 5.6%, which is absolutely unsustainable. The Economic Secretary knows the figures better than I do, and he will know that the Treasury’s own projections for the next two years demonstrate clearly that the beer duty escalator will raise absolutely no money. Instead, it will hit the brewing industry and cost jobs and production.

[Mark Pawsey (Rugby) (Con)]

My hon. Friend is making a strong case. He has just spoken about micro-breweries. Does he agree that they provide great diversity in the beer market? We have fantastic micro-breweries such as The Atomic Brewery and Wood Farm Brewery in my constituency, and we need to support the concession necessary to provide the breadth and diversity of product that is now available.

[Andrew Griffiths]

I congratulate my hon. Friend not only on supporting breweries but on managing to get both his local brewers into Hansard in one attempt, which is absolutely fantastic.

[Bill Wiggin (North Herefordshire) (Con)]

I am grateful to my hon. Friend for his generosity in giving way. He will be aware that we need it, as he is one of the few Members whose speech does not have a time limit.

Will my hon. Friend use his excellent speech and the sense of unity in the House today to ensure that people paying duty on beer do not fight with people paying duty on cider? We must stay united, otherwise the Treasury will win.

[Andrew Griffiths]

I completely understand what my hon. Friend is saying. Nobody wants one industry to fight against the other, but we are seeing a reduction in the brewing industry simply because it is being treated unfairly. All that we are calling for is fairness. He talks about cider, and he will know that there is a 50p difference between the duty paid on a pint of cider and on a pint of beer. How can it make sense to the Treasury that every time somebody buys a pint of cider instead of a pint of bitter, it not only disadvantages brewers but costs the Treasury 50p?

[Greg Mulholland (Leeds North West) (LD)]

I am delighted to be working with my hon. Friend on this matter. He is aware that beer carries higher duty per serving than any other form of alcohol—spirits, wine or cider. Duty is 19p on a pint of cider and 41p on a pint of beer, which is simply not fair. We are calling today for fair duty on beer.

[Andrew Griffiths]

My hon. Friend hits the nail on the head.

We need to understand that the beer and pubs industry employs 1 million people across the country, 50% of whom are under the age of 25. We have a problem with youth unemployment, so surely supporting such a dynamic industry is the right thing to do.

[Heather Wheeler (South Derbyshire) (Con)]

I congratulate my neighbour on introducing the debate. We rely greatly on jobs in the industry in South Derbyshire and Burton. We have some fantastic local brewers such as Tollgate Brewery in Shardlow, John Thompson in Ingleby and of course the Burton Bridge Brewery, which has opened its fantastic pub, the Brickmaker’s Arms, in Newton Solney. They all create jobs, and we are asking Treasury Ministers to understand the cost-benefit analysis and bring the price down.

[Andrew Griffiths]

I thank my hon. Friend; nobody does more to support the brewing industry than she. I am astounded at the level of understanding shown by right hon. and hon. Members. Clearly Parliament gets it, and our job today is to ensure that the Treasury gets it, and that it scraps the tax and does more to support Britain’s beer and pubs industry.

[Dr Sarah Wollaston (Totnes) (Con)]

Last week, I met people from the Victoria Inn and the Kings Arms in Salcombe, as well as the publican from the Ferry Boat Inn in Dittisham. Those are among the finest pubs in Britain, and I was told that they could employ more young people if they had lower overhead costs, which includes the beer duty escalator. Does my hon. Friend agree that the greatest threat to those wonderful pubs is the toxic effect of ultra-cheap alcohol from our supermarkets? We must do more to level the playing field.

[Andrew Griffiths]

My hon. Friend does a great deal of work on alcohol and responsible drinking, and I am pleased that she has seen for herself the benefits that pubs can provide in educating young people and providing low-strength, high volume drinks such as beer.

I am getting some looks from the Chair, so I must press on and finish my speech. I hope hon. Members will forgive me, but Madam Deputy Speaker is giving me that stern look.

The beer and pub industry pays £11 billion in tax, and many of our brewers pay more than 50% of their turnover in tax and duty to the Treasury. This is not special pleading, and the industry does not expect to be treated any differently from others, but as my hon. Friend the Member for North Thanet (Sir Roger Gale) pointed out, companies such as Starbucks and Kentucky Fried Chicken, which have vastly larger turnovers, pay no tax. We want proper support for a good, British manufacturing industry.

We also want fairness. Britain pays 40% of all EU beer taxes, yet we drink just 13% of the beer—we are clearly not drinking hard enough. Why do we in Britain pay eight times more duty than a French drinker, 10 times that of a Spanish drinker, and 11 times that of a German drinker?

[Philip Davies (Shipley) (Con)]

I commend my hon. Friend on his speech, which is excellent as ever. Is not the point that beer duty disadvantages pubs against supermarkets? Supermarkets have 40,000 other products that they can cross-subsidise, perhaps by selling beer at a loss or a reduced price. We are in an economic mess because we have over-spent, not because we are under-taxed, and the Government’s solution should be to reduce spending, not to seek to increase taxation for ever.

[Madam Deputy Speaker (Dawn Primarolo)]

Order. There is a great deal of pressure on this debate, and I wish it took only a look from the Chair to remind Members that introductory remarks are supposed to last for 10 minutes or so. The speech by the hon. Member for Burton (Andrew Griffiths) has already lasted considerably longer, and I would be grateful if he would make progress so that others can contribute in full speeches, rather than interventions.

[Andrew Griffiths]

Thank you for reminding me of my obligations, Madam Deputy Speaker. I will come quickly to a conclusion.

My hon. Friend the Member for Shipley (Philip Davies) makes two important points. First, supermarkets have the ability to force brewers to include in the price paid for the beer any increases in duty, whereas publicans, who tend to run small businesses, do not have that opportunity. Secondly, supermarkets use their bulk buying power to drive down the price and use alcohol as a loss leader, which disadvantages pubs.

