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7 July 2009 : Column 927
9.15 pm

Mr. Browne: I agree with that point. Actually, I agree with all three of the points that the hon. Gentleman made and I would probably add a fourth, which is the smoking ban. I accept that in some pubs that might have attracted more customers, particularly those pubs that have a reputation for serving food. Customers, in many cases, like to eat food without people smoking in the same building. There are other pubs where many of the customers might have felt that their enjoyment of the pub was closely linked to their ability to smoke in that environment, too. That is opening up another debate that I do not wish to open now, but I acknowledged at the outset—perhaps I should have acknowledged it in slightly greater detail—that a number of social and, in some cases, legislative factors have impacted on the ability of pubs to attract customers and to be profitable. I accept that that is the case, but my point is that that difficult economic situation is compounded by above-inflation increases in beer duty.

Let me explain that point, because it is very important that people understand. I am not simply making a sentimental case for pubs, although I do have a sentimental attachment to them. There are some hard figures that should give the Government cause for reflection. In January—four or five months from now—VAT will increase again by 2.5 per cent. when the Government’s temporary VAT reduction expires. In April 2010 and April 2011—this has already been factored in—beer duty will increase by 2 per cent. above inflation. That is the so-called duty escalator that was announced last year, so that beer is priced out of the range of people who are seeing, if they are lucky, inflation increases in their salaries. Some people are not even seeing that. A pint of beer is becoming more expensive for people as a proportion of their income and in real terms, too. That is a deliberate instrument of Government policy. That leaves aside whether, for example, the core ingredients are becoming more expensive.

In other words, fundamental costs are being borne by brewers and passed on. They will eventually go through the pubs to the customer, and so the customer will have to meet that extra cost. For example, they will have to meet brewery or transportation costs, with fuel duty and other considerations of that type. Beyond all those factors there is a built-in increase of 2 per cent. above inflation each year on duty on beer.

Julia Goldsworthy: My hon. Friend is being generous in giving way. Although the hon. Member for North-West Leicestershire (David Taylor) identified a number of other issues that impact on pubs, the reality is that for many pubs, such as the Trengilly Wartha—I spoke to the landlord there just a few weeks ago—the margins are so small that these changes, which appear to be small on the surface, have a big knock-on effect on their economic viability.

Mr. Browne: I completely accept that point. That is why I hope that hon. Members from all parties will support amendment 38 tonight. It is very important for all our constituencies.

Simon Hughes (North Southwark and Bermondsey) (LD): My hon. Friend has waxed lyrical about rural pubs, and I join him in that, but some of us have very
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urban constituencies. I just want to put it on the record that the same issue applies. The pubs that people would like to go to are the family pubs and the pubs that sell the traditional beers—in my constituency, the Fuller’s pubs, the Young’s pubs and the Shepherd Neame pubs. They do not want to go to the supermarket unless they have to. The pubs that the tourists would want to go to are certainly not better replaced by the supermarket. Tourists want to go to a traditional pub and they want an incentive to do so. The argument applies, and as the son and grandson of a brewer I have to say that I think that the Government are strangling the industry in a way that will be detrimental to urban communities as well as rural and suburban ones.

Mr. Browne: I completely accept my hon. Friend’s point. Let me illustrate my acceptance of his point with an example from my constituency. One of the games widely played in pubs in Somerset, as my hon. Friend the Member for Somerton and Frome (Mr. Heath) will be aware, is skittles. I am a keen player of skittles and people associate skittles with rural pubs. There are skittles leagues and teams attached to village pubs across Somerset and other parts of the west country.

I recently had the pleasure to visit, as a customer, the Oxford Inn in Halcon in east Taunton, one of Somerset’s most urban and socio-economically poorest parts. It has a skittles alley and offers all sorts of entertainment and social events, and it also puts on food buffets built around people’s enjoyment of skittles and other activities. The points that I am making are not exclusively true of rural areas: they are very much true of rural areas, but they apply to urban and suburban areas as well.

I promised my hon. Friend the Member for Falmouth and Camborne (Julia Goldsworthy) that I would talk about the breweries in my constituency. I do not want to let her down by neglecting to take up her invitation.

There are four beer brewers in my constituency, and a BrewFest is taking place in Wiveliscombe in my constituency later this month. That will be an opportunity for people from all over that part of Somerset, and even perhaps from Devon, to visit Wiveliscombe and enjoy the beers brewed there by Cotleigh Brewery Ltd and by Exmoor Ales. Both produce large numbers of popular beers for pubs and off-licence sale, in my constituency and further afield.

The other two brewers in my constituency are much smaller. Confusingly, Quantock Brewery is based not in the Quantocks but in a place called Chelston just outside Wellington, while Taunton Brewing Company is not in Taunton but in West Bagborough—

Madam Deputy Speaker: Order. Some of the breweries may not be where they should be, according to the hon. Gentleman, but I hope that he will concentrate his remarks a little more on the amendment.

