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If the reductions are linear, the Lib Dem amendment implies that beer duty would be eliminated entirely in 50 years’ time; it might even imply that beer duty would go negative from the year 2060. That raises the tantalising prospect of the Liberal Democrats paying people to drink beer. That gives a new twist to their populist policies; they are like a desperate candidate in a student
union election in their efforts to court the popular and youth votes. It appears, at least from amendment 38, that they are already reaching out to my grandchildren with an offer of booze not only free of tax, but subsidised by the state from 2060. Here we have it: the Liberal Democrats seemingly proposing that the state should pay people to drink beer. That cannot make any sense, and that is why we cannot support amendment 38.
Kelvin Hopkins: I want to make two brief and simple points. The chief medical officer has suggested that alcohol should be taxed according to the alcoholic content of beverages. That would have the enormously beneficial effect of raising prices in supermarkets and having little effect on pub prices. That would help the pub trade and reduce irresponsible drinking.
My other point is that we have a vast ocean of untaxed, cheap alcohol coming in from Europe, and the Government get almost no revenue from it. If we reduced the amount of alcohol coming in and taxed it properly, Government revenues would increase and there would be less irresponsible drinking. Those two points should be taken on board by the Government and everybody in the Chamber. I hope that, in time, we move in that direction.
Mr. Bone: I shall not detain the House for long, although I should say that it is a pleasure to speak at slightly earlier than 10 minutes to midnight, as I did in Committee.
I entirely agree with my hon. Friend the Member for Hammersmith and Fulham (Mr. Hands), who exposed the technical faults in the amendment tabled by the hon. Member for Taunton (Mr. Browne). However, the hon. Gentleman’s heart is entirely in the right place. It is wrong for there to be a duty escalator on alcohol, going up and up. The Government should decide at each Budget what the duty should be, depending on the economic circumstances. I have seen pubs close in Wellingborough, Rushden and Irchester, and this is not the time for a duty escalator. Although I cannot support the hon. Gentleman’s amendment, I certainly think his heart is in the right place.
The Exchequer Secretary to the Treasury (Sarah McCarthy-Fry): I, too, have read the Hansard report of the debate in Committee of the whole House when alcohol duties were debated. It went down many highways and byways, and I hoped that we would not have a repetition of that this evening, because I would have had to bone up on all the pubs that I have visited in my constituency. I can tell hon. Members that in the 1960s there were more than 300 pubs on Portsea island alone, because a friend of mine wrote a book about them. However, I am sure, Mr. Speaker, that you would not want me to go down that road.
Alcohol duties play an important role in contributing to the public finances. The amendment would significantly reduce the revenue that the Government receive, thus weakening the public finances, notwithstanding the arguments made by the hon. Member for Taunton (Mr. Browne). The amendment deals only with beer duty, not that on other alcohol products. On the rate of duty, my predecessor, my hon. Friend the Member for Wallasey (Angela Eagle), noted in Committee of the whole House
“that, for fairness, it was right to have 2 per cent. across the board this time round”.—[ Official Report, 12 May 2009; Vol. 492, c. 815.]
Furthermore, it would not be possible for us to accept the amendment as the European Court of Justice has ruled that duty on beer should be maintained within a set ratio with duty on wine. Such a continued reduction in beer duty would breach that ratio in the absence of similar provisions for wine. There are several constraints in EU law as regards alcohol. Beer must be taxed at an equivalent rate to wine and in direct proportion to degrees of alcohol strength. We are allowed to have reduced rates for small breweries, and we do so. It is also possible to set a reduced rate on beer with a strength of below 2.8 per cent. alcohol by volume. The pub industry proposed a zero rate for low-strength beers, its rationale being that it is easier to manufacture ale and stout. However, when we looked at the possible consequences, there was no evidence to suggest that people would opt to drop down to those reduced strengths.
Mr. Hands: Can the Minister explain how the Government’s escalator currently works? Is it still based on RPI plus 2 per cent.? If so, at a time when RPI is negative, why was the increase in beer duty nevertheless 2 per cent.?
Sarah McCarthy-Fry: Because we work on a zero base. It is an increase of 2 per cent. on zero, and it would not go back below that figure even though inflation is negative, so it is staying at 2 per cent.
