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12 May 2009 : Column 797

Mr. Hands: Thank you, Sir Alan. It is a pleasure to follow the hon. Member for Dundee, East (Stewart Hosie). I shall return to his amendment in due course, but I was greatly entertained and interested by his passionate defence of the Scotch whisky industry—so much so that I thought that amendment 10 had actually been tabled by the Scottish National party. We are, of course, speaking to the Liberal Democrat amendment, which is designed to freeze spirit duty only, while allowing beer and cider duty to continue to rise.

It is also a pleasure to follow my right hon. Friend the Member for Wokingham (Mr. Redwood), who spoke, as always, with a great deal of sense. I look forward to the Minister’s explanation of the duty figures and to her response to his question about the tipping point, the revenue-maximisation point and other issues facing the industry.

In speaking to his amendment, the hon. Member for Taunton (Mr. Browne) recovered well after a difficult start, but it is worth repeating that the amendment says that he will freeze only spirit duties for three years, while he seems quite happy for the above-inflation increases to continue for wine, beer and cider.

Mr. Jeremy Browne: I caution the hon. Gentleman about failing to see the wood for the trees. I made it extremely clear in my speech—I do not think many would accuse me of not speaking for long enough—that I am very keen to help those producing beer, cider, wine and other alcoholic drinks. If he feels that the amendment is not drafted satisfactorily, I regret that he has not tabled a better-drafted one, as I would not wish to let the Government off the hook by his splitting hairs on this issue, when it is very clear that I wish to represent alcohol producers as a whole.

Mr. Hands: The hon. Gentleman raises an interesting point. Although I am relatively new to the Finance Bill, I did not believe that it was possible to table an amendment to an amendment, so I am not sure how I could have tabled an amendment to his amendment. It is important to be clear about what we are discussing and amendment 10 deals only with the spirits industry, but I appreciate the spirit in which the hon. Gentleman says that he actually means the whole industry. I will try to move on from that.

The only other thing I would say about the amendment is that it is also clear that no reduction in duty would be possible until such time as the report is presented—a point made very ably by my hon. Friend the Member for Wellingborough (Mr. Bone) and, albeit some hours afterwards, by the hon. Member for Castle Point (Bob Spink), who in his customary fashion has been in and out rather quickly. Having said all that and having listened to the speech of the hon. Member for Taunton, I agree with the great majority of what he had to say about the issues facing the industry.

Mr. Hayes: I know that my hon. Friend is anxious to move on, but it would be remiss of him not to say something about the relationship between this amendment and the Intoxicating Liquor (Licensing) Bill of 1872, for much of the same argument was used then as was heard in the Chamber this evening. The issues that the hon. Member for Taunton (Mr. Browne) articulated with such style and eloquence about the relationship
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between licensing and the ability of grocers to sell alcohol more cheaply than licensed premises are directly pertinent to the amendment.

Mr. Hands: As ever, my hon. Friend makes a telling point, dwelling on the history of many of these issues. I look forward to hearing the Minister’s response about that Bill and its impact.

The amendment is wide ranging and talks about reaching

I intend to speak around most of those issues this evening.

One of the main reasons for my speaking tonight is that I am going to outline why we voted against this year’s rises in alcohol duties. We see them as blanket rises that hit all consumers, without making any attempt to curb problem drinkers. There are also significant holes in other aspects of Government policy. For example, while Labour’s alcohol duty escalator appears still to exist, it does not seem to apply when the retail prices index is negative. We were told that the escalator was there to provide stability, but that stability went within a few months with the new duty rises in the pre-Budget report, and stability and certainty have been eroded further in the Budget.

We must ask whether the RPI measure looks forward or backward. We must also ask what will happen to alcohol duty when VAT goes up next new year’s eve as “Auld Lang Syne” rings out. Earlier, I think that we heard a concession from the Financial Secretary, who suggested that the change might be made in the early hours of new year’s day rather than on new year’s eve. A further question is whether the Government’s huge duty rises are a result of health concerns or of a desperate effort to plug the gaping hole in the public finances, or perhaps a little bit of both. However, I thought that first we should conduct an examination of exactly what has happened over the last 14 months in relation to alcohol duties.