[Mr John Leech (Manchester, Withington) (LD)]

Will the hon. Gentleman give way?

[Andrew Griffiths]

I will not; I am going to finish my speech if I may.

The reality is that most pubs get 65% of their income from the sale of beer. That is why beer duty—rather than duty on wine, spirits, cider or anything else—is so important. Publicans, those small businesses in all our constituencies, rely on selling beer, and the 45% increase in duty that we have seen is simply unsustainable.

This is an opportunity. A fair taxation system for beer would help to drive growth, and if beer were given a fair break, it would challenge the industry to find ways of providing growth and employment, particularly for young people. I remind the Minister that some 2,370 people are employed in the beer and pub industry in 78 pubs in his constituency, including at the fabulous Bird’s Brewery in Bromsgrove of which he will be aware. A study by Oxford Economics showed that scrapping the beer duty escalator would save 5,000 jobs in the first year alone, and stop the closure of hundreds of pubs in all our communities. This is a huge opportunity to bring balance and fairness into the duty system, and to support our pubs and breweries.

I thank the House for taking such an interest in the debate. The Minister has a perfect opportunity today to demonstrate that the Government understand the pressures on hard-working families and do not want to penalise them by over-taxing the great British pint of beer. This is a great opportunity for the Minister to be the man who saves Britain’s brewing industry, protects the nation’s pubs and saves the great British pint. Scrap the duty!

--- Later in debate ---

[Albert Owen]

I am grateful to the hon. Gentleman. I am very fond of going to Yorkshire. I went to university there and regularly visit York and the fine pubs in that area, so I might come to Humberside and the east coast at some point.

The suppliers are important small and medium-sized enterprises. A family business in my constituency, Joseph Keegan and Sons, wrote to me. It has been established for many years and supplies the area and its concerns are about beer duty and fuel duty, too. Many companies have been hit by the high levels of fuel duty when transporting their goods, so there is a double whammy of which the Minister must take note in his review.

The motion before the House is very moderate, because all it calls for is a review. The hon. Member for Leeds North West, in his measured contribution to the debate, was right to say that Members across the House have supported escalators when there was a need to do so. The beauty of an escalator is that we can get on or off it when the conditions are right, so the Government would not lose face by coming off it. A previous Conservative Government brought in the fuel duty escalator and then came off it when they thought that was necessary, so that can happen quite simply.

[Andrew Griffiths]

I agree completely with the hon. Gentleman’s point about the rising cost of fuel for brewers. He will also be aware of the rising cost of the raw materials that brewers must purchase and the falling incomes of households across the country.

[Albert Owen]

The hon. Gentleman is absolutely right. We are talking about the business of pubs, clubs, hotels and suppliers, but we must also consider the producers. Much of the problem is beyond the control of Governments and the terrible weather this summer has affected the price of raw materials, and that all has an impact on costs.

I want to talk, as many Members have done, about the social value of the pub as a hub in our towns and villages. My hon. Friend the Member for Hartlepool (Mr Wright), who is no longer in his place, said that Hartlepool once had the highest concentration of pubs in the country, a claim that many of us could make for our constituencies. In the port communities of Holyhead and Amlwch in my constituency there is certainly a tradition of pubs, but they are more than just public houses serving food and drink; they are social hubs. Many local sports clubs meet in the public houses, particularly in the winter when they cannot train. I have known one or two rugby and football clubs that spend an awful lot of time in pubs; they get their business over with very quickly and then get on to the drinking and the sandwiches. The pub is an important place for people to meet in those communities.

I pay tribute to the hon. Members who tabled this important motion. Yes, it is specifically about beer duty, but I am sure that the Minister and the Treasury will take on board all the points that have been made today. It is nonsense to impose a duty that does not make any money for the Treasury. That is the nub of the debate. But many other issues have been raised by Members in their contributions. It is worth emphasising the importance of the pub, but we must not forget the supply chains that help the pub, hotel and catering industries across the United Kingdom, which are major contributors to the British economy.

I will draw my remarks to a close as I know that other Members wish to speak. I do not want to walk past pubs in my constituency with “For Sale” signs outside, and I do not want to see empty pubs; I want to be invited by members of the local community to open a pub, because I want to see a renaissance of the great British pub in both rural and urban communities across the country. The Government can make a difference by having the review and looking at its results and, if it shows that the duty is cost-neutral or loses the Treasury money, they will have my backing for coming off the escalator and putting the emphasis on the great British pub.

--- Later in debate ---

[Andrew Griffiths]

I thank all colleagues who have contributed to the debate so passionately and knowledgably, and I thank the Economic Secretary to the Treasury and the Minister responsible for community pubs, who has been present throughout. Both I and my colleague, the hon. Member for Leeds North West (Greg Mulholland) have been encouraged by the positive way in which both Ministers have engaged with the issue in the few short weeks they have been in office.

We are clearly disappointed that the Minister was not able to give us more positive news from the Dispatch Box, but he should be in no doubt about the clear view of the House. Every Member who has contributed to this over-subscribed debate, has spoken out against the beer duty escalator and in favour of Britain’s pubs and brewers. Let me assure the Minister that we will not let the matter rest there, and he would not expect us to. We will continue this campaign because it is not just a business or brewery that is at stake, but the future of a central part of our communities. We will continue to campaign and do all we can to save Britain’s pubs and breweries.

Question put and agreed to.

Resolved,

That this House welcomes the essential contribution of brewing and pubs to the UK’s economy in providing one million jobs; notes the 42 per cent increase in beer duty since 2008 and HM Treasury forecasts that have shown that there will be no additional revenue generated from beer duty despite planned increases over the next two years; is therefore concerned about the effectiveness of this policy in tackling the Budget deficit, its impact on valued community pubs and the continued affordability of beer in pubs; and therefore urges the Government to support the UK’s beer and pub sector by conducting a thorough review of the economic and social impact of the beer duty escalator to report back before the 2013 Budget.