As with all tax policy decisions, the Government will monitor the impact of alcohol duty, including the impact on the pub industry. However, I am sure that hon. Members will acknowledge—indeed, they have done so—that the competitiveness and employment levels in any industry depend on a large range of factors. The pub sector has been adversely affected by the economic downturn, as well as by changing tastes and lifestyles over a longer time period—nowadays there are many more ways to spend leisure time. Increased input costs for suppliers and the smoking ban have also had an effect.
Changes in duty are unlikely to be the answer to tackling those problems. Indeed, the proportion of tax—duty and VAT—in the price of a pint of beer in a pub has remained broadly constant in real terms since 1994. In the Treasury Committee on 28 April, a member of the experts panel, Mr. Weale from the National Institute of Economic and Social Research, said:
“with beer...All the evidence is that”
“not terribly price sensitive.”
However, the Government recognise and value the contribution that pubs make to employment and local communities. Although under EU tax legislation it is not possible to provide tax reliefs targeted specifically at pubs, such as taxing beer sold in supermarkets differently from that sold in pubs, the Government have introduced a range of measures to support all businesses, including the British pub. Those include: enabling pubs to spread payment of this year’s inflation uprating to business rates over three years; HMRC’s business payment support service, which has benefited many pubs already; improved
access to finance for small businesses through the enterprise finance guarantee; and support through low-cost loans and advice on energy efficiency for small businesses, including many pubs, to make savings on their energy bills.
An approach suggested by the industry has been a reduced rate for cask beer, which, again, is not currently possible under EU legislation. As many hon. Members will be aware, however, there is a planned review by the European Commission of EU alcohol rates and structures, which will provide an opportunity for the beer and pub industry to put proposals to the Commission on a reduced rate for cask beer.
Kelvin Hopkins: I thank my hon. Friend for giving way. I am somewhat concerned about this emphasis on the EU, because if the EU determined our tax and duty levels they would be substantially reduced, which would be damaging to both revenues and health.
Sarah McCarthy-Fry: I have already explained some of the constraints in EU alcohol law, but I picked out the ones on beer because that is referred to in the amendment. There are many others, such as the fact that wine must be taxed at the same rate—above 8.5 per cent. and not exceeding 15 per cent.—as must still cider. Those are among the directives that are under review for 2010. When the new Commission is in place, a work programme will be published.
Various strands to that work are currently under discussion, encompassing possible assistance for small and medium-sized enterprises, the classification of alcoholic products with specific attention to mixtures of distilled and fermented alcohols, and possible standardisation of denaturants. The UK has been working closely with the Commission to work towards a more modern structure that supports UK trade. Progress so far has been good, and initial findings have been in line with what the UK has been pressing for.
Linda Gilroy (Plymouth, Sutton) (Lab/Co-op): A moment ago, my hon. Friend the Member for Luton, North (Kelvin Hopkins) mentioned the unit price of alcohol suggested by the chief medical officer for health reasons. Is it likely that the review will enable us to take a serious look at that as a potential policy on alcohol duty?
Sarah McCarthy-Fry: I am sure that it is possible, but I do not know whether that precise matter is in the terms of reference of the review. As I said, the work programme will not be published until the new Commission is in place. I am sure that Members will appreciate that changes to the European excise rules governing alcohol duties require unanimous agreement from all 27 member states, so it could be a long process.
Given the points that I have made, not least about the legal constraints in the current EU directives and the fiscal consequences of the amendment, I ask the hon. Member for Taunton to withdraw it.
Mr. Jeremy Browne: I question the Minister’s statement that beer is not a price-sensitive commodity.
Sarah McCarthy-Fry: May I just clarify that that was not my statement? It was a quotation from one of the expert witnesses to the Treasury Committee.
Mr. Browne: Let me start again. I question the so-called expert’s statement that beer is not price-sensitive, or the Minister’s acceptance of that statement, because if it were as self-evidently true as she claims, I would not hear Ministers and others express such concern about happy hours and other forms of alcohol promotion.
