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Beer Duty

Volume 592: debated on Thursday 5 February 2015

Motion made, and Question proposed, That this House do now adjourn.—(Dr Thérèse Coffey.)

I am delighted to have secured this debate. I recognise that the final Adjournment debate of the week is not exactly the shift that every Minister wishes for, but I am delighted that she is here today for this important debate. It is important because I am the first MP for more than 10 years to be able to say that beer sales are on the up; beer sales are in growth. That is a direct result of the decision taken by the Chancellor and this Government to scrap the hated beer duty escalator, and to cut beer duty not once, but twice. It is those decisions that have led to the renaissance in brewing that we see at the moment.

In this short Adjournment debate, I intend to make the case to the Minister about why she should complete a hat-trick that would be more memorable than Michael Owen’s hat-trick when he put three past Germany in that magnificent victory for England. I pay tribute to all the people who helped to deliver that important scrapping of the beer duty escalator, and those two cuts. In particular, I pay tribute to the Campaign for Real Ale and its 170,000 members who led the campaign, lobbied Parliament and their MPs, and made the case so vigorously on behalf of the brewing industry and the beer that they love so much.

I also congratulate the British Beer and Pub Association that represents brewers and pub companies across the country, and the Society of Independent Brewers—SIBA. The Minister knows that there has been a renaissance in small brewers across the country. Some 1,700 brewers are now producing excellent beer across the country, and that is as a result of economic decisions taken by this Government as part of their long-term economic plan.

I also wish to thank the TaxPayers Alliance, which ran the Mash the Beer Tax campaign, and The Sun newspaper. As we know, The Sun is always on the side of the hard-working man and woman in Britain, and it got behind this campaign to cut beer duty so that Britons could enjoy one of those simple pleasures: a pint of great British beer. The Minister will know about the great support that has been shown for this campaign by the Burton Mail—an august publication. I had the privilege of sending her the front page of the Burton Mail, which supports this campaign for the third cut in beer duty.

While revelling in the congratulations that my hon. Friend is dolling out left, right and centre, may I slightly rain on his parade? Although we are delighted with the abolition of the escalator, the last Budget, which of course introduced the 2% cut in beer duty and a freeze for spirits, actually increased duty on wine by 2.47%. As chairman of the all-party parliamentary wine and spirits group, may I ask whether he agrees that we need a better deal for wine drinkers as well?

I recognise the point that my hon. Friend makes, and I would be forced to agree with him as Mrs Griffiths is no stranger to a large pinot grigio. I point out that the campaign last time was led by a doughty Back Bencher who argued vociferously for cuts in alcohol duty, and I hope that there is some consistency in that argument in the weeks to come.

I thank colleagues on both sides of the House. Although the hated beer duty escalator was Labour’s design, colleagues from all political parties supported the campaign. I would particularly like to pay tribute to members of the all-party parliamentary beer group, the all-party parliamentary save the pub group and, of course, my colleague the hon. Member for Leeds North West (Greg Mulholland), who was instrumental in that campaign.

I am the MP for brewing. Burton is the home of British brewing, and some 5,873 people in my constituency are employed in beer and pubs. A thousand of them are young people, and it is interesting that this industry can offer great opportunities to the 16 to 25-year-olds the Government are trying to get into work and off the unemployment lists. The hospitality industry, and the pub industry in particular, represents a massive opportunity to help in that respect. I point out to the Minister that 1,136 people in Witham are employed in beer, pubs and brewing, so she will understand the issue’s importance.

In my constituency, the gross value to the local economy is £348 million, and we contribute £438 million to the Treasury—something that, I am sure, delights the Minister. Nationally, the industry contributes £10 billion in taxation. At a time when we want to pay off the debt and pay down the deficit, that contribution must not be underestimated. Beer and pubs are vital to this country, and 1 million people rely on the beer and pub industry for their employment. I have alluded to the fact that 46% of those people are between the ages of 16 and 24.

Beer is a success story. We brew the best beer in the world, and 82% of all the beer consumed in this country is brewed here by brewers big and small, producing a fantastic product. Although I understand the point made by my hon. Friend the Member for East Worthing and Shoreham (Tim Loughton), wine is imported into this country—[Interruption]—ostensibly, but I have sampled, as has Mrs Griffiths, some fine English and Welsh wines.

