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2.45 pm
Mr. Chope: The Minister says that it makes no difference whether the increase is 20p or 60p. How, then, does he explain what the Financial Secretary—now Chief Secretary—said in Committee, at column 47, where he informed us that one of the key issues for consideration was whether it was 60p or 20p? He rejected our arguments for 20p and said that it would definitely be 60p.
John Healey: The hon. Gentleman intervened too soon and did not hear out the rest of my argument. One of the key issues, as my right hon. Friend indeed said in Committee, was whether the proposed increase in the duty rate would damage the growth of the sector. The evidence demonstrates, regardless of whether the rise is 20p or 60p, that consumption rose at the same time as prices were rising well above the rate of inflation. The sector can withstand this duty increase, and it is appropriate to make such provision.
Mr. Edward Davey: Is the Minister now saying that the Government's taxation of alcohol is driven by an underlying rationale of price elasticities and that, where the price is deemed to be most inelastic, they believe that they can get away with shoving up the tax? Is the rationale that they will charge what they can get away with?
John Healey: No, it is not the underlying rationale, but it is one of the factors that we take into account when considering duty changes.
Mr. Bercow: I have to say to the Minister, who is as honest and upright a fellow as a member of this Labour Government can be, that no one believes a word of it. Everyone believes that Governments tax as much as they can get away with at any particular time.
On a lighter note, whatever the implications of the tax regime for the elasticity of demand for coolers, there is likely to be some increase in the demand for them this afternoon, in the light of the splendid news that Tim Henman has won his match.
John Healey: I do not know whether Mr. Henman will celebrate by consuming alcopops this evening, but I am sure that the whole House will welcome his victory.
The hon. Member for Kingston and Surbiton pressed me on the narrow point concerning the first part of the justification and rationale for the duty increase, which is, as I stress again, that in our judgment removing the concessionary treatment, whether the price increase is 20p or 60p, can be done without damaging the growth of the sector.
Secondly, whether the increase is 20p or 60p, the fact that coolers remain the fastest growing sector in the drinks market, and now rank alongside cider as the fourth largest sector, renders obsolete the original rationale for granting them the concessionary status alongside other obscure niche products.
Thirdly, it seems unfair that a vodka and orange mixed at the bar should be taxed differently from a vodka and orange drink pre-mixed in the bottle. It seems especially unfair that such a bottled drink should bear a lower rate of tax as a proportion of its average price than any other alcoholic drink.
Whether the increase was 20p or 60p made no difference to our deliberations on whether it was right to retain concessionary treatment for a drink with links to binge drinking among young people, about which the chief medical officer has raised specific concerns. In a thoughtful speech, my hon. Friend the Member for Dundee, East (Mr. Luke) echoed those concerns in respect of his constituency, as did the hon. Member for Kingston and Surbiton in a moderate, measured and rational contribution.
I genuinely hope that, based on my explanation, Opposition Members can see why the 20p-60p issue does not affect our decision that the concessionary treatment for coolers can no longer be justified, and does not warrant reopening the debate. Having said that, I am glad that this debate has enabled me to alert Opposition Members to what industry experts themselves have said about the strength of the coolers market—just as my right hon. Friend the Chief Secretary to the Treasury did in Committee when he was responsible for this clause. On 1 June, a full 18 days after our debate in Committee, Drinks International said:
- "New figures reflect the relentless march of pre-mixes in the UK on-trade. Of the top 5 premium packaged drinks . . . in value terms, 3 are spirits-based mixes."
- "are looking forward to a buoyant summer, despite duty on spirits mixers being raised recently. The sector was worth £1.4bn in 2001. This year it is estimated that the category will be worth £1.6bn."
I conclude by assuring all hon. Members that although we regret reproducing the erroneous 60p figure—which I have been happy to correct on becoming aware of it—its revision makes not one bit of difference to the rationale for the change or its estimated impact. This measure supports the steps that we have consistently taken to deliver a fairer burden of taxation on different alcoholic drinks and different producers. These drinks are spirits, they are marketed as spirits and they should be taxed as spirits. Any justification that may once have existed for affording them concessionary status no longer applies. They are well established in the marketplace and they can pay their fair share of duty—at a rate that properly reflects the nature of the alcohol that they contain. Doing so will not damage the future growth of their sector. On that basis, if the amendment is pressed to a vote, I urge the House to reject it.
