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1.16 pm
The Economic Secretary to the Treasury (Mrs. Angela Knight): I congratulate my hon. and learned Friend the Member for Burton (Sir I. Lawrence) on being granted this debate--his annual Adjournment debate on a subject dear to his heart and to the heart of many Members of Parliament and many people in the country.
I have a sad confession to make. I am a cider drinker, not a beer drinker. I hope that that at least puts me in the category of the alcohol consumer, even if I do not consume the product that is brewed in my hon. and learned Friend's constituency.
Sir Ivan Lawrence:
May I invite my hon. Friend to come to Burton-on-Trent soon and frequently, so that I may introduce her to the joys of Burton beer?
Mrs. Knight:
My hon. and learned Friend has already tried to introduce me to the charms of Burton beer, not altogether successfully, but I will visit his constituency with pleasure. I believe it is well known that, when one is at least a quarter of an hour out of Burton on the A38, it is possible to smell the hops through the car windows, and that smell is a very tempting prospect.
The Government acknowledge the importance of the brewing industry. The industry contributes significantly to Government revenues, is a wealth creator in the economy generally and plays a socially cohesive role in pubs throughout the country. It is a considerable employer, directly and indirectly. As my hon. and learned Friend's contribution developed, I understood why the debate was timely.
No right hon. or hon. Member would expect me to divulge the Chancellor's Budget intentions--there are a few more days to wait--but I can say that the worries that my hon. and learned Friend expressed about the impact on brewers of cross-border shopping and smuggling are a
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Mr. William Ross (East Londonderry):
May we be assured that the effects of the smuggling of tobacco will also be taken into account?
Mrs. Knight:
I can give the hon. Gentleman that assurance. My right hon. and learned Friend will take into account all matters relating to cross-border smuggling when he reaches his decisions.
My hon. and learned Friend clearly set out some of the general aspects relating to the brewing industry in his opening remarks. In so doing he recognised the many recent changes to that industry. Community pubs are popular, but there have unfortunately been closures in some areas--for a number of reasons. The off-licence trade has, over the years, taken business away from the pubs, and in the off-sales sector supermarkets have increased trade at the expense of off-licence shops. Social trends and changes in drinking patterns have also played their part.
Over the past 30 years or so the main drink of practically every country in Europe has declined as a proportion of the whole: beer is down in beer-drinking countries and wine is down in wine-drinking countries. The industry has responded to these changes in consumption. At retail level, it has reassessed the pub structure to help it compete more successfully. We now have a variety of types of pub catering for particular groups--targeting a high-spending young clientele with theme bars, Irish bars and so on. Then there are community or country pubs, which have generally been made more attractive to customers by renovation and improved facilities--including the idea of the family pub catering for children.
I hear what my hon. and learned Friend says about the concerns regarding regional inconsistencies as between children's licences; we shall take a careful look at that.
I think that the family pub is an excellent idea. It means that I can take my children into the pub with me and they do not have to go through what I went through. My father used to leave me in the car in the car park with a fizzy orange drink which I did not like and, occasionally, a packet of crisps, while he stayed in the pub for what seemed like hours. I am sure that it was not really that long, but certainly, being able to take one's children into pubs leads to a more family-like atmosphere and is a great benefit. I note that my hon. Friend the Member for East Surrey (Mr. Ainsworth), the Government Whip, is nodding in agreement. He too has children who can benefit from these changes.
More people now drink at home because of drink-driving laws and because of home entertainments, but also because of significantly cheaper drinks being available in supermarkets. It is important to recognise and to cater for these long-term trends.
My hon. and learned Friend mentioned his concern about the guest beer provision. Even though I am not a beer drinker, I am well aware of the concerns that many have expressed on this matter. Indeed, the organisation CAMRA has brought it to many people's attention. The European Commission alleges that cask-conditioned beer is not produced in any significant quantity in other
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To resolve the issue, on 11 October officials of the Department of Trade and Industry and of the Ministry of Agriculture, Fisheries and Food met Commission officials responsible for the free movement of goods in the single market, and representatives of the CBMC--the European brewers federation. They met to clarify the facts behind the dispute. It has been agreed that the CBMC will provide information on the extent of cask-conditioned beer production in other member states. I can assure my hon. and learned Friend that the United Kingdom is committed to resolving the issue. We do not believe that the guest beer provision breaches article 30 of the treaty.
Cross-border shopping affects not just the brewers; all involved in the production, distribution and retailing of alcoholic drinks are affected. On the other hand, the single market has brought a great number of benefits to UK business generally, to the extent that I notice that some brewers are reporting healthy sales on the continent.
Tax-induced cross-border shopping has clearly had an effect on the brewing industry, but since 1993 UK beer production has continued to increase, and most major and regional brewers report increased profits.
The drinks industry is working closely with Customs and Excise. It has been doing so for some time, first to agree the amount of personal imports of alcoholic drinks, and secondly to look at cross-border issues. The calculation that has been agreed is that in 1994 between 3 and 5 per cent. of the UK market was affected by the importation of alcoholic drinks. There is also general agreement on the overall amount of legitimate importation and smuggling. Agreement is still to be reached on how much of what is purchased cheaply abroad is in substitution for what would be bought here, and how much is additional consumption.
I can assure the House that we are not complacent. It is, however, important to keep the cross-border issue in proportion. Customs' own estimates of revenue lost--in duty and VAT--for legitimate cross-border shopping last year put the figure at £210 million for all alcoholic drinks. The share attributable to beer was £40 million. That assumes that half the trade is additional; but even if none of it was additional, the figures would not square with some of the scenarios about which we have read.
Customs conducted its own survey earlier this year to arrive at an estimate of revenue evaded by smuggling. That estimate provides a similar figure of £210 million for all alcoholic drinks, but with a much larger share attributable to beer, at £110 million. The actual loss of
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That is not to say that we are doing nothing about the problem, or that Customs is not paying attention to this vital area. The top priority is to catch the smugglers.
Mr. Alan Meale (Mansfield):
Customs and Excise forecasts that by the year 2000 illegally imported alcoholic drinks will have doubled in quantity--a frightening statistic that will mean hundreds of millions of pounds in lost revenue. With Customs and Excise already stretched to the limit, does the Minister agree that action is needed now?
Mrs. Knight:
I was just coming to that. What are we doing about the smuggling problem? Smuggling, dealing in smuggled goods and buying smuggled goods are all crimes. Customs has 300 staff employed on single market work, most of them directly involved in the anti-smuggling effort. Many, if not most, of them work at the ports, but some work inland providing intelligence. For instance, they are watching more closely the frequent crosser--but my hon. and learned Friend will excuse me if I do not go into the detail of what we are doing to stop smugglers. We do not want to give them notice of our intentions.
My hon. and learned Friend used the argument about harmonisation--that harmonising duties across the European Union would spell the end of smuggling as a problem. Some heavy costs are associated with that. A reduction of 10 per cent. in the duties on alcohol would result in a loss of £500 million to the Exchequer. To reduce our duties to French levels would cost roughly £3.5 billion. That is the sort of sum in question. We take every opportunity to press our case in the Commission. We want other countries to adopt a more practical attitude to alcohol duties.
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