When the Government introduced their duty escalator at the last Budget, they raised duty by some 6 per cent. across the board. It rose again by 8 per cent. when VAT was reduced in the PBR, and we have a further increase of 2 per cent. across the board in this year’s Budget. Over two Budgets and the intervening PBR, duty on a typical pint of beer has risen by 8p in a year. A bottle of wine now carries duty of £1.61, compared with £1.34 previously. That is an increase of 27p.

Spirits are up. A bottle of gin carries 82p more duty, and a bottle of whisky carries an additional 86p—although without the Government’s embarrassing U-turn in the PBR, the amount would have been even greater. Cider and perry are also up, as is champagne—which does have some impact on the Treasury, judging by last year’s photographs of large-volume deliveries to it and to other Government premises on and just off Whitehall.

Let me first outline some of the current health concerns about alcohol and their relevance to duty and then to the problems facing the sector, before examining the Government’s recent record and setting out some of the Conservative solutions. Health issues have been and will be a key part of the debate. There are 37 million
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responsible drinkers in the United Kingdom, but there are also about 3 million adults who have some form of alcohol dependency and another 8 million who have some kind of alcohol-use disorder. That is the picture among adults, but under-age drinking is a problem that is often highlighted as well. A tenth of final-year primary school children at least say that they drink regularly, and the number rises to 45 per cent. of 14 to 15-year-olds. I understand that, in this context, “regularly” is taken to mean at least weekly. A fifth of 10 to 15-year-olds say that they get drunk regularly. In 2005-06, more than 1,400 children under 14 were admitted to hospital in the United Kingdom as a result of conditions caused by alcohol abuse.

We all know that alcohol is a major contributor to crime and antisocial behaviour. Half of all violent crime is drink-related. It probably happens in every one of our constituencies, and it is probably happening now, at this late hour. One of the interesting aspects of being an inner-London Member of Parliament without a second home to return to in the evening is leaving this place after a 10 pm vote and arriving at Fulham Broadway tube station between 10.30 and 11 pm. The scene is not yet in full swing, but the thumping music makes the whole street vibrate. Drunken youths are already marauding, and on some occasions fighting has started. That is one of the many reasons why Hammersmith and Fulham council is clamping down on late licences, as far as it can under Labour’s disastrous Licensing Act 2003. It was the first council in Britain to pay for 24-hour beat policing teams in both Fulham Broadway and Shepherd’s Bush town centres.

Mr. Hayes: I am delighted that my hon. Friend is making such a strong case for the link between alcohol and lawlessness. If the Minister had studied the 1872 Act and the debate on it in more detail, she would know that the same argument was used in the debate on then.

That was what was said then, linking it directly to crime and disorder—a link that my hon. Friend is making now.

Mr. Hands: My hon. Friend makes an important point. It is worth mentioning that the problems I have just outlined, and of which we are all aware, are not new problems, but problems that have been with us for some time. That does not abrogate the Government’s responsibility to do something about them, however, and I shall outline how we might be able to use the duty regime to do something.

There are, of course, other effects of alcohol abuse. Since the 2003 Act came into force, there has been a 25 per cent. increase in violent crime reported between 3 am and 6 am. I do not have up-to-date figures on the impact of alcohol on domestic violence, but we are all aware from our constituencies that there is a strong correlation. These are serious problems. It in no way downplays their severity to note that they involve a small minority of drinkers. It would also be wrong to put them entirely at the door of the industry, which is taking action of its own, although it could, and should, be doing even more.

First, let us take a look at the condition of Britain’s fragile drinks sector.

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11.30 pm

Mr. Todd: Does the hon. Gentleman agree that disorder is rather less likely to emanate from the supervised environment of a public house than from off-licence sales of alcohol, freely distributed to those who may drink it in the street, and distribute the packaging all over the road?

Mr. Hands: I thank the hon. Gentleman for that intervention. He makes the telling point that a well-supervised, well-staffed, professionally run licensed establishment will be able to look after such problems quite well. The real problems, of course, start to arise outside the establishment or later on, which is, again, something the industry has to consider.