Mr. Chope: We are not convinced. The Government argued that there was significance in the 60p retail price increase—and if they did not think that, why did they include it in the explanatory notes to clause 3? Why did it feature in Budget day press releases, and why did it feature so prominently in the arguments deployed in Committee by the then Financial Secretary? Only one month after being pressed on the matter, the Government admitted that the figures on which their argument was based were incorrect. They should therefore go back to the drawing board and discuss with the industry the introduction of a rational and consistent taxation regime that fits with other alcoholic beverage duties. It appears that this type of beverage is being discriminated against badly, compared with some of the more potent lagers and ciders. That is a significant factor.
The hon. Member for Dundee, East (Mr. Luke) made an entertaining speech and tried to draw me back into our debate in Committee on Christchurch Conservative club. The relevant extracts from Hansard have done wonders for the reputation of the club's secretary. The hon. Gentleman made some serious allegations about the use of flavourings in such beverages to appeal to the underage market, but that practice was put to an end by the Portman Group, which worked closely with the Government. In Committee, Ministers and the then Financial Secretary accepted that, thanks to the work of the Portman Group and other responsible people in the industry, hooches are no longer on the market. The hon. Gentleman's arguments may have been relevant at one time, but they are certainly out of date now. We are talking about a growing, successful and responsible part of the drinks industry, and it is a great pity that the Government have chosen to discriminate against it in this way.
Question put, That the amendment be made:—
The House divided: Ayes 136, Noes 276.
AYES
Ainsworth, Peter (E Surrey)
Allan, Richard
Amess, David
Arbuthnot, Rt Hon James
Atkinson, David (Bour'mth E)
Atkinson, Peter (Hexham)
Bacon, Richard
Baron, John
Beggs, Roy
Bercow, John
Beresford, Sir Paul
Boswell, Tim
Bottomley, Peter (Worthing W)
Brady, Graham
Brake, Tom
Brazier, Julian
Brooke, Mrs Annette L
Burnett, John
Burns, Simon
Burnside, David
Burstow, Paul
Burt, Alistair
Butterfill, John
Cable, Dr Vincent
Calton, Mrs Patsy
Cameron, David
Cash, William
Chapman, Sir Sydney
(Chipping Barnet)
Chope, Christopher
Clappison, James
Cotter, Brian
Cran, James
Curry, Rt Hon David
Davey, Edward (Kingston)
Davies, Quentin (Grantham)
Djanogly, Jonathan
Duncan, Peter (Galloway)
Evans, Nigel
Fabricant, Michael
Fallon, Michael
Field, Mark (Cities of London)
Flight, Howard
Flook, Adrian
Forth, Rt Hon Eric
Foster, Don (Bath)
Francois, Mark
George, Andrew (St Ives)
Gibb, Nick
Goodman, Paul
Grayling, Chris
Green, Damian (Ashford)
Green, Matthew (Ludlow)
Greenway, John
Grieve, Dominic
Hammond, Philip
Hancock, Mike
Hayes, John
Heald, Oliver
Heath, David
Heathcoat–Amory, Rt Hon David
Hermon, Lady
Hoban, Mark
Hogg, Rt Hon Douglas
Holmes, Paul
Horam, John
Hughes, Simon (Southwark N)
Jack, Rt Hon Michael
Jenkin, Bernard
Key, Robert
Knight, Rt Hon Greg (E Yorkshire)
Lamb, Norman
Lansley, Andrew
Laws, David
Leigh, Edward
Lewis, Dr Julian (New Forest E)
Liddell–Grainger, Ian
Lidington, David
Lilley, Rt Hon Peter
Luff, Peter
MacKay, Rt Hon Andrew
Maclean, Rt Hon David
McLoughlin, Patrick
Malins, Humfrey
Maples, John
Mawhinney, Rt Hon Sir Brian
Mercer, Patrick
Mitchell, Andrew (Sutton Coldfield)
Moore, Michael
Moss, Malcolm
Murrison, Dr Andrew
Osborne, George (Tatton)
Page, Richard
Paice, James
Prisk, Mark
Redwood, Rt Hon John
Reid, Alan (Argyll & Bute)
Rendel, David
Roe, Mrs Marion
Ruffley, David
Russell, Bob (Colchester)
Sanders, Adrian
Selous, Andrew
Shephard, Rt Hon Mrs Gillian
Simmonds, Mark
Smith, Sir Robert (W Ab'd'ns)
Spelman, Mrs Caroline
Spicer, Sir Michael
Spink, Bob
Spring, Richard
Streeter, Gary
Stunell, Andrew
Swayne, Desmond
Swire, Hugo
Syms, Robert
Tapsell, Sir Peter
Taylor, Ian (Esher & Walton)
Taylor, John (Solihull)
Taylor, Matthew (Truro)
Tonge, Dr Jenny
Tredinnick, David
Trend, Michael
Turner, Andrew (Isle of Wight)
Tyler, Paul
Tyrie, Andrew
Waterson, Nigel
Watkinson, Angela
Whittingdale, John
Wiggin, Bill
Wilkinson, John
Willetts, David
Williams, Roger (Brecon)
Willis, Phil
Wilshire, David
Yeo, Tim
Young, Rt Hon Sir George
Younger–Ross, Richard
Tellers for the Ayes:
Mrs. Cheryl Gillan and
Mr. Laurence Robertson.
