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Mr. John Baron (Billericay): Welcome to the Chair, Sir Nicholas. I shall keep my comments brief, as I appreciate that time is short. Column Number: 015 In spite of all the Economic Secretary's comments about being fair to the domestic brewing industry and the consumer, I put it to him that beer duty is much higher on this side of the English channel than it is on the continent. That is unfair and wrong for several reasons. There is a great deal of talk about how Customs and Excise is coping and doing a great job on smuggling, but the increase in the price differential between this country and the continent encourages smuggling. Unless we can really get to grips with smuggling, as was pointed out on the Floor of the House yesterday in respect of tobacco smuggling, the increasing price differential will significantly harm our domestic industry. The higher duty is also unfair on the 15 million beer drinkers in this country. I must declare an interest because I am one of them, in moderation. I ask the Economic Secretary what justification he has for the ever-increasing price differential on beer between this country and the continent. Will the Treasury put in place some long-term strategy or policy on taxation? At present, we seem to live hand to mouth, from year to year, never quite knowing where we are with taxation on alcohol. It would help the Committee, and the country as a whole, if we had some better indication of what might come in the years ahead. It would certainly help our domestic brewing industry to make investment plans for the future. Mr. Jonathan Djanogly (Huntingdon): It is important to say something about real ale. The industry is not happy with the proposed rise and has hit out against the penny increase. Mike Benner, head of campaigns and communications for the big consumer group, the Campaign for Real Ale, stated:
That ties in with what my hon. Friend the Member for Billericay said. It is all very well to crack down on smuggling—indeed, we must do so—but at the same time we must put the price of beer in this country in the context of the price in the rest of Europe. Most people do not have to indulge in smuggling. They can legally go to the continent and purchase alcohol at a rate that is vastly reduced in comparison with rates in this country. That is why I fully support the proposal of my hon. Friend the Member for Eddisbury, who said that it would be helpful if the Government were to provide comparative figures for other European countries so that we could see what we were talking about.
9.45 amYesterday, on the Floor of the House, we discussed the duty on Scotch whisky. As part of that debate, comparisons were made with the duty on beer and wine. I remember the Economic Secretary saying that he was happy that the duty had been kept constant for a number of years and that it would have been bad for Column Number: 016 whisky if there had been increases over those same years. However, he did not go on to give a rationale for the Government's strategy of freezing duty on whisky, other than to imply that that had been done on a year-by-year assessment basis.Comments made yesterday are relevant to the debate. It would help the industry if some sort of strategy were put in place, so that it could be debated as an issue and put in an overall context. Has the Government's policy over recent years been to equalise the duty on whisky vis-à-vis the duty on beer and wine? The Economic Secretary never addressed that in the debate yesterday, so it would be helpful if he addressed it today. Mr. Jack: I want to follow the line of my hon. Friend the Member for Huntingdon and take the Economic Secretary through one or two arguments on which I would be grateful for his comments. Every time the Government of the day return to the hackneyed old favourite of raising money by revalorisation—on this occasion, of the duty on beer—we hit a problem. I had not realised that one of the effects on the product itself was a potential downgrading of some of our better known beers. I declare an interest. I am principally a wine drinker, but occasionally I like to go into The Taps in Lytham, which is an excellent community pub, and enjoy a pint of Boddingtons beer. I had thought that it was a good north-west brew of traditional style, but I discovered recently that instead of containing good English-grown hops, the beer is being reformulated to contain hop oil. Those who like their beer brewed the traditional way will reflect on the fact that a range of hops and the contribution that whole hops make to the flavour of beer will be denied them. What many traditional beer drinkers would think of as an inferior product will be the one that is available. Brewing and the retailing of beer are under considerable pressure on the margin and returns that they give, so manufacturers reformulate the product to try to sustain their financial returns against a background of rising prices. That background is occasioned by the clause. I am concerned because there are potential knock-on effects on agriculture. If brewers adjust the formulation, in the light of the rising price of the product, the net result will be that hops grown in the United Kingdom will suffer. The Government have made great play of their policies on the importance of rural Britain and sustainability. The inch-by-inch increase of the price of beer occasioned by the clause acts against the Government's professed interest in sustaining rural Britain and its communities. That brings us back to where we started: namely, in the pub. The Countryside Agency's recent report on rural Britain places strong emphasis on the important role that the pub plays as the centre of rural communities. However, the inexorable rise in the price of beer has its effect on depressing the viability of not just rural pubs, but pubs in general. There is a circularity to the argument. The more the Government carry on increasing the price of beer, the more they affect not only the returns to the landlord, but also the quality of the product. Column Number: 017 The Economic Secretary did not comment on another aspect. The increase in the price of beer is not the same as the increase in the price of duty. Retailers of beer will take a retail margin on the extra tax, so the percentage increase that he mentioned will be multiplied by the retail margin, especially in the case of supermarkets, off-licences and other purveyors of alcoholic drinks. That raises the question of how much analysis the Treasury has undertaken of the knock-on effect of what seems on the face of it a modest proposal. Can the Economic Secretary enlighten the Committee on what will happen? Beer is deemed a natural beverage. Many would ascribe to it health-giving properties. I contrast that with many of the comments made on, for example, drinks available to children—fizzy pop, to give the generic term—which are high in sugar content. They can bring all kinds of problems, such as the onset of type 2 diabetes, which results in a cost to the national health service. However, such drinks have so far remained untouched by the Government in terms of taxation. It proves an interesting contrast that a natural beverage, beer, is continually under price pressure from the Government while other beverages that may have health disadvantages remain untouched. Rob Marris (Wolverhampton, South-West) rose— The Chairman: I call the hon. Member for Wolverhampton, South-West (Rob Marris), who, I believe, represents the home of Wolverhampton and Dudley breweries. Rob Marris: You almost took the words out of my mouth, Sir Nicholas, and may I say what a remarkable pleasure it is to serve under your chairmanship? I should declare an interest that is not registrable: Banks's, the Wolverhampton and Dudley breweries, which is headquartered in my constituency, is the landlord of my constituency office—at an open-market rent, I hasten to add. It makes the excellent Banks's mild bitter as well as Banks's bitter, as I am sure that all hon. Members know. It used to be available in the Strangers Bar. Banks's is the largest independent brewer in the United Kingdom and is responsible for some 1,600 public houses. It is a major brewer, and I can briefly tell my hon. Friend the Minister that I have quite close contact with Banks's, not only because my office is its tenant, but because it is literally a stone's throw from the brewery that is its headquarters. I saw Ralph Findlay, the chief executive, fairly recently—before the Budget—and discussed many things with him, including the Licensing Bill. I cannot recall that I have had any representation from Banks's brewery—the largest independent brewery in the UK—on the rise in the rate of excise on beer proposed in the Budget. John Healey: I welcome the strong support that a number of Members have given for particular local brewers and breweries in their constituencies. It reinforces the quality of insight brought to proceedings in this House and in Committee when we can make such direct links between our experience of local interests and more general national policy Column Number: 018 issues. I particularly welcome the comments of my hon. Friend the Member for Wolverhampton, South-West.I have to say to the right hon. Member for Fylde that although I drink Boddingtons, I do not submit it to the chemical analysis to which his comments treated us. I found them especially interesting. Mr. Jack: The ale in The Taps pub that I mentioned is brewed with hops. I should be delighted to share a pint of that fine brew with the Economic Secretary.
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