I say to the Conservatives that the objective of the amendment is to cancel out and neutralise the escalator that the Government have introduced. I shall leave aside the strange assertion by the hon. Member for Hammersmith and Fulham (Mr. Hands) that if one takes 2 per cent. off a figure every year, it gets down to zero. I cannot see how it would ever get to zero, but we will leave that bit of innumeracy to one side. I regret that although the Conservatives talk a good game on this matter, I have to ask where their amendment is. Why is it always left to the Liberal Democrats to defend pubs and breweries? Why are the so-called official Opposition so negligent in that regard?
Both because it is the responsibility of my party, and sadly often that of my party alone, to champion this important community interest, and because the arguments made by the Conservative spokesman and the Exchequer Secretary fell short of what I had hoped for, I should like to press the amendment to a Division.
Question put, That the amendment be made.
The House divided: Ayes 62, Noes 311.
AYES
Alexander, Danny
Baker, Norman
Beith, rh Sir Alan
Breed, Mr. Colin
Brooke, Annette
Browne, Mr. Jeremy
Bruce, rh Malcolm
Burt, Lorely
Cable, Dr. Vincent
Campbell, rh Sir Menzies
Carmichael, Mr. Alistair
Clegg, rh Mr. Nick
Davies, Mr. Dai
Farron, Tim
Featherstone, Lynne
George, Andrew
Gidley, Sandra
Goldsworthy, Julia
Harris, Dr. Evan
Heath, Mr. David
Hemming, John
Hollobone, Mr. Philip
Horwood, Martin
Hosie, Stewart
Howarth, David
Hughes, Simon
Huhne, Chris
Keetch, Mr. Paul
Kennedy, rh Mr. Charles
Laws, Mr. David
Leech, Mr. John
Llwyd, Mr. Elfyn
MacNeil, Mr. Angus
Mason, John
McDonnell, John
Moore, Mr. Michael
Mulholland, Greg
Öpik, Lembit
Pelling, Mr. Andrew
Price, Adam
Pugh, Dr. John
Rennie, Willie
Robertson, Angus
Rogerson, Dan
Rowen, Paul
Russell, Bob
Salmond, rh Mr. Alex
Sanders, Mr. Adrian
Smith, Sir Robert
Spink, Bob
Stunell, Andrew
Swinson, Jo
Teather, Sarah
Thurso, John
Wareing, Mr. Robert N.
Webb, Steve
Weir, Mr. Mike
Williams, Hywel
Williams, Mark
Williams, Mr. Roger
Willott, Jenny
Younger-Ross, Richard
Tellers for the Ayes:
Mr. Alan Reid and
Mr. Don Foster
NOES
Abbott, Ms Diane
Ainger, Nick
Ainsworth, rh Mr. Bob
Alexander, rh Mr. Douglas
Allen, Mr. Graham
Anderson, Mr. David
Armstrong, rh Hilary
Atkins, Charlotte
Austin, Mr. Ian
Austin, John
Bailey, Mr. Adrian
Baird, Vera
Balls, rh Ed
Banks, Gordon
Barlow, Ms Celia
Barron, rh Mr. Kevin
Battle, rh John
Bayley, Hugh
Beckett, rh Margaret
Begg, Miss Anne
Bell, Sir Stuart
Benn, rh Hilary
Benton, Mr. Joe
Berry, Roger
Betts, Mr. Clive
Blackman, Liz
Blackman-Woods, Dr. Roberta
Blears, rh Hazel
Blunkett, rh Mr. David
Borrow, Mr. David S.
Bradshaw, rh Mr. Ben
Brown, Lyn
Brown, rh Mr. Nicholas
Brown, Mr. Russell
Browne, rh Des
Bryant, Chris
Buck, Ms Karen
Burden, Richard
Burgon, Colin
Burnham, rh Andy
Butler, Ms Dawn
Byers, rh Mr. Stephen
Byrne, rh Mr. Liam
Caborn, rh Mr. Richard
Cairns, David
Campbell, Mr. Alan
Campbell, Mr. Gregory
Campbell, Mr. Ronnie
Caton, Mr. Martin
Challen, Colin
Chapman, Ben
Chaytor, Mr. David
Clapham, Mr. Michael
Clark, Paul
Clarke, rh Mr. Tom
Clelland, Mr. David
Clwyd, rh Ann
Coaker, Mr. Vernon
Coffey, Ann
Cohen, Harry
Connarty, Michael
Cooper, Rosie
Cooper, rh Yvette
Corbyn, Jeremy
Cousins, Jim
Crausby, Mr. David
Creagh, Mary
Cruddas, Jon
Cryer, Mrs. Ann
Cummings, John
Cunningham, Mr. Jim
Cunningham, Tony
David, Mr. Wayne
Davidson, Mr. Ian
Davies, Mr. Quentin
Denham, rh Mr. John
Dhanda, Mr. Parmjit
Dobbin, Jim
Dobson, rh Frank
Dodds, Mr. Nigel
Donaldson, rh Mr. Jeffrey M.