[Sir Bob Russell (Colchester) (LD)]

On a point of order, Mr Deputy Speaker. Would it be possible for you to discuss with Mr Speaker the conduct of the previous debate? Injury time was given on numerous occasions owing to hon. Members almost wandering in off the street, lobbing a bit into the debate and then disappearing. Perhaps injury time should not be allowed. In particular, the hon. Member for Bedford (Richard Fuller) and my hon. Friend the Member for North Cornwall (Dan Rogerson), were prevented from giving their thoughtful speeches in full, yet they were signatories to the motion.

Beer Duty Escalator

Andrew Griffiths Excerpts

Monday 2nd July 2012 Commons Chamber

[Gavin Williamson]

My hon. Friend has made a valid point. Not only is everyone in South Staffordshire rooting for the ending of the beer duty escalator, but so are those in the great county town of Worcester. Obviously their pubs are not as fantastic as those in South Staffordshire, but we all have our crosses to bear in life.

We recognise that the Government face a great challenge. It is not easy to do what they are doing, and Treasury Ministers carry a burden on their shoulders that I am sure none of us on the Back Benches would wish to carry.

[Andrew Griffiths (Burton) (Con)]

As chairman of the all-party group on beer, I congratulate my hon. Friend on securing this debate. I am sure he agrees with me that the packed Benches at almost midnight show the strength of feeling in this House in support of Britain’s brewing industry. Does he share my shock that British brewers are paying half their income in tax to the Treasury, yet the future of the industry is at a critical point? Does he agree we can save jobs and pubs if we cut the duty on beer?

[Gavin Williamson]

As always, my hon. Friend and fellow Staffordshire Member of Parliament makes an excellent point. We want to encourage investment by our brewers into this vital industry and into our pubs.

--- Later in debate ---

[Miss Smith]

On that note, let me come on to some of the factors affecting the state of the industry. It is important to be clear that duty is not the only thing affecting the state of the pub industry. We have all, I am sure, been in good pubs and terrible pubs, and the price of the beer is not the only factor involved. On the price of a beer, I point out that the pre-announced alcohol duty increases in question added only 3p to a pint of average-strength beer, including VAT. The total duty on a pint of beer is now 47p. I think that hon. Members will agree that, especially as alcohol consumption does, after all, carry its own costs and concerns, that addition in the Budget this year is not an overwhelming or unreasonable amount. It is something that we can consider in the context of the public finances and the challenges relating to them that have to be met.

As I say, alcohol duty is only one of a wide range of factors that determine the final price paid by the customer. Let us be clear about the position of the industry. The decline in the beer and pub industry that some talk of is influenced by a number of factors. Lifestyles are changing. People’s choices when they walk into pubs and other establishments are changing. People have more choice about whether they go to a pub or somewhere else. Removing the escalator, which is what has been asked for tonight, and the pre-announced duty increases would not solve those problems. There is very much a wider context.

My right hon. Friend the Member for Putney (Justine Greening)—my predecessor as Economic Secretary to the Treasury with responsibility for alcohol duty—and I have met a wide range of representatives from industry. As I said, I am happy to continue doing so. I recognise the important contribution that pubs and breweries make to local communities and to the wider economy. Many groups that have been prayed in aid tonight, such as the Campaign for Real Ale and the British Beer and Pub Association, have welcomed the work that we have done to date, such as the review of alcohol taxation in November 2010. We continue to keep all taxes under review.

[Andrew Griffiths]

Will my hon. Friend give way?

[Miss Smith]

I am sorry. I must complete my remarks within a few minutes, but as I said, I am happy to continue the conversation, whether in the bar or elsewhere.

CAMRA’s figures show that the net rate of pub closures has slowed dramatically over the past two years. I believe the BBPA’s figures support this. I support pubs as places where people can drink sensibly in a supervised environment and enjoy themselves responsibly. I want to reverse the trend towards pre-loading on cheap alcohol at home. I was out with Norfolk constabulary in my neighbouring constituency, Norwich South, on Saturday night, observing some of the problems in action in places that are not as friendly as the community pubs that have been spoken about tonight.

In my view, minimum unit pricing will help to tackle the issue of excessive alcohol consumption and heavily discounted alcohol sold in supermarkets and off-licences. I strongly believe that that will benefit pubs and the responsible on-trade once we can tackle the demand for cheap alcohol in supermarkets. It is of interest to hon. Members here tonight that we have introduced a 50% reduction in alcohol duty for low-strength beers. That may be a growing sector in the industry.

In brief response to my hon. Friend the Member for Amber Valley (Nigel Mills), the Government are committed to tackling alcohol fraud and avoidance, and have been working in collaboration with the industry to address that. There are a number of measures that we wish to take to act on that.

At the Budget, this Government knew that it would be unfair to place further burdens on the alcohol industry, on pubs and on responsible drinkers. This is why we did not go further than the pre-announced duty increases. But I return to my main point. There is an important question of the public finances. The revenue from these increases was included in the public finance projections at that time. It would now require the raising of other taxes to pay for removing them. That is the question that I ask hon. Members to consider. I am sure that many pub conversations come up with the best answers to that, which hon. Members may like to go on to discuss.

This year’s duty increase and those to 2014-15 form part of our vital plan to reduce Britain’s debt, which is required to ensure low interest rates and a stable platform for growth for everybody—drinkers, businesses and households. We will continue to keep all taxes under review and monitor the impact of alcohol duty—

Illegal Alcohol and Tobacco Sales

Andrew Griffiths Excerpts

Tuesday 27th March 2012 Westminster Hall

[Jesse Norman (Hereford and South Herefordshire) (Con)]

It is a pleasure, as always, Ms Dorries, to serve under your chairladyship today.