NOES
Abbott, Ms Diane
Adams, Mrs Irene (Paisley N)
Ainger, Nick
Allen, Graham
Anderson, Rt Hon Donald
(Swansea E)
Anderson, Janet (Rossendale)
Armstrong, Rt Hon Ms Hilary
Atkins, Charlotte
Austin, John
Bailey, Adrian
Baird, Vera
Banks, Tony
Barnes, Harry
Bennett, Andrew
Berry, Roger
Best, Harold
Betts, Clive
Blackman, Liz
Blears, Ms Hazel
Blizzard, Bob
Borrow, David
Bradley, Rt Hon Keith (Withington)
Bradshaw, Ben
Brennan, Kevin
Brown, Rt Hon Nicholas
(Newcastle E & Wallsend)
Brown, Russell (Dumfries)
Bryant, Chris
Buck, Ms Karen
Burden, Richard
Burgon, Colin
Cairns, David
Campbell, Alan (Tynemouth)
Campbell, Ronnie (Blyth V)
Caplin, Ivor
Casale, Roger
Caton, Martin
Cawsey, Ian
Challen, Colin
Chapman, Ben (Wirral S)
Chaytor, David
Clapham, Michael
Clark, Dr Lynda
(Edinburgh Pentlands)
Clark, Paul (Gillingham)
Clarke, Rt Hon Tom (Coatbridge)
Clarke, Tony (Northampton S)
Clelland, David
Clwyd, Ann
Coaker, Vernon
Coffey, Ms Ann
Cohen, Harry
Coleman, Iain
Connarty, Michael
Cook, Frank (Stockton N)
Cooper, Yvette
Corbyn, Jeremy
Cox, Tom
Cranston, Ross
Crausby, David
Cruddas, Jon
Cryer, John (Hornchurch)
Cummings, John
Cunningham, Jim (Cov'try S)
Cunningham, Tony (Workington)
Curtis–Thomas, Mrs Claire
Davey, Valerie (Bristol W)
David, Wayne
Davidson, Ian
Davis, Rt Hon Terry
(B'ham Hodge H)
Dawson, Hilton
Dean, Mrs Janet
Dhanda, Parmjit
Dismore, Andrew
Dobbin, Jim
Dobson, Rt Hon Frank
Donohoe, Brian H
Doran, Frank
Dowd, Jim
Drew, David
Drown, Ms Julia
Eagle, Angela (Wallasey)
Edwards, Huw
Efford, Clive
Ennis, Jeff
Etherington, Bill
Ewing, Annabelle
Farrelly, Paul
Field, Rt Hon Frank (Birkenhead)
Fisher, Mark
Fitzpatrick, Jim
Flint, Caroline
Flynn, Paul
Foster, Rt Hon Derek
Foulkes, George
Gapes, Mike
Gardiner, Barry
George, Rt Hon Bruce (Walsall S)
Gerrard, Neil
Godsiff, Roger
Goggins, Paul
Griffiths, Nigel (Edinburgh S)
Griffiths, Win (Bridgend)
Grogan, John
Hain, Rt Hon Peter
Hall, Mike (Weaver Vale)
Hall, Patrick (Bedford)
Hamilton, David (Midlothian)
Hanson, David
Harris, Tom (Glasgow Cathcart)
Healey, John
Henderson, Doug (Newcastle N)
Henderson, Ivan (Harwich)
Hepburn, Stephen
Heppell, John
Hesford, Stephen
Hewitt, Rt Hon Ms Patricia
Heyes, David
Hill, Keith
Hinchliffe, David
Hodge, Margaret
Hood, Jimmy
Hope, Phil
Hopkins, Kelvin
Howarth, Rt Hon Alan (Newport E)
Howarth, George (Knowsley N)
Hoyle, Lindsay
Hughes, Beverley (Stretford)
Hughes, Kevin (Doncaster N)
Humble, Mrs Joan
Hurst, Alan
Illsley, Eric
Jackson, Glenda (Hampstead)
Jamieson, David
Jenkins, Brian
Jones, Helen (Warrington N)
Jones, Jon Owen (Cardiff C)
Jones, Martyn (Clwyd S)
Joyce, Eric
Kaufman, Rt Hon Gerald
Keen, Ann (Brentford & Isleworth)
Kidney, David