Contrary to popular perception, alcohol consumption is falling, and actually peaked a few years ago. The total amount of alcohol sold in the UK fell by 6 per cent. between 2004 and 2008. Consumption per head of pure alcohol per annum is down from a peak of about 9.5 litres in 2004 to about 8.7 litres today, although that is still above the figure of 7.5 litres for 1993. This is not to deny that there are problems in the UK with alcohol consumption, but it goes to show that the sands are shifting. This is not the occasion to digress into a full debate on the healthiness or otherwise of alcohol consumption, as we are, after all, looking at the effect on licensed premises, but we need to strike a careful balance between the interests of the great majority who drink in sensible moderation as against addressing the people who abuse alcohol and are responsible for mayhem and disorder in our town centres, not to mention issues such as domestic violence and the expense caused, to low-income households in particular, by dependency and addiction.

Beer consumption peaked in 1979, and since I left university in 1989 beer consumption in pubs has halved. I am not for a moment suggesting a link between those two facts, but that does put into perspective how quickly this sector has changed. This is not a plea to reject the zeitgeist and return to a golden age of cricket and warm beer in our local pub, but we need to recognise that the competitive environment facing pubs is, in many places, difficult.

Mr. David Drew (Stroud) (Lab/Co-op): As someone who admits to being a teetotaller, may I say that pubs could be much fairer by recognising that there are people who do not drink alcohol and by not charging the outrageous mark-up that they put on non-alcoholic drinks for those of us who like to go into pubs but do not want to drink alcohol? Does the hon. Gentleman agree that if we were to address such issues, we could change the whole debate?

Mr. Hands: I am not sure that I quite agree with that. There is a limit to how much soft drink prices can be regulated, and I would be slightly nervous about suggesting there should be such regulation. I share the hon. Gentleman’s frustration, however; when I am out with my wife, who rarely drinks alcohol, she constantly talks about how expensive an orange juice is relative to the price of beer, in this country at least. That is a fair point.

Beer duty was increased by a staggering 17.8 per cent. last year, with two big increases in the space of just nine months. UK pub beer volumes have fallen by 9.3 per cent. in the past 12 months. The proportion of beer sold
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through the off-trade has risen from about 10 per cent. in 1979 to just under 50 per cent. today, and the trend is accelerating. The rate of decline in beer consumption overall, across both on and off-trades, which is clear over 30 years, is accelerating. According to the British Beer and Pub Association, between March 2006 and March 2007, consumption fell by some 600,000 barrels, between 2007 and 2008 it fell by 1.1 million barrels—that is about twice the rate—and between 2008 and 2009 it fell by some 2.2 million barrels. It seems that almost every year the rate of the deceleration of beer consumption doubles. We are down to a level where just 28.6 million barrels are consumed, across both the on and off-trades and covering all types of beer.

Meanwhile, wine consumption fell for the first time this year since records began. According to the World Health Organisation, in 2003 the UK’s overall alcohol consumption level was only just above the EU average and was about the same as that of Switzerland and Portugal. The UK will have fallen further down that league table in the five or six years since. Again, that is not to say that this country does not have a problem with alcohol consumption, because it does, but it is worth remembering that consumption has decreased and the type of consumption is changing. These figures show that our problem is less related to overall volumes of consumption and more related to the types, patterns and, especially, the effects of alcohol consumption. In 2003, the UK’s consumption per head was already lower than that of either France or Spain—countries that many of us would view as having a more responsible attitude and approach to drinking in general. All that implies that the overall volume of consumption in this country is not necessarily the problem.

A recent study that Oxford Economics published in 2008 forecast that, with Labour’s alcohol duty escalator in place at retail prices index plus 2 per cent., the sales volume will fall by between 11.5 and 12.4 per cent. over the five financial years following the 2008 Budget. Oxford Economics expects that these rises will

The decline in alcohol consumption may be welcomed by many in this House, but none of the evidence points to a decline in consumption among problem drinkers. The duty rises are just a blanket increase in expense for the great majority who drink responsibly, and I shall return to that point in due course.

