Finance Bill

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Ann McKechin (Glasgow, Maryhill): Is not it the case that those drinks, unlike cider and beer, are specifically targeted at young female drinkers? There has been a worrying increase in alcohol addiction among young women and binge drinking among women in recent years.

Kevin Brennan: I am sure that my hon. Friend is right, and we should be concerned about that increase. To take the Portman Group's carefully worded claim

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that the majority of drinking among young people involves consumption of beer and alcohol and to say, therefore, that we should ignore a doubling in the demand and consumption of lower-strength alcoholic drinks by young people is to support the argument of the industry and the Opposition without addressing the facts. The facts are that, although it may still be the case that the majority of alcohol consumption by young people is of beer and cider, the huge increase in consumption is due to lower-strength alcoholic beverages.

Chris Grayling: Does the hon. Gentleman not accept that, in its own right, the measure in the Bill is a one-off? Were it to come as part of a strategy to examine the consumption of different types of alcohol and to consider ways of adjusting the excise structure to tackle the problem of binge drinking across the whole range of alcohols, particularly strong alcohols, there would be some coherence in the proposal. For example, the measure is entirely incompatible with the reduction in duty on strong cider, and it appears to have no strategic dimension to it at all, except for raising revenue from a particular part of the market.

Kevin Brennan: The measure is evidence based. There is a huge amount of evidence of the increase in consumption of such products. There has been no similar rate of increase in the consumption of cider. As I said earlier, binge-drinking problems are not caused by strong cider or drinks with a high alcohol content, but by lower-alcohol products, which one can consume for a longer period of time. There may be a case for reviewing the alcohol content of some beers and ciders, and I would be willing to entertain that proposition, but there is an evidence-based reason for putting right the anomaly of treating these products like beer and cider instead of what they are—spirit-based products.

I welcome the clause and urge the Committee to oppose the amendments. This is an important step, first, towards rectifying an anomaly and, secondly, towards dealing with what is becoming a significant problem, as evidenced by the doubling of consumption in recent years.

Mr. Davey: I support these modest amendments, which simply ask the Government to think again and to undertake the consultation that they should have undertaken before bringing the measures before the House. Many other aspects of the Bill have been widely consulted on. Indeed, that is something on which the tax professions have commented positively in regard to the Bill. It is a great shame that, when the Government are embarking on a major policy change, they have not undertaken adequate consultation.

The Committee must be aware that it is a major change in policy. The duty on this type of drink is being increased by more than 60 per cent., a huge one-off increase by any standards. It goes against a previous cross-party agreement—that low alcoholic beverages would have this concessionary rate. If the Government are to object to such consultation, they must say why. They may argue that the announcement had to be made clear on Budget

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day because it might have affected the share prices of the companies involved. I doubt that the Government will make that argument, because it is my understanding that it would have had a marginal or neutral effect on the share price. No Budget secrecy issue related to the tax, so the Government could have consulted, had they chosen to do so.

The other reason why I am moved towards supporting the amendments is that the evidence that we have received from Bacardi-Martini Ltd. and the Wine & Spirit Association seems to contradict the limited evidence provided by the Government in the notes on clauses and the Budget itself. When there is a conflict of evidence—quite a serious conflict in some cases—we are justified in asking the Government to think again.

Let me give the Committee an indication of two of those conflicts. The first relates to the change in retail price of these products over recent years. In the notes on clauses the Government say that there has been a 60p increase in the past two years. We have seen evidence from ACNielsen that the increase is a third of that—20p. Clearly, that relates to the Government's justification for the measure, because the notes on clauses say:

    ''Tax as a proportion of the retail price is now lower for spirit-based designer drinks than for any other type of alcoholic drink''.

If that is the Government's justification, but it is based on incorrect evidence, they need to think again. Therefore, I hope that the Financial Secretary will tell the Committee where the estimate of 60p comes from, because it flies in the face of the evidence that Committee members have been sent, which I am told comes from independent research. The Government have a case to make.

