|Previous Section||Index||Home Page|
This is a debate about flavoured alcoholic beverages, otherwise known as FABs, but it might better take its title from another late-night beverage, Horlicks, because the Government have made a total horlicks of this provision in the Budget.
Clause 3 introduces a tax increase of 64 per cent.the highest percentage increasewhich is about a 12p duty increase on a standard bottle of one of these beverages. The Government justified that extraordinarily high increase in the explanatory notes on clause 3, which states that between 1999 and 2001
Mr. Tom Harris (Glasgow, Cathcart): The hon. Gentleman is right to criticise the Government for lack of consultation, provided that he is attacking the 1996 Budget statement, which also introduced a major increase in tax on those drinks without any prior consultation. I do not recall the hon. Gentleman complaining about that.
On 18 June, the Economic Secretary finally admitted that the Government were wrong and that the Opposition were right about whether there had been an increase of 60p or 20p in the retail price of coolers between 1999 and 2001. He said that in 19992001, the retail price of coolers went up not by 60p, but by an amount
Rob Marris: I wonder whether this could be a question of mixing apples and oranges. The explanatory notes refer to the standard pub retail prices, but is the hon. Gentleman referring to the retail price in, say, a shop, or to a pub retail price? As we all know, pub retail prices can be more expensive and can increase at a greater rate.
Mr. Chope: I am referring, as the Economic Secretary was, to the retail prices cited in the explanatory notes. The Economic Secretary has admittedas a member of the Committee, the hon. Gentleman will have received a copy of the letter that he sent to methat the note in question was incorrect in its reference to an increase of 60p, and that the figure is closer to the 20p suggested by the industry.
After being forced to admit that there was such a gross error in the calculations, any decent Government would have apologised to the industry, consumers and Parliament. They would have withdrawn the proposal and deferred a decision on any tax increase while reassessing the impact of the evidence. However, I am sorry to say that that is not what the Government did; indeed, that is not the way in which they operate. The Economic Secretary had the gall to say in his letter to me:
Mr. Davey: I want to back up the strength of the hon. Gentleman's argument by saying that, when the Committee questioned the Minister closely on the underlying rationale behind this change in the tax regime, he relied heavily on this piece of evidence. We were surprised, because there had been a change in the underlying rationale of the taxation of alcohol in other areas. The hon. Member for Christchurch (Mr. Chope) is right, and the fact that the Government have been found out suggests that this has nothing to do with rational taxation, and more to do with a raid on people's purses.
Mr. Chope: The hon. Gentleman is absolutely right. It is apparent that the Government are motivated by prejudice rather than reason. That is their driving force, and, as so often happens, that prejudice is tinged with a certain amount of arrogancethe inevitable ingredient of this Government.
Rob Marris: The hon. Gentleman quoted the Minister referring in CommitteeI recall being thereto one of the factors. The other factor referred to in the explanatory notes is the chief medical officer's report of 2001, so the hon. Gentleman's suggestion that there was only one reason for the Government adopting this approach does not sit well with what we were told in Committee, or what is said in the explanatory notes about the health aspect of the issue.
Mr. Chope: I have not said that that was the only justification; there were two justifications. But, in Committeethe hon. Gentleman was there; he will remember thisthe Minister had to back-pedal pretty rapidly on the assertion that there was some reason for raising the tax on this particular kind of drink, when it became apparent that certain lagers and ciders with a much higher alcohol content were less highly taxed. The Minister moved back from the position of saying that the provision could be justified as a way of addressing binge drinking. Indeed, the Government's argument in Committee was that the consequence of this steep increase in tax would not involve any reduction in the consumption of coolers.
Mr. Davey: The hon. Gentleman is exactly right. The health argument put forward by the Government was put in total disarray by the fact that they had been arguing for a reduction in tax on cider. According to the chief medical officerand evidence, no doubt, from all our
Mr. Chope: I am grateful to the hon. Gentleman for reinforcing that point. Much as the hon. Member for Wolverhampton, South-West (Rob Marris) may try to argue the Government's case, I am afraid that the Government abandoned that particular ground in Committee, relying heavily on the 60p increase over the three-year period. Now, when that has been found to be totally wrong, they have resorted to bluster and other arguments.