I am grateful to colleagues from across the House for their support in this debate, and to the Economic Secretary and shadow Economic Secretary, the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson), for attending. Many issues will be raised in this debate—including, I am sure, the issue of duty and minimum alcohol pricing. I will restrict myself to describing and discussing the core issue of the illegal smuggling of tobacco and alcohol.

Such smuggling is becoming a serious issue in Herefordshire, particularly in Hereford city itself. My investigations have made clear to me what will already be apparent to many Members—namely, that such smuggling is only the tip of an iceberg and only the beginning of a much bigger problem nationwide. In that context, I especially want to pay tribute to PC John Yarwood, who is the Hereford city beat manager; to Councillor Mark Hubbard, who first brought this issue to my attention; and to the trading standards team at Herefordshire council, who have been fighting to keep the smuggling under control.

The problem is easily stated. A number of shops in my constituency persistently sell illegal tobacco and alcohol under the counter. A regular pattern is emerging: the shops are raided by the police and HM Revenue and Customs, goods are seized and fines are imposed. But weeks later, exactly the same thing happens again—the shops are raided, goods are seized and fines are imposed. And so it goes on. In the past 18 months, some 360,000 cigarettes have been seized in Herefordshire alone.

That pattern does not happen by accident. There is a simple explanation—the profits to be made from illicit sales far exceed the losses from fines and seizures. A single lorry-load of cigarettes can be worth £1.5 million in profits to the smugglers. Costing just 9p, a pack of 20 cigarettes has something like a 4,000% mark-up when it is sold on the street.

It has been reported that HM Revenue and Customs seizes some 1.7 billion illegal cigarettes every year. As a whole, tobacco trafficking is estimated to cost the taxpayer £2 billion a year and alcohol trafficking £1.2 billion a year so this is very big business. In effect, the fines and seizures have become just another cost of doing business—literally, a licence to smuggle. It appears that they have little or no deterrent effect. Many of these shops have had their alcohol licences revoked, but that has proven to be little or no deterrent against illegal sales.

These actions make a mockery of the law and our law enforcement agencies, and they need to be stopped. They cause a huge loss of tobacco and alcohol duty to the taxpayer, they undermine the sales of law-abiding businesses on the high street and of distributors, and there is nothing to prevent under-age sales and illegal working in these shops; one man arrested in a raid in Hereford last year had been awaiting deportation since 2008. They also create serious additional hazards to health.

Someone smoking a smuggled cigarette could be smoking anything, just as someone drinking a smuggled bottle of spirits could be drinking anything. These products are not subject to the same rigorous controls as the legal products. Generally, they are made in backstreet premises in countries far distant from the UK, and they are specifically made to be smuggled. Moreover, there is evidence that illegal tobacco and alcohol outlets are often used to fund organised crime on a far wider scale.

However, the problem goes much deeper than that. There appears to be no way in law to prevent these shops from reopening and no clear line of accountability within Government. The issue sits unhappily poised between HM Revenue and Customs, which reports to the Treasury; the UK Border Agency and the police, which report to the Home Office; and licensing policy and trading standards officers, which report to local councils. I am extraordinarily grateful to the Economic Secretary for coming today, but she cannot be expected to answer questions about policing or border controls. Those topics are for the Home Office, not the Treasury.

I am aware that the Government have taken important steps to address the issue in recent years—providing extra resources during the next four years to increase investigations, intelligence and enforcement; expanding the work of HMRC overseas to tackle importation into the UK at source; and developing new technology and resources to strengthen our borders. I am also aware that, at least in theory, HMRC has a range of penalties at its disposal, including the seizure of goods, civil penalties, fines of up to £5,000, criminal prosecution and the recovery of criminal assets. However, those penalties are not anything like enough. I repeat that a single lorry-load of cigarettes can be worth £1.5 million in profits to the criminal rings behind it.

Furthermore, recent history has not been encouraging. Far from raising their game during the past 10 years, I understand that HMRC and the UK Border Agency have been doing worse over that time: they seized fewer cigarettes and less rolling tobacco in 2008-09 than in 2000-01; they have seized fewer vehicles; and fewer people have been sentenced for tobacco smuggling.

What can we do? I suggest three things. First, we need more information. Is it true that HMRC has been less effective and not more effective during the past few years? How many prosecutions have there been? We need regular and detailed data on prosecutions and seizures. Secondly, it is not enough for the police and HMRC just to be able to seize goods and impose these relatively modest fines. They need to be able to close down premises for significant periods when there have been repeated violations of the law. That may require new law-making.

Finally, there is a clear case for having a Minister who is specifically charged with dealing with the issue and able to work across Departments to be as effective as possible. I note that the Minister with responsibility for broadband, my hon. Friend the Member for Wantage (Mr Vaizey), works across both the Department for Business, Innovation and Skills and the Department for Culture, Media and Sport. Perhaps there is scope for similar joint-reporting lines across HMRC, the Treasury and the Home Office in this area.

[Andrew Griffiths (Burton) (Con)]

I thank my hon. Friend for securing this debate. As the chair of the all-party group on beer, I recognise his commitment to the brewing industry; he has been a great supporter of it since he has been in this place. Does he share my concern about the Government’s recent estimate of alcohol smuggling into this country? They estimated that the equivalent of 28,000 lorry-loads of alcohol come into this country every year, which is about 538 illicit movements per week. If so, does he also share my view that if such a massive amount of alcohol is being smuggled into this country, the problem lies with the customs authorities, which are not policing our borders efficiently and effectively?