Stewart Hosie: Is the hon. Gentleman saying that although price may be a factor in, and its use a tool to control, problem drinking, he does not see duty being part of that? Does he think that instead another mechanism unrelated to duty such as minimum pricing in supermarkets could be used?

Mr. Hands: The hon. Gentleman makes a telling intervention. Obviously, price is an important determinant of consumption patterns, but the one way in which the Government can increase price directly is through duty, and I shall suggest how we might be able to do that in due course.

I wish to discuss the number of pubs and bars in England and the commercial pressures that are being put on them, which have been mentioned by a couple of
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hon. Members. There are some 57,000 pubs and bars in England and Wales, which, according to the Association of Licensed Multiple Retailers, have a combined annual turnover of approximately £25 billion, which is equivalent to about 2 per cent. of our GDP. More than 500,000 people are directly employed in the industry—about a third as bar staff—which is more than are employed in construction, agriculture and mining put together. According to ALMR, a third of pub revenue goes to the Exchequer in alcohol and gaming duties. Additional revenues are generated through VAT, PAYE and other local and national taxes, so the typical pub contributes about £155,000 per annum to the Treasury.

However, the number of pubs is falling. More than 4,000 have closed since 2004, pre-dating the start of Labour’s recession. The trend is now accelerating, with more than 3,000 of those closures taking place in the past two calendar years. What was a closure rate of five a week between 2004 and 2007 has become 40 a week in 2008. What was the weekly closure rate just a couple of years ago has become the daily closure rate.

It would be unfair to blame alcohol duties exclusively for that trend. Labour’s Licensing Act 2003 must also bear part of the blame, as must the increased competition from supermarkets and the smoking ban.

John Howell: Does my hon. Friend agree that today’s debates will also affect those businesses? We have debated corporation tax for large and small businesses, and the VAT decrease and increase. The alcohol duty increase is just the last in the chain. By design or accident, there is a direct causal link with everything that we have debated today, and it is all coming together to affect this industry.

Mr. Hands: My hon. Friend makes a powerful point. He has spoken well in all four of the debates, and he ties together the overall impact of Labour’s mismanagement of the economy with reference to the beer and pub industry.

The pub and bar trade is under pressure elsewhere too. A couple of weeks ago I was delighted to be hosted by my right hon. and learned Friend the Member for Devizes (Mr. Ancram) and my hon. Friend the Member for Westbury (Dr. Murrison) to see at first hand how town and village pubs were coping. I say that as someone who represents an inner-London constituency. Perhaps I should get out a little more. One of the most striking aspects was being shown the entirety of the documentation that a pub operator or landlord needs to complete when opening, and again each year, even before a single pint is sold. According to the industry, publicans spend an average of eight hours a week dealing with paperwork, and one in five gives red tape as a reason for becoming uncompetitive. According to ALMR, which represents large parts of the pub and bar industry, the average running costs of a pub are some 51 per cent. of turnover, even before rent and the cost of sale are taken into account. Employment costs have increased—

Rob Marris: The hon. Gentleman makes a powerful case for voting down amendment 10, which calls for research into the competitiveness of licensed premises and the level of employment in alcohol-related industries. Judging by the hon. Gentleman’s speech, he appears to have done all that research already. Will he confirm that he will vote against the amendment?

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Mr. Hands: I thank the hon. Gentleman for that intervention. It is fair to say that we will not vote for amendment 10, for many of the reasons that I have already outlined. It does not really make any sense and has many flaws. As for pre-judging any report, I have certain views about the overall trade, which are shared by many hon. Members on both sides of the House.

On my visit to Wiltshire, I looked at the problems facing licensed premises and the levels of employment in alcohol-related industries—

Mr. Newmark: I invite my hon. Friend to come to Braintree, which is a bit closer to London. My constituency is semi-rural and contains more than 40 villages. The pub is the heart and soul of many of those villages, but Labour’s policies are destroying them, one by one. That not only costs jobs, but affects the whole nature of the village. Many of the villages in my constituency no longer have pubs, when they did have them five years ago.

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