King, Ms Oona (Bethnal Green)
Kumar, Dr Ashok
Ladyman, Dr Stephen
Lawrence, Mrs Jackie
Laxton, Bob
Lazarowicz, Mark
Lepper, David
Lewis, Terry (Worsley)
Liddell, Rt Hon Mrs Helen
Lloyd, Tony
Llwyd, Elfyn
Love, Andrew
Luke, Iain
Lyons, John
McAvoy, Thomas
McCabe, Stephen
McCartney, Rt Hon Ian
McDonagh, Siobhain
McDonnell, John
McFall, John
McKechin, Ann
McKenna, Rosemary
Mackinlay, Andrew
McNamara, Kevin
MacShane, Denis
Mactaggart, Fiona
McWalter, Tony
Mahmood, Khalid
Mahon, Mrs Alice
Mallaber, Judy
Mandelson, Rt Hon Peter
Marris, Rob
Marsden, Gordon (Blackpool S)
Marshall, Jim (Leicester S)
Martlew, Eric
Meacher, Rt Hon Michael
Meale, Alan
Merron, Gillian
Michael, Rt Hon Alun
Milburn, Rt Hon Alan
Mitchell, Austin (Gt Grimsby)
Mole, Chris
Moran, Margaret
Morgan, Julie
Morris, Rt Hon Estelle
Mountford, Kali
Mudie, George
Munn, Ms Meg
Murphy, Denis (Wansbeck)
Murphy, Jim (Eastwood)
Naysmith, Dr Doug
Olner, Bill
Organ, Diana
Osborne, Sandra (Ayr)
Palmer, Dr Nick
Pearson, Ian
Perham, Linda
Picking, Anne
Pickthall, Colin
Pike, Peter
Plaskitt, James
Pond, Chris
Pope, Greg
Pound, Stephen
Prentice, Ms Bridget (Lewisham E)
Prentice, Gordon (Pendle)
Price, Adam
Primarolo, Dawn
Prosser, Gwyn
Quinn, Lawrie
Robertson, Angus (Moray)
Robertson, John
(Glasgow Anniesland)
Roche, Mrs Barbara
Rooney, Terry
Roy, Frank
Ruane, Chris
Ruddock, Joan
Salmond, Alex
Salter, Martin
Sarwar, Mohammad
Savidge, Malcolm
Sawford, Phil
Sedgemore, Brian
Shaw, Jonathan
Sheerman, Barry
Sheridan, Jim
Shipley, Ms Debra
Simon, Siôn
Singh, Marsha
Skinner, Dennis
Smith, Rt Hon Andrew (Oxford E)
Smith, Angela (Basildon)
Smith, Geraldine (Morecambe)
Smith, John (Glamorgan)
Smith, Llew (Blaenau Gwent)
Soley, Clive
Spellar, Rt Hon John
Starkey, Dr Phyllis
Steinberg, Gerry
Stewart, David (Inverness E)
Stewart, Ian (Eccles)
Stinchcombe, Paul
Stoate, Dr Howard
Sutcliffe, Gerry
Taylor, Rt Hon Ann (Dewsbury)
Taylor, Ms Dari (Stockton S)
Thomas, Gareth (Clwyd W)
Thomas, Gareth (Harrow W)
Thomas, Simon (Ceredigion)
Tipping, Paddy
Todd, Mark
Touhig, Don
Truswell, Paul
Turner, Dennis (Wolverh'ton SE)
Turner, Neil (Wigan)
Twigg, Derek (Halton)
Twigg, Stephen (Enfield)
Tynan, Bill
Vaz, Keith
Vis, Dr Rudi
Walley, Ms Joan
Ward, Claire
Wareing, Robert N
Watson, Tom
Weir, Michael
White, Brian
Whitehead, Dr Alan
Williams, Rt Hon Alan
(Swansea W)
Williams, Mrs Betty (Conwy)
Williams, Hywel (Caernarfon)
Winnick, David
Winterton, Ms Rosie (Doncaster C)
Wray, James
Wright, Anthony D (Gt Yarmouth)
Wright, David (Telford)
Wright, Tony (Cannock)
Tellers for the Noes:
Joan Ryan and
Mr. Fraser Kemp.
Question accordingly negatived.
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