[Jesse Norman]

I thank my hon. Friend and colleague for his intervention and questions. He puts his finger on the scale of the problem and he must also be right that the UK Border Agency is not being as effective as it should be in preventing this illegal importation of goods. That is a further element to be addressed by a Minister with the kind of joint-reporting lines that I described earlier.

Let me sum up my argument. Better information, new powers and better co-ordination between Government agencies are all required. Those three steps could make a crucial contribution to tackling the scourge of alcohol and tobacco trafficking, and I am sure that I speak for all Members in Westminster Hall today when I urge the Government to consider those steps carefully as they develop their thinking in this area.

--- Later in debate ---

[Stephen Williams (Bristol West) (LD)]

I congratulate my hon. Friend the Member for Hereford and South Herefordshire (Jesse Norman) on securing this debate. I want to make some brief remarks as chairman of the all-party group on smoking and health. My hon. Friend the Member for Burton (Andrew Griffiths) is chairman of the all-party group on beer, and I want to make it absolutely clear that my group is against smoking whereas his, I believe, is in favour of the consumption of beer.

[Andrew Griffiths]

The responsible consumption.

[Stephen Williams]

Absolutely. I saw my hon. Friend just last night responsibly consuming beer in the Strangers Bar downstairs.

The UK is a leader in tobacco control, and I want our country and the coalition Government to remain at the forefront in that area. We have seen huge progress over the past couple of decades in the limitation of tobacco companies’ opportunities to market their products. Checking carefully around the room, I think that all of us, perhaps with the exception of the Economic Secretary, remember popular television tobacco advertising, with catchy tunes. They are now a thing of distant memory, and we will see further changes shortly. I am sure that many of us will visit supermarkets in our constituencies during the Easter recess, and we will no longer be able to see displays of tobacco products because all large shops will have to cover them up. Some shops in my constituency have already pressed ahead with doing so, including the Tesco superstore in Eastville on the edge of my constituency.

The next necessary stage in tobacco control is introducing what has been called plain packaging for cigarettes, although that is to some extent a misnomer. The design of plain packs shows that they are anything but plain, but they would be of a standardised design in order to remove what is essentially the last opportunity available to tobacco companies to promote their products: the design of packs, of packaging within the cardboard pack and of cigarettes, which now come in many shapes, sizes and colours to attract the next generation of gullible young people attracted by glitzy products that they think it is cool to consume. Of course, it is anything but.

I am sure that tobacco companies will fight tooth and nail to prevent standardised packaging from being introduced in the United Kingdom. The Department of Health is about to start a consultation exercise on plain packaging on behalf not only of central Government but of the devolved Administrations. I am sure that tobacco companies will come up with all sorts of reasons why plain and standardised packaging should not be introduced. One reason will be that it could increase the opportunity for the sale of illicit and counterfeit cigarettes, which is the topic of this welcome debate.

I doubt whether the introduction of plain packaging will increase the opportunity for counterfeiting. If it does, it will only do so because the tobacco industry inflicts that problem on itself. Most or all tobacco companies already put covert markings on their packs to protect their legal sales from illicit sales in a market where their brands are clearly visible. Their brands will no longer be clearly visible on packs if plain packaging is introduced, as I hope it is. Instead, the packs will have prominent health warnings and standardised colours and fonts. The fact that they will still have covert markings, bar codes and other measures to counteract the best efforts of those who wish to smuggle cigarettes into our country should mean that moving from branded packs to standardised plain packs will not increase the opportunity for illicit sales.

--- Later in debate ---

[Andrew Griffiths (Burton) (Con)]

This is the first time I have served under your chairmanship, Ms Dorries, and it is an absolute pleasure. I was not intending to speak in today’s debate, but I thought I would take the opportunity as there is a bit of time. I congratulate the hon. Member for North Antrim (Ian Paisley) who, as always, made a passionate speech. Everybody who has contributed to the debate wants the level of illegal tobacco and illegal alcohol to be reduced. We all recognise the damage to British business, the cost to the Treasury and the cost to companies in all our constituencies. We are united in that view.

However, coming from a brewing constituency and being the chairman of the all-party group on beer, I have some major concerns about the Government’s proposals on duty stamping. Of course, such concerns come on the back of last week’s Budget, which continued the duty escalator on beer and resulted in a 5% increase in duty on a pint of beer.

We need to consider the impact that any measure we introduce on fraud will have on the industry. We already pay more duty on British beer than people in any other European country. The facts are that we pay 40% of all of Europe’s beer duty, yet we drink only 13% of Europe’s beer. Our British brewing industry is being penalised by the duty regime. In France, 7p in duty is paid on a pint; yet, in this country, we pay 49p in duty. Hon. Members can see the impact that the duty regime is having on our industry.

I urge the Minister to think carefully about the effect that such a policy will have on an industry that is already reeling as a result of the duty regime. We are talking about requiring British brewers to duty stamp 5.5 billion bottles and cans every year. We recognise that there is fraud and smuggling in relation to beer, cider and wine, but the Government are not proposing to introduce duty stamps for cider or wine. Why is it that yet again the British brewing industry is being penalised in this way?

[Kelvin Hopkins]

Would it not help the British brewing industry if there were serious constraints on imports of beer and, indeed, we returned to the era when we could tax imports of alcohol to the same level that domestic products are taxed?

[Andrew Griffiths]

I agree wholeheartedly that the duty regime is encouraging imports into this country. The fact that the British beer industry pays up to four times the duty paid by the British cider industry is encouraging companies such as Stella Artois to produce cider—or cidre, as it calls its brand—and import it into the UK. We are exporting jobs as a result of our duty regime.

[Jesse Norman]

On a point of information, I would like to make it perfectly clear to hon. Members that the cidre product has nothing to do with Herefordshire.

[Andrew Griffiths]

I would like to put it on the record that, as well as being a great supporter of the British brewing industry, my hon. Friend is a magnificent spokesman for the cider industry. We regularly do battle over whether beer or cider is best.