Mr. Browne: Sadly, Madam Deputy Speaker, that is the sum total of breweries in my constituency, but I am doing my best to make setting up new ones an attractive proposition for people.

My point is that all those breweries are directly affected by reductions in beer sales. That may sound like a statement of the obvious, but we tend to concentrate on the business at the end of the supply chain—that is, the pub landlord selling a pint of beer to the customer.
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However, the breweries are also employers in my area. They are more than just employers, too, as they are also part of the heritage and fabric of the area.

People in Taunton Deane or Somerset as a whole enjoy having their local breweries, believing that they add to the character of the community and that there is something distinctive about them that helps to define our area. Indeed, people visiting on holiday from London, Birmingham or elsewhere in the country feel that having an opportunity to drink in a pub in my constituency a pint of beer that has been brewed in Wiveliscombe or somewhere else in Somerset is part of their enjoyment as a visitor to the county. It would be extremely sad if that were to be affected.

As I said, I accept that people can choose soft drinks, wine or something else instead of beer. I am not trying to compel people to drink beers brewed in breweries in my constituency, although I sometimes think that they would benefit from the experience. It may be that their life would be poorer if they missed that opportunity, but I am not compelling anyone to drink them. What I do not want, however, is businesses to be placed in jeopardy as a direct consequence of the Government’s imposition of above-inflation duty increases on beer.

Mr. Greg Hands (Hammersmith and Fulham) (Con): Before the hon. Gentleman concludes, will he explain what amendment 38 means? It seems to set up some sort of reverse escalator, but will he go through the mechanics of how the amendment might work?

Mr. Browne: I will, but I am trying to put in place a simple measure to do precisely what the hon. Gentleman says. If the Government felt that the amendment was technically deficient, I would be happy if they sought to make changes to it. As has happened in previous years when emergency measures have been introduced in the PBR, more emergency measures could be brought in this autumn, if the Government felt that they were needed.

The simple fact is that the Government are increasing beer duty by 2 per cent. above inflation every year—the so-called duty escalator, as I have said. The amendment would not change the duty for this year, as that has been passed and set in stone already, but it would reduce the duty by 2 per cent. next year and in subsequent years. What I am effectively trying to do, and I hope the mechanism achieves that objective, is to cancel out the effects of the so-called escalator which, for the reasons that I have given, I regard as damaging.

Stewart Hosie: On a technical point, the first part is correct—

but the amendment then reads

If it said, “by 2 per cent. for subsequent years”, I would understand that, but

indicates to me, if I have read it correctly, a reduction in the level of duty, rather than a stabilisation of it and the reversal of the escalator only.

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Mr. Browne: That would be an extremely popular measure, but it is not my intention. [Interruption.] The hon. Member for Hammersmith and Fulham (Mr. Hands) says that is what the amendment says. I suppose it depends how one interprets the word “further”. The effect that I sought to achieve was to say that the Government should feel free to put up duty in line with inflation. Most people would accept that that is a reasonable way to proceed, but the escalator that is over and above inflation is damaging pubs and breweries, for the reasons that I have given.

David Taylor rose—

Mr. Browne: I was about to conclude to give others an opportunity, but I give way to the hon. Gentleman.

David Taylor: I am pleased that the hon. Gentleman had not yet concluded. It was all too easy in the past to be critical of Liberals, who were rather relaxed about fiscal policy and did not put figures to the changes that they were suggesting. What would be the reduction in Government revenue resulting from amendment 38, and how would the hon. Gentleman replace that revenue?

Mr. Browne: I am entirely sure that I accept the premise of the hon. Gentleman’s intervention. Perhaps I did not explain clearly enough at the beginning. Beer sales dropped by 8.2 per cent. in the first quarter of 2009, and since the Budget last year 2,200 pubs have closed. The opportunities for people to buy beer are diminishing rapidly as pubs close, and the total beer sales in all outlets are falling, so the amount of revenue that the Government are collecting is off a diminishing base. I fear that any assumptions that the Government make about increasing revenue from above-inflation beer duty increases may not be borne out by their experience when they come to add up the money that they hope will come into their coffers. That is quite apart from the wider social benefits that I touched on earlier in my speech. They are difficult to quantify, but everyone would acknowledge that in both urban and rural areas, there are those wider benefits. I caution the hon. Gentleman about knowing the price of everything and the value of nothing, as people used to say. That would be an unfortunate position for the Labour party to adopt, and the costs in this case are unlikely to be a consideration that need unduly concern Ministers.

On Friday 17 July I will be pulling a pint at the Maypole Inn in Thurloxton—

Madam Deputy Speaker: Order. The hon. Gentleman will relate that, I am sure, to the amendment that we are discussing.

Mr. Browne: Indeed, Madam Deputy Speaker. I will be celebrating Proud of Pubs week. I thought that would be a suitable way to demonstrate the pride that I have in pubs in my constituency, and I hope that all Members present who are proud of pubs and of breweries and who see the benefit of those institutions flourishing in their community will support amendment 38.

