Alcohol Duty

Peter Bottomley Excerpts

Monday 19th December 2022 Commons Chamber

[James Cartlidge]

I am grateful to the hon. Lady. To be clear, this is good news for every single part of our alcohol industry and for those who drink in our pubs. Crucially, it gives certainty to the industry. The hospitality industry employed 2.1 million people at the latest reckoning, so it is a huge part of our economy and we want to do what we can to support it.

The hon. Lady mentioned a U-turn. To be clear, we said that we would introduce a radical reform of alcohol duty, and we will introduce that reform. It will come into effect next August. That reform could not have happened if we had not left the European Union. It will introduce, for the very first time, differential duty rates on tap and in the supermarkets. The public want that, because they value their pubs and understand the importance of pubs to their communities. [Interruption.] The hon. Lady intervenes, having sat down. She talked about her local pub. Obviously, we want to assist her local pub, and all pubs up and down the country; that is why we have put in place an energy bill relief scheme worth £18.1 billion, which is a huge intervention.

The energy bill relief scheme is very generous, but it is expensive, and we need to ensure longer-term affordability and value for money for the taxpayer. That is why we are carrying out a review of the scheme, with the aim of reducing the public finances’ exposure to volatile international energy prices from April 2023. We will announce the outcome of the review in the new year to ensure that businesses have sufficient certainty about future support before the scheme ends in March 2023. We should remember that this energy-related support comes on the back of the enormous support that we put in place during the pandemic. There were grants, bounce back loans, and of course furlough for all staff working in the hospitality sector.

We are proceeding with this ambitious reform package next year. We felt that it was appropriate to give the sector certainty as soon as possible that it would face only one uprating. That is the right thing to do, and it shows that the Government are supporting the hospitality industry.

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

Like the hon. Member for Erith and Thamesmead (Abena Oppong-Asare), who speaks for the Opposition, I support what has been announced today. I declare an interest: I drink most things, except super-strength draught cider.

On wine, using an average rate of 12.5% is right; stepped rates would not have worked, because growers do not know what strength a wine will be—the strength fluctuates naturally. A revenue-neutral level makes sense. I hope that this approach will continue beyond the 18 months.

I hope that the Minister will consider whether farm-gate concessions can be made for the growing number of vineyards in this country. I hope that between now and the Budget the Chancellor will calculate the price and tax elasticity, because often, when duty rates are frozen, revenue goes up. There have been times when the rate has gone up and the revenue has gone down, which is perverse.

[James Cartlidge]

I am grateful to the Father of the House for his question—I do not think that I will ever get another that mentions both elasticity and high-strength cider; it was an interesting combination of points. He made a very good point about wine. I have enjoyed engaging with all the main alcohol sectors, mainly in November, in the run-up to the making of this decision. As he knows, we are requiring all wine between 11.5% and 14.5% ABV to be treated as though it were 12.5% ABV for the purpose of calculating the duty rate. That will apply for 18 months, so there is a transition. We have to ask ourselves: if that were made permanent, would it not undermine a regime that is ultimately based on taxation by strength? I understand my hon. Friend’s point and will continue to engage with the sector on it.