Let us consider the Government’s alcohol fraud strategy. In 2010, we introduced a new strategy, which has been successful. We have seen the number of illegal goods being impounded and seized increase dramatically: a 71% increase in beer, a 50% increase in wine and a 67% increase in cider. Those figures clearly demonstrate that the smuggling problem is just as prevalent with wine and cider, yet the Government do not propose to put a duty stamp on them. I struggle to understand why beer is being singled out in such a way.

Let us consider the estimated amount of illegal beer that the Government believe is coming into this country. They estimate that 28,000 articulated lorry loads of beer come into this country every year. That is the equivalent of 538 articulated lorry loads of beer every week, with an estimated profit to the smugglers of £18,000 per lorry. That is the equivalent of £9.6 million of profit to the smugglers per week. Of course, we want to stop that profit and that illegal trade. However, are we honestly suggesting that if our border controls have 28,000 articulated lorries going through them every year, the answer is to bring in duty stamps, rather than to tighten up our border controls?

[Brandon Lewis]

My hon. Friend and I have discussed this issue on a number of occasions. Is it not true that the industry feels that a lot of the trade that is, in theory, coming in on those trucks is not physically coming in, but is merely a paper movement? The product never actually leaves the UK in the first place. We need to overcome that problem as well.

[Andrew Griffiths]

I agree that that has been suggested. If we are saying that there is a problem with smuggling—importing bottles and cans of beer into the country—let us deal with that. If we are saying that there is a fraud going on in relation to some grand paper chase of virtual bottles of beer leaving the country and coming back in, let us tackle that. We need the industry and the wholesalers to work with us on that. The answer is not to implement a duty stamping of 5.5 billion bottles of beer at a massive cost to the brewing industry, because that may not solve the problem to which my hon. Friend refers. There is the phrase, “Just because you’re paranoid doesn’t mean they haven’t got it in for you”. From the brewers’ perspective, it seems as if the Government have a desire to ruin the British beer industry, and I ask the Government why.

The all-party parliamentary beer group—I urge those in the Chamber who are not members to join as a matter of urgency—held a hearing recently, in which, I think, Andy Leggett gave evidence to us. He said, at that stage, that duty stamps were not the number one option for the Treasury and Customs in relation to smuggling and fraud. We are therefore concerned to see that proposal in the Budget.

Does the Minister have any idea what cost this will add to the beleaguered British beer industry? Why single out beer? Why not cider? Why not wine? Does she have any estimate of the cumulative effect of the extra burden and red tape on the brewing industry, when adding in the beer duty escalator and this unnecessary extra cost? I ask the Minister to think about British beer. Some 80% of all beer drunk in this country is brewed in this country. The beer industry employs tens of thousands of people in all our constituencies. It is a great British product of which we should be proud. Let us not ruin it with an over-bureaucratic system that is costly and damages the future of British beer.

--- Later in debate ---

[The Economic Secretary to the Treasury (Miss Chloe Smith)]

It is a pleasure for me, as it is for every hon. Member, Ms Dorries, to serve under your chairmanship for the first time.

I am grateful to have—I hope—a relaxed amount of time to respond in detail to the many points that have been raised today, beginning with those presented so well at the outset by my hon. Friend the Member for Hereford and South Herefordshire (Jesse Norman), who secured the debate, and then those of other hon. Members who have contributed. I welcome, as my opposite number did, a fairly consensual, constructive debate—if I blur some questions about tobacco packaging—in which hon. Members have sought answers rather than conflict.

I begin by reassuring hon. Members that the Government share the recognition that alcohol and tobacco fraud is serious. We are committed to bringing it down in the ways that I shall describe. Fraud of the kind that we have discussed this morning clearly affects not only public revenues and all the uses we put them to, but the livelihoods of honest businesses, as many hon. Members have said.

Questions have been asked about HMRC’s performance, for which I am one of two Ministers with departmental responsibility. First, my hon. Friend the Member for Hereford and South Herefordshire asked whether we could do better in publishing numbers of seizures and other such data. Such statistics are available on demand. I should be happy to enter into conversation with him about what he is seeking. In brief, detailed statistics on both seizures and prosecutions are no longer published. There was little evidence that such data were put to any use by those outside HMRC. However, I am happy to assist my hon. Friend if he has particular questions.

My hon. Friend also asked whether it is true that fewer cigarettes are seized today than in 2001-02. On that point, I will open up my description of the work that we have been doing to combat fraud. I assure him that between 2002 and 2011, between 1.7 billion and 2 billion cigarettes were seized every year. In this year, 2011-12, to the end of February—the period for which figures are available—1.7 billion have already been seized.

On HMRC’s broader strategy, starting with alcohol fraud, hon. Friends and other hon. Members will be aware that, in 2005, HMRC first launched its strategy to tackle alcohol fraud, focusing on fraud in the spirits sector. I am pleased to report notable success in halving the size of the illicit spirits market since 2005-06. In 2009, HMRC launched a refreshed alcohol strategy, which aimed at expanding the scope and reach of its compliance work and tackling all forms of alcohol fraud. Since then, its enforcement activity targeting alcohol fraud has been stepped up by more than 50%, which, again, I am sure that hon. Members welcome. However, the battle is not yet won, as all hon. Members have highlighted. We have a way to go. Our commitment to tackling alcohol fraud in all its forms remains strong.

Hon. Members will be aware that, only last Friday, the Home Secretary announced a new alcohol strategy, for which I welcome the support shown here today. That initiative, which is cross-Government work at its finest—I shall come on to the concept of cross-Government work—sets out a wide range of Government action to tackle excessive alcohol consumption and to turn the tide against irresponsible drinking, which, to put figures on it, costs the UK taxpayer £21 billion a year and led to almost 1 million alcohol-related violent crimes and 1.2 million alcohol-related hospital admissions last year alone.