Donohoe, Mr. Brian H.
Doran, Mr. Frank
Dowd, Jim
Drew, Mr. David
Durkan, Mark
Eagle, Angela
Eagle, Maria
Efford, Clive
Ellman, Mrs. Louise
Engel, Natascha
Ennis, Jeff
Etherington, Bill
Fisher, Mark
Fitzpatrick, Jim
Flello, Mr. Robert
Flint, rh Caroline
Flynn, Paul
Follett, Barbara
Foster, Mr. Michael (Worcester)
Foster, Michael Jabez (Hastings and Rye)
Francis, Dr. Hywel
Gapes, Mike
Gardiner, Barry
George, rh Mr. Bruce
Gerrard, Mr. Neil
Gilroy, Linda
Godsiff, Mr. Roger
Goggins, rh Paul
Goodman, Helen
Griffith, Nia
Griffiths, Nigel
Gwynne, Andrew
Hain, rh Mr. Peter
Hall, Mr. Mike
Hall, Patrick
Hamilton, Mr. David
Hamilton, Mr. Fabian
Hanson, rh Mr. David
Harman, rh Ms Harriet
Harris, Mr. Tom
Havard, Mr. Dai
Healey, rh John
Henderson, Mr. Doug
Hendrick, Mr. Mark
Hepburn, Mr. Stephen
Heppell, Mr. John
Hermon, Lady
Hesford, Stephen
Hewitt, rh Ms Patricia
Heyes, David
Hill, rh Keith
Hodgson, Mrs. Sharon
Hoon, rh Mr. Geoffrey
Hopkins, Kelvin
Howarth, rh Mr. George
Howells, rh Dr. Kim
Hoyle, Mr. Lindsay
Hughes, rh Beverley
Humble, Mrs. Joan
Hutton, rh Mr. John
Iddon, Dr. Brian
Illsley, Mr. Eric
Ingram, rh Mr. Adam
Irranca-Davies, Huw
Jackson, Glenda
James, Mrs. Siân C.
Jenkins, Mr. Brian
Johnson, rh Alan
Johnson, Ms Diana R.
Jones, Mr. Kevan
Jones, Lynne
Jones, Mr. Martyn
Jowell, rh Tessa
Joyce, Mr. Eric
Keeble, Ms Sally
Keeley, Barbara
Keen, Alan
Keen, Ann
Kemp, Mr. Fraser
Khan, rh Mr. Sadiq
Kidney, Mr. David
Kilfoyle, Mr. Peter
Knight, rh Jim
Kumar, Dr. Ashok
Ladyman, Dr. Stephen
Lammy, rh Mr. David
Laxton, Mr. Bob
Lazarowicz, Mark
Lepper, David
Levitt, Tom
Lewis, Mr. Ivan
Linton, Martin
Lloyd, Tony
Lucas, Ian
Mackinlay, Andrew
MacShane, rh Mr. Denis
Mactaggart, Fiona
Malik, Mr. Shahid
Mallaber, Judy
Mann, John
Marsden, Mr. Gordon
Marshall-Andrews, Mr. Robert
Martlew, Mr. Eric
McAvoy, rh Mr. Thomas
McCabe, Steve
McCafferty, Chris
McCarthy, Kerry
McCarthy-Fry, Sarah
McCrea, Dr. William
McDonagh, Siobhain
McDonnell, Dr. Alasdair
McFadden, rh Mr. Pat
McFall, rh John
McGovern, Mr. Jim
McGrady, Mr. Eddie
McGuire, rh Mrs. Anne
McIsaac, Shona
McKechin, Ann
McKenna, Rosemary
Meacher, rh Mr. Michael
Meale, Mr. Alan
Merron, Gillian
Michael, rh Alun
Milburn, rh Mr. Alan
Miliband, rh Edward
Miller, Andrew
Moffat, Anne
Mole, Chris
Moon, Mrs. Madeleine
Morden, Jessica
Morgan, Julie
Morley, rh Mr. Elliot
Mountford, Kali
Mudie, Mr. George
Mullin, Mr. Chris
Munn, Meg
Murphy, Mr. Denis
