Beer Duty

Peter Bottomley Excerpts

Thursday 5th February 2015 Commons Chamber

[Andrew Griffiths]

I absolutely understand the points that my hon. Friend makes, but I gently point out that seven out of 10 drinks that are drunk in pubs are beer. If we value our community pubs, we can support them by supporting the great British brewing industry. Beer gets people into our community pubs, which are the backbone of our society, and each pub contributes £80,000 a year to the local economy. Of course, some of them offer other services—they are the post office, the local shop, and offer many facilities. We have heard of groups who have meals on wheels in their pubs. Pubs play an important role, and, as I have said before, they form the fabric of our community: the great British pub.

[Sir Peter Bottomley (Worthing West) (Con)]

I congratulate my hon. Friend on winning the beer award at the marvellous evening that we had on the Terrace. Will he join me in thanking the pub trade and the brewers for their help in reducing drink-driving while maintaining the social life of the pub, where more controlled, sensible and responsible drinking takes place than in many other places?

[Andrew Griffiths]

Indeed. If we want to tackle problem drinking, our community pubs are the solution, not the problem. Encouraging people back into the pub is the way to tackle that. My hon. Friend talks about publicans. According to Pub Aid, £120 million is raised for charity each year as result of people supporting initiatives in our pubs. We should all support that.

When Labour’s hated beer duty escalator was introduced in 2008, we saw a duty increase of 42% in those few years. That hit beer sales, made pints less affordable and closed pubs. If we care about pubs, that should worry us.

[Sir Peter Bottomley]

A very short point, and it is not supposed to be too pointed—it is interesting that there is not a single Labour Member present for this important debate on beer.

[Andrew Griffiths]

I recognise the point that my hon. Friend makes. It is not lost on me that it was Labour that introduced the beer duty escalator, but as I said, many MPs on all sides supported the campaign for its abolition.

When the beer duty escalator was introduced, beer consumption fell by 16% across the board, and in pubs it fell by 25%. The decision by that Labour Government closed pubs—7,000 of them—and we lost 58,000 beer-related jobs as a result. The amazing thing is that although beer duty increased by 42%, beer duty revenue to the Treasury increased by only 12%. We can see the impact that the escalator had not only on our pubs and our brewers, but on the Treasury take—the goose that laid the golden egg and that Labour Chancellor choked it. We can see the folly of the escalator.

When the current Chancellor chose to scrap the beer duty escalator in 2013 and cut beer duty for the first time since 1958, he was cheered by 32 million beer drinkers across the country and 170,000 CAMRA members who had worked so hard to bring that about. Last year we saw that historic second cut in beer duty. My right hon. Friend was the first Chancellor in history to cut beer duty in two successive Budgets and I commend him for it. The cut was passed on by the industry. There are some who try to suggest that brewers or pub companies did not pass it on to their customers, but we have seen the lowest increase in beer prices since the 1980s—just 2.2%. When, as we are often told, we are suffering from a crisis in the cost of living, the fact that the Chancellor cut beer duty and therefore delivered lower beer prices so that hard-working men and women could enjoy one of life’s simple pleasures, is important.

Consequently, as I said earlier, we have seen a growth in beer sales for the first time in 10 years. That means brewers, publicans and all the related trades having business through their doors and are on the up, which must be good news. According to the British Beer and Pub Association, those two duty cuts and ending the escalator saved 16,000 jobs. Most importantly, confidence in the industry is up, confidence in the Government is up, and as a result some £1.1 billion is likely to be invested over the next 12 months. I have seen the impact in my constituency. Molson Coors is investing £75 million in its brewery in Burton, and Marston’s has invested over £20 million in its bottling plant in Burton. That is not just brewers on the up, but engineering and manufacturing—another success story.

When we made the case to the Chancellor two years ago, we said, “Cut beer duty and beer sales will go up; cut beer duty and the Treasury’s tax take will increase.” In results that would make Jonathan Isaby of the TaxPayers Alliance dance around his office in glee, we have proven that lower taxes for the brewing industry result in a better return for the Treasury. Even sales in pubs, which we have all been concerned about, have declined by less than 1% over the past 12 months. That is clear evidence that we are beginning to see a change, with investment and growth in our pubs. The last time we saw such a performance was in 1996, and strangely enough that was the last time we had a Conservative Government—cause and effect.

What has been the result for the Treasury’s tax take? Over the 12 months to November 2014, beer duty revenue actually increased by £39 million, and it is £15 million higher than it was in March 2014. Add the additional VAT and jobs-related taxes and we can see that cutting beer duty is great news for the Treasury. The Government have also cut business rates, helped with apprenticeships, and followed a long-term economic plan that is supporting small businesses. That all means the brewing industry and the pub industry have a great deal more confidence and are on the up.