The strategy sets out how local areas will be given more power to tackle local problems, including the ability to restrict opening and closing hours, to control the density of licensed premises and to charge a late-night levy to support policing. I am confident that my hon. Friend the Member for Bristol West (Stephen Williams) will support that kind of local approach—he nods to indicate that he does, which is excellent. Such a strategy clearly has the benefit of giving people the information and support that they need to make the right choices—in particular, through the health arena, for example, by asking the chief medical officer to review the alcohol guidelines for adults and by working with industry to take 1 billion units out of the market by 2015.

The strategy also reveals the Government’s determination to get to grips with one of the root causes of the problem by stemming the tide of cheap alcohol. We are doing so through methods such as the introduction of a minimum unit price, which will ensure for the first time that alcohol can only be sold at a sensible and appropriate price. Relevant to the debate, the strategy acknowledges the Government’s role in responding to emerging threats or issues, some health-related, such as the rising incidence of liver disease.

[Andrew Griffiths]

Does the Minister agree that the new proposal for minimum pricing will not only tackle the problems of binge drinking and preloading and the cost of policing and accidents and emergencies, but will support our community pubs and be good for the pub trade?

[Miss Smith]

My hon. Friend makes precisely the point that I have made myself several times in recent days. Our proposed pricing, which we are consulting on, will not affect the price of a pint in a pub—I am proud to put that on the record today. For good measure, I note that last week’s Budget added only 3p to the price of a pint in a pub, several of which I enjoyed over the weekend after all the hard work. Perhaps that returns me to the rising incidence of liver disease on a note of bad taste.

Some of the other threats and issues for the Government to look at in their alcohol strategy might be crime-related, such as the increase in alcohol duty fraud, which I am about to go on to, and some might be both health and crime-related, such as the growing availability of counterfeit alcohol, which can be dangerous for consumers. The strategy is targeted explicitly at harmful drinkers and at places such as problem pubs and irresponsible shops, including those that sell cheap or counterfeit alcohol. Over the forthcoming months, the Government will run a number of public consultations on the strategy’s proposals.

Alcohol duties are an important source of Government revenue, raising approximately £9 billion a year in public funds. Alcohol duty fraud, by contrast, costs the country as much as £1.2 billion every year, which takes money away from public services such as schools and hospitals. As has been mentioned, community pubs are facing difficult circumstances in tough economic times, as we are all aware in our constituencies. The Government want to protect community pubs and the tens of thousands of UK jobs provided by the food and drinks sector. Such jobs ought not to be put under even greater threat by the growing availability of illicit alcohol. Indeed, the overwhelming majority of law-abiding businesses throughout the industry, from small brewers to corner shops, that sell alcohol legally are put at a grossly unfair competitive disadvantage as a direct result of alcohol fraud.

Latest estimates show that beer fraud in particular is an acute problem, with losses to the public purse estimated at as much as £800 million in 2009-10. That is unacceptable and cannot be allowed to continue.

[Andrew Griffiths]

rose—

[Miss Smith]

My hon. Friend might want to ask about cider and wine, and I shall come to them in a moment. I would not dream of failing to answer that question for him, but I will work through a few more points before coming to that strand.

Ensuring that honest businesses can compete fairly is a Government priority. Another priority brings me on to joint working, as mentioned by several hon. Members, notably my hon. Friend the Member for Hereford and South Herefordshire and the hon. Members for North Antrim (Ian Paisley) and for Kilmarnock and Loudoun (Cathy Jamieson). I hear the calls for a single Minister in this respect, but let me first outline what we already do, which I hope will assist and which, I am sure hon. Members will agree, takes us fairly close to having accountability in the right places.

Her Majesty’s Revenue and Customs has a seat on the board of the UK border force and works closely with it, not only in designing and developing fraud strategies but in operational activity, such as sharing intelligence, tackling the organised criminals who have been rightly attacked in today’s debate and conducting joint exercises. The director of border revenue is accountable to the Treasury through me, the Economic Secretary to the Treasury, so hon. Members can see HMRC, the Home Office and the Treasury coming together. The border force was introduced recently, as announced by the Home Secretary; its responsibilities are explained on the website. I have regular meetings with the chief executive and others in that organisation, so that we work effectively together.

I hope that begins to reassure hon. Members that the right parts of Government are working together. Moving on to what we can do together, with the UK border force, HMRC already carries out substantial enforcement activity against all forms of alcohol fraud, successfully disrupting illicit supply chains and penalising those involved in the fraud. However, given the scale of the problem, enforcement alone is not enough to provide the level playing field that we all seek for our legitimate businesses, so I come to the Budget proposals for further ways to bust fraud and to explore all potential enforcement and legislative measures, which include restricting criminals’ access to stocks of illicit alcohol in the first place and tackling the illicit supply of alcohol to wholesalers and retailers. On the table are options including the introduction of fiscal marks for beer, supply chain legislation and a licensing scheme for wholesale alcohol dealers. I heard the points made by my hon. Friend the Member for Hereford and South Herefordshire on licensing more broadly and on the closure of premises, which is definitely one weapon in the arsenal.

I can clarify something for my hon. Friend at this point. HMRC can refer cases to other regulatory authorities for consideration of the revocation of a retailer’s licence to sell alcohol. I am aware of at least one case—from the Hereford and Worcester BBC news, no less, in 2011—in which a shop in Hereford lost its licence after smuggled cigarettes and alcohol were found during two raids.

[Miss Smith]

My hon. Friend makes an extremely valuable point. That will require joint discussion and consideration, but I hope that local authorities will seek to take a role in it under the powers that we wish to allow them through the alcohol strategy and other means.

