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However, the hon. Member for Luton, North (Kelvin Hopkins) makes a very fair point about alcohol off-sales. Anyone who goes shopping will know just how cheap alcohol is in supermarkets compared with pubs. I observe that customers seem keen to buy alcohol sold cheaply in supermarkets. The public do not greet it with great hostility, but the differential involved makes it that much harder for pubs and other licensed establishments to be successful.
The differential also makes it harder for traditional brewers to be successful, because they are rarely able to offer to the supermarkets the heavily discounted alcohol that the large international brewers can offer. Therefore, they are at a price disadvantage even within the supermarket, because the economies of scale are not sufficiently big for them to be able to manufacture to the level that means that supermarkets will offer their products at a great discount.
Philip Davies (Shipley) (Con): Surely the hon. Gentleman does not want the many thousands of people who visit Asda in Taunton to pay more for their shopping than they need to. Does he want to penalise all those people who drink perfectly responsibly but who want to do so at home, or the many hundreds of people who work at Asda in Taunton? Surely not.
Mr. Browne: Asda in Taunton is the company’s south-west regional training centre. It is an extremely important and significant local employer, as are Sainsbury, Tesco and Morrison. All of them do very well in Taunton.
I said that lifestyles are changing and that people want to buy alcohol from supermarkets to drink at home while they are watching a DVD or the football. I am not saying that the Government have it within their gift to change that—lifestyles are changing. My point is that for someone who is trying to run a pub in Taunton or anywhere else, the above-inflation duty increases are making business harder, which is creating problems at precisely the point when those other factors are militating against publicans.
Mr. Browne: Perhaps no one else will need to make a speech—I shall just use the opportunity of mine to give everyone a chance to speak. I give way to the hon. Member for Angus (Mr. Weir).
Mr. Mike Weir (Angus) (SNP): I agree with much of what the hon. Gentleman says. Obviously, rising duty is one factor, but is not another the way in which the pub trade is now run, in many cases by large pubcos? They are putting huge costs on those who are trying to run pubs, and adding the duty on top of that is often the last straw.
Mr. Browne: I agree with the hon. Gentleman. I think we all agree that there are a large numbers of relevant factors, but whatever they are, the increase in duty is the last straw. On that point, he is united with the right hon. Member for Wokingham (Mr. Redwood), who also thinks it is the last straw.
Mr. Mark Todd (South Derbyshire) (Lab): I was fortunate enough to miss the start of the hon. Gentleman’s speech. He may have covered this point in his oration, which has lasted half an hour or so, but I am puzzled about how his proposal relates to the competitive position of a pub against another provider of alcohol. If one simply reduced the duty or altered how the Government increase the duty, it would affect all sellers of alcohol equally. The competitive position of pubs would not be altered one iota.
Mr. Browne: I regret giving way to a Member who, first, was not interested enough in the subject to turn up at the beginning of the debate—it is not as though we are early in the working day—and, secondly, was so discourteous. However, I shall answer the hon. Gentleman’s point. I think that drinking in pubs is quite price sensitive—more so than other environments in which people consume alcohol. Pubs are more price sensitive than bars that sell in large volume. I am not convinced that the Government’s policy will have a profound impact on binge drinking: people who go and drink 12 pints of very strong lager are unlikely to modify their behaviour, and if they do, it will take the form of drinking 11 and a half pints of very strong lager, the effect of which will be little different. On the other hand, people of more modest means who drink in a pub, in a village or an urban area, can be more price sensitive: they may choose not to visit the pub, or to have only one pint, rather than one and a half. There is a price factor.
As I said, a pub has a range of social dimensions, and the impact on them of sales taking a different form may not be so keenly felt. However, my hon. Friend the Member for Somerton and Frome (Mr. Heath), who defers to no one in his knowledge of Somerset as a whole, mentioned skittles. Readers of Somerset County Gazette will see among all the reports of how well Somerset’s cricketers are doing the publication of the skittles leagues. Those leagues, like the darts leagues, are based around pubs: most pubs have skittles alleys which are about the length of this Chamber and as wide as the area between the red lines, and many people visit pubs to play skittles as part of teams against another pub team. When they are there—
The Second Deputy Chairman: Order. I would find it helpful if the hon. Gentleman explained how his remarks relate to his amendment—directly, I mean.
Mr. Browne: I shall do so briefly and directly, Sir Michael.
Mr. Hayes: The amendment refers to a report on competitiveness. I appreciate that this may take some time, but could the hon. Gentleman outline the substance and nature of that report? Could he add an element of quantification in his analysis, and could he tell us how the report will be drawn up with reference to whom will it be drawn up, who will be consulted, and what form will it take?
Mr. Browne: I am grateful for that intervention. I hope that a wide range of people will be consulted, including skittles teams, publicans, brewers and others. Subsection (6B) of my amendment refers to
“(a) the competitiveness of licenses premises, and
(b) the level of employment in alcohol-related industry”.