Mr. Hands: It is always a pleasure to follow the hon. Member for Taunton (Mr. Browne). I, too, will be celebrating Proud of Pubs week on the same evening, but almost certainly in a different establishment. I enjoyed
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sparring with the hon. Gentleman in Committee on this and many other duties. I agreed with a great deal of what he had to say; I just thought it a pity that he did not properly explain the amendment before us, because it has a number of problems that need probing.

9.30 pm

Nevertheless, we seem to be making a habit of debating alcohol duty only very late at night or at the end of the day. [Hon. Members: “Last orders!”] Last orders indeed, although not quite, under the old world. During Committee of the whole House on 12 May, I spoke on alcohol duties for an hour and a quarter either side of midnight—well after what I used to think of as closing time. I shall not repeat my arguments and certainly will not go on for as long, but we had an entertaining debate about the serious subject of alcohol duties, and various Members joined the debate late, including the hon. Member for Morley and Rothwell (Colin Challen), who intervened on a Liberal Democrat Member at two minutes past 1 in the morning to say that

He went on to ask at six minutes past 1 in the morning:

We had various other contributions from a collection of Members from all-party groups, some of whom appeared to have come straight out of intense discussions on the various duties involved. I do not know whether we can expect such interventions this evening, but alcohol duties are a serious matter, affecting not only a huge number of consumers but a large number of employers and employees. There are also issues about problem drinking and alcohol-induced crime.

The hon. Member for Taunton pointed out that the sector is under pressure, and on that point I very much agree. Part of that tale of woe is due to the big increases in beer duty, so let us examine what the Government have done since they introduced their duty escalator at the previous Budget. They put duty up across the board by 6 per cent.; then it went up again by a further 8 per cent. when VAT fell in the pre-Budget report; and we now have a 2 per cent. across-the-board increase in this year’s Budget.

Lembit Öpik: The hon. Gentleman may be coming to this point, but does he agree that, given the level of pub closures and the change in drinking habits, it seems extremely improbable that the Government made any holistic analysis of the net effect on the economy? Leaving aside our discussions on pubs, as a result of the changes there has probably been a net reduction in revenue to the Government, rather than an increase.

Mr. Hands: The hon. Gentleman makes a very strong point. In fact, the amount of revenue has undershot Red Book projections for each of the past two years, so that point would seem to bear out evidence that the sector is under severe pressure.

Kelvin Hopkins (Luton, North) (Lab): I strongly support the Government’s policy on alcohol prices, so will the hon. Gentleman not accept that over several decades
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the real price of alcoholic beverages has fallen substantially; that that is a major contributor to the current rather excessive alcohol consumption by young people, in particular; and that there are health as well as revenue concerns?

Mr. Hands: The hon. Gentleman makes a reasonable point, although it ignores the fact that beer consumption has fallen steadily for the past 30 years, and that alcohol consumption overall has fallen for the past four. Although he refers to a long trend, it may have reversed over the past three or four years.

I shall now discuss the amendment itself.

Mr. Don Foster: Just before the hon. Gentleman moves on, I note that he said that the hon. Member for Luton, North (Kelvin Hopkins) made a reasonable point. Surely, however, the key differential that influences the appalling behaviour on the streets of many of our towns and cities is that between the cost of beer in our pubs and the ridiculously cheap price of beer in our supermarkets. The same is true of other drinks. That is the differential we ought to address.

Mr. Hands: The hon. Gentleman makes a good point, although we must recognise that there are difficulties concerning the duty regime on beer and other alcohol served in pubs, vis- -vis supermarkets. Nevertheless, he makes a strong point, which we would like to look at.

We have not spoken about amendment 38 in any detail. As the hon. Member for Taunton knows, I pay close attention to the text of his amendments, and I have to say that his amendment would insert its new Subsection (3A) in the wrong place. It would insert his reverse beer escalator in line 34, between two subsections on low and medium-strength cider. It should actually be inserted in line 30. Furthermore, the Lib Dem amendment, taken in totality with the Bill’s existing provision on beer duty, would see beer duty first rise this year by 10.5 per cent. and then fall each year by 2 per cent. because of that insertion into line 34. That seems an odd policy—less an escalator and more an escarpment, with a steep increase this year followed by a shallower descent for all years thereafter.

Mr. Jeremy Browne: Will the hon. Gentleman give way?

Mr. Hands: I will not because we are short of time. According to the amendment, the new beer escalator—in effect a reverse of Labour’s current RPI plus 2 per cent. escalator—would go on for ever. Nor is it clear whether the annual 2 per cent. reduction in duty would mean 2 per cent. off today’s figure of £16.47 in the original clause or 2 per cent. off the figure as amended. In other words, are the 2 per cent. reductions linear or cumulative? In the second year, would the figure be 98 per cent. of the original figure, or 98 per cent. of the 98 per cent. that was affected the previous year?

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