Questions were asked about fiscal marking. The consultation document was launched yesterday and is available on the HMRC website. In response to the point about how we are conducting the consultation, I welcome the continued engagement of the alcohol industry. There is already a joint HMRC and industry group on fraud and other matters of concern, which I hope satisfies the hon. Member for Kilmarnock and Loudoun.

Turning to wine and cider specifically, cider revenue losses are not believed to be as substantial as losses elsewhere. On wine, I am well aware of the points about equivalence not only of wine, to which my hon. Friend the Member for Great Yarmouth (Brandon Lewis) referred, but of cider. Most wine comes from outside the UK, so fiscal marks are less practical than for beer. The consultation refers to how to mark bottles and cans that move through the UK.

[Andrew Griffiths]

First, I am intrigued that the Minister says that because wine is imported, it is less likely to be controlled. Surely, it is more likely to be smuggled because it is being imported. Secondly, why is there is no publishable estimate of wine fraud? Why does her Department have no estimate of the value and cost of wine fraud into this country?

[Miss Smith]

I think that I had better come back to my hon. Friend in slightly more detail than I can in the time remaining now. I urge him and anyone else who is interested to take a close look at the consultation paper and the information contained within it, and to reply. I reiterate that I am keen to work with industries of all shapes and sizes, whatever their products, to understand the impact on them and the available data. One of the key efforts that I and my officials have made to date has been to work with several key industry groups, including the British Beer and Pub Association and independent brewers in advance of publishing the consultation document to understand the available data that can be acted on.

We are aware of course that any new measures might attract costs during implementation. The Government are sensitive to that and keen to be on the side of legitimate businesses in drawing out issues of cost and practicality and moving to a solution that safeguards them and jobs.

On tobacco fraud, it is a sad fact that although tobacco duty raises around £9 billion a year, duty fraud costs the UK more than £2 billion a year and undermines the efforts by the Department of Health to reduce smoking prevalence. Trade in illicit tobacco makes cheaper tobacco more readily available to the youngest and most vulnerable people in society, as the hon. Member for Stockton North (Alex Cunningham) ably described. As with alcohol fraud, tobacco fraud takes trade away from honest businesses, so it is a matter of pride that HMRC has halved the illicit cigarette market in the UK since 2000.

I want briefly to introduce minimum indicative levels, which some hon. Members will be aware of. The hon. Member for North Antrim made a point about how to stop and search what is coming in. Since October last year, the Government have reduced the MILs for personal import of cigarettes and tobacco into this country, which reduces the opportunity for fraud and brings us into line with the rest of the European Union. MILs are a guide to personal use, so if someone has more than the level, having already been stopped, they will be more likely to be challenged further on their assertion that the goods are for personal use. There are, of course, points to be made, perhaps in another debate, about the free movement of goods and the fact that all goods imported for commercial purposes must have their excise duty paid.

I turn to what HMRC must do further to avoid complacency and, with the border force, to maintain a strategy to address the source, supply and demand for illicit tobacco in this county. The aim of the tobacco strategy is to intercept as much illicit product as possible before it crosses the border into the UK. The Government are providing more than £25 million in additional funding over the next four years in direct support of that strategy. That is part of the extra £917 million reinvestment in HMRC specifically to tackle organised crime, tax evasion and avoidance, all of which contribute to the delivery of an additional £7 billion per year in tax revenue by 2014-15. That is a sign of our intention, commitment and confidence on reducing fraud.

Details of the strategy and what our increased investment will provide that might be of interest include additional criminal investigators to target criminal gangs and to prosecute more offenders involved in tobacco fraud at all levels, additional intelligence and enforcement staff to tackle smuggling and an expansion of HMRC’s intelligence and enforcement work overseas, to target supply-chain activity in high-risk source and transit countries for illicit tobacco.

I heard the call by my hon. Friend the Member for Bristol West for better registration and to work with the World Health Organisation to trace the movement of tobacco products. He will know that the UK is a partner and a signatory to the WHO. The agreement is worldwide and in the form of the framework convention on tobacco control. During the next few weeks, a UK representative will attend a meeting in Geneva, where we hope to obtain agreements to that framework convention, which will provide a wide range of control measures. I shall be happy to talk to my hon. Friend about that later if he wishes.

The hon. Member for North Antrim referred to organised crime. I have joined him at a Select Committee evidence session covering some of the issues. In addition to duty losses that we have discussed—illicit production, counterfeiting and the abuse of cross-border shopping rules—the most significant threat that we face in relation to alcohol and tobacco fraud today comes from organised criminal gangs, which smuggle alcohol products into the UK in large commercial quantities, duty unpaid. HMRC is working closely with key partners to tackle organised crime in line with the Government’s strategic approach, which was set out in a paper published in July 2011.

That strategy outlines a comprehensive approach to reduce the risk to the UK and its interests from organised crime by reducing the threat from organised criminals, vulnerabilities to the UK and criminal opportunities. The key players in that work include HMRC, the UK Border Agency, the Serious Organised Crime Agency and, of course, the police. They are overseen in their work by the organised crime partnership board. I hope that that reassures hon. Members that we have a truly multi-agency response to organised crime. All four bodies are represented, for example, in the establishment of the new organised crime co-ordination centre. They are all closely involved in the design and build of the new National Crime Agency.

In conclusion, the Government’s response to alcohol and tobacco fraud is articulated in HMRC’s alcohol fraud and tobacco strategies and was reaffirmed in last week’s cross-Government alcohol strategy. It represents a coherent package of measures to hit back hard against these types of fraud from several directions. I thank my hon. Friend the Member for Hereford and South Herefordshire and other hon. Members who have contributed to today’s lively but well-informed and wide-ranging debate. I am sure that my colleagues in other Departments who have been mentioned today will be grateful for the comments and insight provided and will take the points made into account in the further development of their work in this area and with industry when appropriate.