Sir Robert Smith: An important message that the Government have to take on board when it comes to the competitiveness of the alcohol industry is that we should have regard to the export industry that we have built up, in particular on the back of the expertise in the whisky industry. My point relates not just to whisky, but all the spirits industries that have grown up in Scotland on the back of the whisky industry. The export industry depends on access to other markets, and if our own Government are penalising the product at home, it is much more difficult to argue about opening up markets abroad.
Mr. Browne: My hon. Friend is a champion of the industry and makes the point perfectly.
Mr. Bone: Before the hon. Gentleman concludes his opening remarks, could he explain subsections (6A) and (6B) in his amendment? I am trying to make up my mind whether to vote for it. Would subsection (6A) restrict Parliament’s ability to reduce duty? It seems to say that we could not reduce it in the next three years. I would like his views on that.
Mr. Browne: That is an interesting point. I hope that the review would consider it and make recommendations. I am sure that the Exchequer Secretary to the Treasury could, if she was so minded, say that the reason why the Government wish to oppose the amendment was that they had had a complete change of mind and were upset that the amendment would restrict their ability to cut duty in future years. That would give me a good reason to withdraw it.
Mr. Browne: I was keen to get on to the impact on brewers, but I give way to the hon. Gentleman.
Mr. Newmark: I have just one supplementary question to those asked by my hon. Friend the Member for South Holland and The Deepings (Mr. Hayes). He asked a number of important questions about proposed new subsection (6B), but another important question is how much the report that the hon. Member for Taunton (Mr. Browne) proposes to compile will cost the taxpayer.
Mr. Browne: I think that the cost will be considerably less than the cost to the taxpayer of the industry continuing to suffer as it does, due to the number of pub closures and the number of other licensed establishments affected. Of course, the precise cost would depend on how many people were consulted. I think that the consultation should be broad, because there are so many groups affected by the issue, including those responsible for postal services and Rotary clubs that meet in pubs in my constituency. In the grand scheme of things, the cost is tiny compared to the huge social impact that is felt when the sector is under threat.
Philip Davies:
The hon. Gentleman glossed over the question asked by the hon. Member for South Derbyshire (Mr. Todd), who made the point that if duty went up equally on the alcohol in supermarkets and the alcohol in pubs, pubs would be at no competitive disadvantage. Does the hon. Member for Taunton (Mr. Browne) agree that whereas pubs sell only alcohol, and therefore have to increase the burden on the customer when duty goes
up, supermarkets sell many products, and so can occasionally absorb the cost of increased duty to keep prices low and attract people in? It therefore affects pubs disproportionately when duty goes up on beer.
Mr. Browne: The hon. Gentleman makes a fair point. I do not want to stray too far, but there is also a difference between pricing a product competitively and deliberately selling it at less than the cost price to drive competitors out of business. That is a legitimate point. I tried to give a comprehensive answer to the question asked by the hon. Member for South Derbyshire (Mr. Todd), who was insufficiently interested to turn up at the beginning of the debate. What I said was that the impact was experienced differently in different sectors. I thought that that was the case 10 minutes ago, and I still think that it is the case.
Before I conclude, I want to deal with the effect on brewers, because Members who are not as familiar with Taunton Deane as I am may not know that there are four distinguished beer brewers in my constituency.
10.45 pm
Mr. Browne: Cotleigh Brewery, which is based in Wiveliscombe—its leading beer is tawny beer, which I strongly recommend to anyone who visits the area; Exmoor Ales, which is also based in Wiveliscombe, and is the producer of the award-winning Exmoor gold; Taunton Brewing Company which, confusingly, is not in Taunton, but has a brewery in the village of West Wagborough in my constituency; and Quantock Ales which, confusingly, is not in the Quantocks but is on the edge of Wellington in an area called Chelston. All four brewers are much appreciated and valued by people in my constituency. The first two—Cotleigh Brewery and Exmoor Ales—have about 10 employees each, so they are not insubstantial operations. The second two are much smaller businesses—they employ only one or two people. As I said, Cotleigh Brewery and Exmoor Ales employ about 10 people each and produce well over 1 million pints of beer a year, which are widely sold in pubs throughout Somerset and the south-west, Dorset and Devon.
Not only are those breweries significant local employers but they are part of the heritage and fabric of the community that I represent. The first two breweries are based in Wiveliscombe, which has a population of just over 2,000, and has a brewing tradition that goes back hundreds of years and is intrinsic to the town’s character. Not only do those breweries produce excellent beers that people in my area enjoy drinking either in bottled form from shops and supermarkets and pubs but they contribute just as much as the pubs to the character of the area that I represent. Moreover, as the comments from Visit England show, they contribute to the overall character of the country. I am sure that many Members enjoy, as I do, different drinks depending on where they are in the country. If I visited Yorkshire, there are excellent beers and other drinks in Yorkshire that I would—
The Second Deputy Chairman: Order. Will the hon. Gentleman direct his remarks to his amendment? These are serious matters for people involved in these industries, and he ought to concentrate on his amendment.
