Skip to main content

Alcohol: Duty

Volume 715: debated on Thursday 10 December 2009


Asked By

To ask Her Majesty’s Government whether they have considered variable tax rates for alcoholic drinks.

The rates of duty for alcoholic drinks are already variable. Alcohol duty rates and structures are constrained by EU law. Beer and spirits must be taxed in proportion to their strength, while wine and cider must be taxed in bands covering a range of strengths. Within these constraints, the Government are free to set different rates of duty for each type of alcoholic beverage provided they are above the EU minimum rates.

I thank the Minister for that Answer. I acknowledge that this is a problem in continental Europe, as well as here. However, if we had a much clearer structure whereby drinks with a high alcohol content, particularly beers which are aimed at and often sold to young people, had a higher and more clearly differentiated tax rate—if necessary, including in this many northern European countries which have a similar problem to us—we could have a greater impact on alcohol abuse involving extra-strong drinks.

I thank my noble friend for that helpful observation. The purpose of taxation on alcohol is primarily to raise revenue for government. The social purpose is a secondary objective, but I take account of what my noble friend says and of the very broad concern that people have about excessive drinking, particularly by younger people.

My Lords, given that young people, if they begin the habit of hard drinking, are likely to sustain it; given the evidence that consumption is clearly tied to cost; given that 45 per cent of the victims of domestic violence say that the perpetrators were under the influence of alcohol when they were attacked; and that in the US, the prevalence of domestic violence is very much associated with those in alcohol rehabilitation programmes, will the Minister take that into consideration in his deliberations on the matter?

Those are matters that are already taken into consideration. That is one reason why both health and Treasury Ministers have for a number of years progressively increased the rate of duty on alcohol.

My Lords, it should be borne in mind that the whisky industry and the beer industry in Scotland are very good employers of labour. When taxation goes up, it makes it difficult for those industries to employ more labour.

We are of course fully aware of that. In respect of any new duty or form of taxation, we take into account the impact on employment.

My Lords, I am sure that everybody accepts that the main function of the excise duties on alcoholic drinks is revenue-raising rather than social, but does the Minister accept that there are still serious concerns about the social impacts of the relatively low level of duty on high-alcohol lager and cider? Those drinks are now sold at very low prices and largely purchased by people with severe alcohol problems. Will the Government review the duty on those products?

In the PBR yesterday, we announced that the cider duty regime will be reviewed and proposals brought forward for Budget 2010. Cider duty is considerably lower than duty on other alcoholic drinks. Recent changes to alcohol duties have increased that differential in favour of cider. That is why the Government have said that we will review those rates. We also have some discretion within the EU framework further to increase rates of duty on high alcoholic strength beverages—beers and ciders—and that is a matter which we keep under very regular review.

My Lords, 24-hour drinking takes place regardless of licensed opening hours. Drinking at home, not in restaurants and pubs, seems to be part of the problem. It is a serious issue to which Ministers are giving a great deal of attention.

My Lords, I understand the question about revenue but, in considering with whom he should consult on this matter, will the Minister be prepared to move beyond and consult those who have the education and care of our young people at heart? It would be reassuring to your Lordships' House if we knew that not only the currency of economics but also considerations about the well-being of the whole community we serve are driving our decisions in this matter.

My Lords, any process of consultation is wide. We want to hear from more than those who are specifically and directly involved in the industry. In this particular case, that includes those who have regard to social consequences and, as the noble Lord from the Cross Benches noted earlier, to the impact on regional economies.

My Lords, would my noble friend agree that, important as the revenue-raising function is, a second, but equally important, public expenditure objective should be to militate against dangers that lead to expenditure in the public sector? The abuse of alcohol leads to enormous costs to our National Health Service and to public utilities through road accidents and causes devastation to many families. Will he make sure that in taxation policy those aspects are borne in mind as being at least equal in importance to the revenue-raising function?

My Lords, I hope that I have assured my noble friend that that is the case, and it is another reason why, for instance, we have special taxation on tobacco.

My Lords, is whisky, wherever it is made, taxed at the same level? I heard about English whisky on the radio this morning. It has a very high mark of approval and is expensive. However, I wonder whether the rate of tax on whisky is the same in England as it is in Scotland.

My Lords, yesterday the Conservative Front Bench challenged me on whether I had read the morning papers on a day when we were rather busy on one or two other matters, and now I am similarly challenged. I must get up earlier in the morning. As far as I am aware, the proportionality of alcohol tax is related to the strength of the alcoholic beverage, and the EU framework establishes that spirits must be taxed in relation to the taxation on beer and vice versa. I have no reason to believe that the EU treats whisky differently, whether it is made in England or in Scotland. If I have misdirected the House, I shall reply immediately and ensure not only that the letter is placed in the Library, but that it is posted in the various bars of the Palace of Westminster.