That is not to say that, if the Government went through that consultation exercise and came back to the House, I representing the Liberal Democrats and, I am sure, the hon. Member for Christchurch representing the Conservatives would be against such a move. If the industry has been widely consulted and the evidence exists, there may be a case—the case put by the hon. Member for Cardiff, West (Mr. Brennan). The concession may have resulted in this class of drink being over-consumed relative to other classes of drinks, leading to binge drinking and antisocial behaviour. If so, this may be one of the measures that we should take. I hope that we shall take it with a range of other measures, because other hon. Members who have had cause to investigate antisocial behaviour in their constituencies will have noticed that it has many causes, one of which is the price of alcoholic drinks. In my constituency, I have seen examples of retailers not acting responsibly by allowing people to purchase huge amounts of alcohol that are clearly intended for binge drinking, which leads to antisocial behaviour. In the last Parliament, new legislation was introduced to enable trading standards departments such as that at Kingston council to investigate disreputable retailers who sell to under-age drinkers. We need to pursue that type of policy to crack down on antisocial behaviour. The Government's policy might

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be well coupled with that, but we need to see the debate in a wider context.

We also need to consider licensing practices, whether in relation to pubs or off-licences, to make sure that we crack down on underage drinking, which, and let us make no bones about it, is a major problem. The question is whether we should allow the Government to introduce a measure that conflicts with the evidence. On antisocial behaviour, for example, we have heard evidence from the Portman Group, which says that many problems attributed to that class of drinks have decreased because certain parts of the alcopops market have reduced. Some initial experiments in that market were seen to cause problems and have therefore finished. If the industry has acted responsibility, it would seem particularly odd to penalise it.

We need evidence such as that from the chief medical officer, and we need the Government to go away and look at evidence on price, social effects and health. As is proposed in the amendments, they should come back to the House with a proper report to allow us to make a decision while being better informed than we currently are.

Mr. Jack: The amendment is a not-unreasonable request for the Treasury to lay before Parliament information to justify a tax change. I was struck by an interesting sentence in paragraph 5 of the explanatory notes on clause 3:

    ''Tax as a proportion of the retail price is now lower for spirit-based designer drinks than for any other type of alcoholic drink, in both the on and off-trades.''

That caught my eye because it seems to move us to a basis for determining tax on alcoholic beverages that is equivalent to the deemed taxable potential of a particular product. I am intrigued by that because it opens up—I will not trespass into this too much, Mr. Gale—a very interesting new philosophy for taxation.

Mr. Flight: May I put this interesting point to my right hon. Friend: a gin and tonic might be described as a FAB. It is gin mixed with various other non-alcoholic groups. If I understand FABs, that is exactly what they are. The point needs to be made that the tax on the spirit element should be in accordance with the tax on all other spirits; that which is not a spirit should not be taxable.

Mr. Jack: My hon. Friend leaps ahead with the logic that I was beginning to expound. My thought process triggered his excellent piece of analysis.

I am intrigued to know whether there is a new philosophy based on taxable potential. If the Treasury and Customs and Excise are to spend their time busily looking at retail prices, I might equally ask that the information that we seek in amendment No. 1 should also reflect the fact that what goes up can come down. If, as the explanatory notes state, the taxation principle is related to retail prices, we are surely moving into an interesting era as far as spirit taxation is concerned. There may be interesting variations about which the Financial Secretary would like to tell us.

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That triggers a second line of inquiry: if retail prices are being observed, for how long will the Treasury go before it revisits that territory?

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It being One o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.

Adjourned till this day at half-past Four o'clock.

The following Members attended the Committee:
Gale, Mr. Roger (Chairman)
Bercow, Mr.
Boateng, Mr.
Brennan, Kevin
Burnett, Mr.
Casale, Roger
Chope, Mr.
Cruddas, Jon
Cunningham, Mr.
Curtis-Thomas, Mrs.
Davey, Mr.
David, Mr.
Flight, Mr.
Grayling, Chris
Harris, Mr.
Hoban, Mr.
Jack, Mr.
Luff, Mr.
Luke, Mr.
McKechin, Ann
Marris, Rob
Pond, Mr.
Primarolo, Dawn
Ryan, Joan
Smith, Angela
Southworth, Helen
Sutcliffe, Mr.
Wright, David

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