Mr. Browne: Thank you, Sir Michael. I was seeking to be serious, and I shall conclude.
Philip Davies: Will the hon. Gentleman give way?
Mr. Browne: Yes, but I shall first explain just how many different areas of public life in this country are taken up with alcohol-related sales and production, and quite how profound the impact of Government increases in duty over and above the rate of inflation will be on all those individuals and sectors of society. It is important that a report of the type envisaged in amendment 10 is conducted before further increases are introduced. It is quite wrong for the Government to proceed blindly in increasing duty on alcohol, which has had a profoundly adverse impact on many people in the past, without their being fully aware of the consequences for all those different people.
Mr. Browne: I wonder whether it would be better for Members to make speeches.
The Second Deputy Chairman: Order. If the hon. Gentleman is encouraging other Members to make speeches, given the time available, perhaps he would like to conclude his own.
Mr. Browne: I promised to give way before I concluded, Sir Michael.
The Second Deputy Chairman: Perhaps after giving way, the hon. Gentleman will conclude his speech.
Philip Davies: I very much support the hon. Gentleman’s comments about the importance of breweries. The recently established Saltaire Brewery in my constituency is thriving. It supplies local pubs, virtually exclusively. If the duty on beer and alcohol puts some of those pubs out of business, the hon. Gentleman will have been absolutely right to stress that that will be devastating not only for those pubs, their customers and the local communities, but for the small breweries that rely on those pubs to supply their wares.
Mr. Browne: The hon. Gentleman has summed up my case perfectly and eloquently. I fear that the Government are on the wrong side of this debate and I hope very much that hon. Members, including Labour Members who have their constituents’ interests at heart, will unite in support of amendment 10.
Mr. Redwood: The amendment invites us to change clause 11. The substance of the argument, as we heard in that interesting opening, is that the increases in duty proposed by the Government are too high and could damage jobs and the industry. An alternative mechanism is proposed for further review so that there would be no further increases in the duty rates unless and until we had taken proper advice about their impact on jobs. That has a lot to recommend it, and I look forward to hearing what my party’s Front Benchers think about it.
When the Minister responds, it would be helpful if she explained a little more about the workings of the increases and the escalator in clause 11 so that we can judge what account, if any, the Government have taken
of the impact of these high and rising duty rates on the business and why she might think that another proposal is not necessary.
In the explanatory notes to the Bill, we are told that clause 11 increases the duty by a nominal 2 per cent. However, if we look at what the clause actually says, we see that, for example, the standard rate of duty on beer is to rise from £14.96 to £16.47—a rise of a little over 10 per cent.
David Taylor: The right hon. Gentleman is well known for his erudition and knowledge about a whole range of issues. To back up the comments that he is making, will he tell the House how much a pint of beer is at his local pub? When did he last buy one?
Mr. Redwood: Sir Michael, I would be wandering far wide of the amendment if I were to go into all my drinking habits. I do not see this as an opportunity to take the hon. Gentleman on a conducted tour of all the pubs in Wokingham, although he can rest assured that I fully support my local pubs—just as he supports his, I am sure.
My argument relates to the impact on the national picture of these duty rates. I take the hon. Gentleman back to where we were. I was pointing out that the standard rate of duty on beer shows an increase of more than 10 per cent.; I appreciate that there are VAT changes as well. There is also an increase in duty per hectolitre on sparkling cider from £188.10 to £207.20, also an increase of more than 10 per cent. The duty per hectolitre on non-sparkling cider whose strength exceeds 7.5 per cent. also increases, from £43.37 to £47.77—again, a rise of more than 10 per cent. The rate of duty per hectolitre in any other case increases from £28.90 to £31.83, which is yet another increase of more than 10 per cent. It would be useful if the Minister took us through her figure work to give us some idea of what, over the period covered by the amendment, the Government have in mind under the alcohol duty escalator that they are designing.
The structure of clause 11 also reminds us that there are large steps up in duty on categories of wine, depending on whether it is sparkling and on its alcoholic strength. There is a duty increase of about 40 per cent. between wines of 3.9 per cent. strength and wines of 4.1 per cent. strength. There is more than a doubling of the duty if the strength goes up from 5.4 to 5.6 per cent. For some reason, sparkling wine in the 5.5 to 8.5 per cent. bracket is slightly cheaper than the equivalent non-sparkling wine, but for sparkling wine with a strength of more than 8.5 per cent. there is an increase of some 30 per cent. in duty over the standard amount. That does not seem to be particularly tidy or fair, and it will mean different impacts on different elements in the industry. Some people feel that duty is becoming penal at the higher levels, and there is no necessary correlation between drinking too much and the strength of the drink. On some occasions, people are much more careful with stronger drinks, for obvious reasons, and one has to be a little careful about the gradations.
We need some background on how these duties are tabled. Without a better explanation of why they are fair and just and related to wider social aims, it seems attractive on the surface that there should be a pause in the escalator and a proper review of its impact.
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