I am delighted to hear about Mrs Griffiths’s delectation of fruit-based drinks for ladies, as I believe someone calls them. Is my hon. Friend aware that there are now 448 commercial vineyards and 131 wineries in the United Kingdom, and that the hectarage given over to vineyards here has more than doubled in the past 10 years, with 4.5 million bottles of excellent quality, world-beating English wine produced in this country and not imported?

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.

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?

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.

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.

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.

I congratulate my hon. Friend the Member for Burton (Andrew Griffiths) not only on securing this debate, but on the reward he received this week for his lobbying and campaigning on behalf of the beer industry. I pay tribute to him for campaigning solidly over this Parliament on behalf of his constituents in Burton, the home of British brewing. He is a champion of the jobs, the investment and the economic security that the industry has provided. I also commend the passion he has shown in his work as chair of the all-party group on beer. It is one of the most popular all-party groups, unsurprisingly, given the effective leadership he has displayed. It has been a delight to work with him on various issues, both before and since becoming a Minister.

This week UK beer sales have increased for the first time in 10 years. That is a testament to the hard work that my hon. Friend has put in over the years in standing up for the beer and pub industries. The great British pub and great British brewers are institutions that we in Government wholeheartedly support. As we heard in the compelling case eloquently made by my hon. Friend, there is a very strong argument that the brewing and pub sector is a major part of the UK economy. It adds £22 billion to the UK’s GDP. It directly employs over 600,000 people and supports almost 900,000 people in total, including, as he said, a significant proportion of young people. There is a very strong skills base in the industry, and young people are part of that. As he said, it also boosts British manufacturing, and its exports are worth over £630 million.

Perhaps as importantly, pubs have been at the heart of British culture for centuries. Fifteen million people visit them each week. They are the cornerstone of our communities, and of tourism. As Members of Parliament, we all recognise that they play a strong and pivotal role in our local communities, particularly rural ones.

The Minister mentions tourism. Is she aware that visiting a great British pub is one of the key things that visitors to this country want to do when they arrive on these shores? Does she agree that we should be doing more to promote the great British pub as part of our tourism offer?

My hon. Friend is absolutely right. We have spoken about this at the APPG. The pub is absolutely pivotal to boosting Great Britain’s brand. Tourism and our rural economies are part of that. When we speak about pubs, it is about enjoyment—the fact that people enjoy them. As a policy maker and a Minister, I sometimes think that that is not sufficiently taken into account.

The case for supporting pubs and brewers as institutions is overwhelming. We see that across the country, beyond pubs, in the supply chain and the wider industry. Maltings and other factors in the supply chain are crucial and pivotal to our economy.

My hon. Friend the Member for Burton (Andrew Griffiths) made a fantastic economic case for the beer industry that the Minister is fortunately echoing. Will she apply the same criteria to the wine industry, which accounts for some 22% of sales in pubs and restaurants, accounts for no less than 67% of all the wine duty paid in the whole of the EU, and contributes £3.7 billion to the Exchequer? Will she see a delegation from the all-party group on wine and spirits, led by me? If we can combine that with happy hour at the Treasury, I will gladly bring along a bottle of Nyetimber, Ridgeview, or my favourite champenois, Breaky Bottom—“Probably the best bottom in the world”, as it markets itself.

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.

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.

My hon. Friend is absolutely right. Regional brewers play an important role by bringing diversity to the mix and by making a contribution. When there is a range of thriving breweries, with regional aspects as well, it provides differentiation and helps with tourism, because it makes regions attractive to people and brings them in.

I want to touch on the big societal changes that we have seen over the past few years. People give a lot more consideration to what they are drinking. They take an interest not only in what they drink, but in how it is produced. With some notable exceptions, people are much more knowledgeable about responsible drinking and regional varieties. Every landlord knows that any drink is capable of being enjoyed in a responsible way or of being misused. This Government will always argue against the top-down approach. I pay tribute to the industry for everything that it has done on responsible drinking and to pubs for the role that they have played in promoting responsible behaviour. We have seen successful schemes, such as the highly renowned Best Bar None.

My hon. Friend the Member for Burton has spoken eloquently about continued action through the tax system to ensure that pubs and breweries continue. I commend him for his speech today.

House adjourned without Question put (Standing Order No. 9(7)).