However, hard-pressed British beer drinkers still pay 40% of all Europe’s beer duty, despite drinking only 13% of the beer. If we could cut beer duty just a little more, we would see more great British products being consumed. Of course, we are now exporting that great British product around the world, not only to France, Germany and other European countries, but to Japan and China. The industry has massive potential.

Madam Deputy Speaker, having listened to the facts and the evidence, I am sure you will agree that the Minister must now be thinking, “Why on earth wouldn’t I cut beer duty a third time?” The economic case, the social case and the jobs case have all been made. However, I want to remind her of one final consideration that she might not be aware of: her last two predecessors who decided to cut beer duty are now in the Cabinet—cause and effect. Cutting beer duty is good for the Treasury, good for the industry and good for our communities. I am sure that she is listening, and I hope that we will see a hat-trick in the Budget this year.

--- Later in debate ---

[Priti Patel]

Of course, the answer is yes to the delegation. My hon. Friend is right that the wine industry makes an enormous economic contribution. Earlier, he referred to English wines. I speak proudly as the Member of Parliament for Witham as I, too, have a good vineyard in my constituency. The wine sector is to be supported and commended as well. I will take him up on his offer; he is very welcome to come and meet me at the Treasury.

As my hon. Friend the Member for Burton pointed out, the previous Government’s beer duty escalator hit the industry hard. It led to pub closures and cost people their jobs. Of course, we have made changes to the escalator. In recognition of what happened in the past, we went on to cut tax on a typical pint of beer by one penny at Budget 2013 and another penny at Budget 2014. I am delighted that he celebrates the fact that the duty on a typical pint of beer is now 8p lower than under the previous Government’s plan. According to the British Beer and Pub Association, the jobs of 16,000 people have been secured by our duty cuts, and for them the duty cuts have been fundamental to their livelihoods. The duty cuts have also boosted confidence in the brewing and pub sector and, importantly, they have led to greater investment and greater economic security when it comes to jobs.

Research for the British Beer and Pub Association estimates that an additional 186 million pints will be sold in the on-trade this year as a result of our beer duty cuts. To meet that increase, it estimates that there has been a 12% rise in investment—in monetary terms, an additional £44 million—in the sector in the last year directly as a result of the cut in duty. According to a recent survey, 86% of its members are planning to increase their investment in the UK. That strengthens our economic case, and shows that we are serious about supporting the pub sector.

As my hon. Friend said, nearly two thirds of all the alcohol sold in pubs is beer, but other drinks are important to pubs. To ensure that help is extended to pubs that have diversified away from beer, at Budget 2014 we froze duties on spirits and ordinary cider. Of course, we ended the escalator on wine as well; I am somewhat familiar with the campaign in favour of that.

Pubs are benefiting from the wider changes that the Government have made to support business. Three quarters of pubs are benefiting from a £1,000 reduction in their business rates this year. The reduction will rise to £1,500 next year. We have extended the doubling of small business rate relief to April 2016, which, as my hon. Friend knows, will particularly help the eight out of 10 pubs run as individual small businesses. Pubs will benefit from our national insurance changes. The £2,000 employment allowance has reduced employer national insurance contributions for all businesses. Pubs will also benefit from the reduction in employer NICs for young people, which is particularly important because 46% of the people employed in pubs are aged between 18 and 24. We have introduced regulatory changes to make it easier for pubs to play live music, and to allow beer and wine to be served in glasses of different sizes.

As I am sure my hon. Friend will know, there is no such thing as a typical pub. There are as many different types of pub as there are types of customer, so pubs should have the flexibility to meet customers’ needs. It is fair to say that customers want reasonably priced drinks, naturally, and I am glad to say that our duty cuts are translating directly into more beer for your buck. Beer prices in the on-trade are rising at their lowest rate for more than 25 years: 96% of British Beer and Pub Association members have said that they plan to reduce or freeze their prices as a result of our policies. That is fantastic news for the 32 million people in the UK who drink beer each year; incidentally, that is more than the number of people who voted in the last general election.

Our customers want choice. It is great news that more than three quarters of respondents to the British Beer and Pub Association survey intend to launch new products directly as a result of the cut in beer duty. Small brewers relief has reduced the beer duty paid by micro-brewers by up to a half. That has encouraged new micro-breweries to be set up and to expand. There are now 1,000 more breweries in the UK than in the year before small brewers relief was introduced.

I am particularly interested in how we can do more to help those industries, because there are many associated benefits from having more thriving breweries, not just in exports, but in the tourism offer, as my hon. Friend has said.

[Sir Peter Bottomley]

Regional brewers also matter. Will my hon. Friend allow me to pay tribute to Hall & Woodhouse, which is one of the many? It set up the community chest in Dorset and West Sussex, which gives grants to good organisations. Not all of the organisations are run in the pubs, but the pubs and brewers want to support them.