Murphy, rh Mr. Jim
Murphy, rh Mr. Paul
Naysmith, Dr. Doug
Norris, Dan
O'Brien, rh Mr. Mike
O'Hara, Mr. Edward
Olner, Mr. Bill
Osborne, Sandra
Owen, Albert
Palmer, Dr. Nick
Pearson, Ian
Pope, Mr. Greg
Pound, Stephen
Prentice, Bridget
Prentice, Mr. Gordon
Primarolo, rh Dawn
Prosser, Gwyn
Purchase, Mr. Ken
Purnell, rh James
Rammell, Bill
Raynsford, rh Mr. Nick
Reed, Mr. Andy
Reed, Mr. Jamie
Reid, rh John
Robertson, John
Robinson, Mr. Geoffrey
Robinson, Mrs. Iris
Robinson, rh Mr. Peter
Rooney, Mr. Terry
Roy, Mr. Frank
Roy, Lindsay
Ruane, Chris
Ruddock, Joan
Russell, Christine
Ryan, rh Joan
Sarwar, Mr. Mohammad
Seabeck, Alison
Sharma, Mr. Virendra
Shaw, Jonathan
Sheerman, Mr. Barry
Sheridan, Jim
Simon, Mr. Siôn
Simpson, Alan
Simpson, David
Singh, Mr. Marsha
Skinner, Mr. Dennis
Slaughter, Mr. Andy
Smith, rh Mr. Andrew
Smith, Ms Angela C. (Sheffield, Hillsborough)
Smith, Geraldine
Snelgrove, Anne
Soulsby, Sir Peter
Southworth, Helen
Spellar, rh Mr. John
Starkey, Dr. Phyllis
Stewart, Ian
Stoate, Dr. Howard
Straw, rh Mr. Jack
Stringer, Graham
Stuart, Ms Gisela
Sutcliffe, Mr. Gerry
Tami, Mark
Taylor, Ms Dari
Taylor, David
Thomas, Mr. Gareth
Thornberry, Emily
Timms, rh Mr. Stephen
Todd, Mr. Mark
Touhig, rh Mr. Don
Trickett, Jon
Turner, Dr. Desmond
Turner, Mr. Neil
Twigg, Derek
Vis, Dr. Rudi
Walley, Joan
Waltho, Lynda
Ward, Claire
Watson, Mr. Tom
Watts, Mr. Dave
Whitehead, Dr. Alan
Wicks, rh Malcolm
Williams, rh Mr. Alan
Williams, Mrs. Betty
Wilson, Phil
Winnick, Mr. David
Winterton, rh Ms Rosie
Woodward, rh Mr. Shaun
Woolas, Mr. Phil
Wright, Mr. Anthony
Wright, David
Wright, Mr. Iain
Wright, Dr. Tony
Wyatt, Derek
Tellers for the Noes:
Helen Jones and
Mr. Bob Blizzard
Question accordingly negatived.
Ordered, That further consideration be now adjourned. — (David Wright.)
Bill to be further considered tomorrow.
Business without Debate
Delegated Legislation
Motion made, and Question put forthwith (Standing Order No. 118(6)),
That the draft Identity Cards Act 2006 (Application and Issue of ID Card and Notification of Changes) Regulations 2009, which were laid before this House on 9 June, be approved.— (David Wright.)
The Speaker’s opinion as to the decision of the Question being challenged, the Division was deferred until Wednesday 8 July (Standing Order No. 41A).
Motion made, and Question put forthwith (Standing Order No. 118(6)),
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