Examination of Witnesses (Question Numbers
420-431)
DR PETRA
MEIER AND
MS LILA
RABINOVICH
14 MAY 2009
Q420 Dr Naysmith: I will have to
look at the KPMG report again, but are you saying that none of
the breaches, or some of them—
Mr Beadles: No, there were a few,
but not substantial ones.
Q421 Dr Naysmith: Why do pubs continue
to serve drinks to people who are intoxicated? I know we have
touched on this already, but there are voluntary agreements about
it.
Mr Beadles: I do not speak on
behalf of the pub trade, but the legislation is very clear. There
is no voluntary agreement on serving to drunks. The law says you
should not serve to someone who is drunk. You do not need a voluntary
agreement to sit on top of that. That is the law and, if someone
is breaking the law, then the licensing office and the police
have the powers to take their licence away.
Q422 Dr Naysmith: Mr Blood.
Mr Blood: That is what I valued
before. We have made a step-change as an industry over recent
years in the amount of training and awareness of bar staff and
licensees. I think if we look at the trading culture six or seven
years ago, I do not think it was a focus of attention, not serving
people who are intoxicated. We have raised the levels. It is certainly
far from perfect, and I am sure that studies could find places
where intoxicated people are being served, and that is why we
argue for greater enforcement, because I think that combination
is the best way to stop drunks being served. I do not think it
can be done by one route in isolation.
Q423 Dr Naysmith: Mr North, you earlier,
when answering a different question on minimum pricing, sounded
as if you would be in favour of a bit more regulation, which is
really rather unusual from the supermarket trade, to say we want
more regulation, as long as it applied to everyone, I think, is
what you more or less said. What do you think of voluntary agreements
and their perceived lack of success?
Mr North: I think they can play
a part. The best example that occurs to me of a voluntary approach
is the community alcohol partnerships, which I think are a very
exciting idea. We have taken part in the one in St Neots and are
doing so in Kent. I would focus less on the voluntarism than on
the fact that this brings together, I think, the right grouping
of partners on an issue that is really quite broad—so the
enforcement authorities that Jeremy talked about, the retailers,
obviously the police, trading standards, schools, youth clubs
and charities—and actually tries to get at the heart of
some of the real underlying issues, which is do people know what
the safe legal age is for drinking, do people know what the right
quantity is to consume, et cetera. It also tries to approach the
issue in a sensible way, not simply at the check-out or at the
bar but in the school and in the home, so that we actually reach
something approaching a consensus on this. I would say, on that
basis, the voluntary approach has a lot to commend it. The area
of pricing, where we said we play a constructive part is one where,
for legal reasons, we simply cannot take a co-operative voluntary
approach across the industry.
Q424 Dr Naysmith: Do you wand to
add anything, Mr Benner?
Mr Benner: I would say that in
well-run pubs you are unlikely to get a lot of these problems,
but I think what the industry does not need right now is more
regulations that deal with something that is already in place.
The Licensing Act has already got the powers in place to deal
with most of these issues, and that would be best used to achieve
that.
Dr Naysmith: I think that is a very good
point.
Q425 Sandra Gidley: I do not know
who what wants to pick up on this. Some people have suggested
that there should be a bigger step in the way that alcohol is
taxed, according to the alcohol by volume of a particular drink.
For example, when beer exceeds 4% alcohol by volume the tax increases
in price, and for wine maybe above 13%. Do you think that is a
good idea? Would it make any difference?
Mr Beadles: I can start on wine
and say that there are already banding levels in wine. So anything
under 8% has a different tax rate, anything between eight and
15 has one tax rate, anything above 15 to 22 another and 22 and
above another. So there is a step-change in there. In terms of
creating more steps within the wine category, I think that would
be incredibly complex. Wine is classified by European legislation
as being a product between eight and 15 degrees. A strength of
wine is not a pre-determined thing; it is determined by the climate
and grape variety of the country that it comes from. Global warming
has had quite an impact on wine production and alcohol levels.
What we are seeing in the wine industry at the moment, and I have
spent the last two days at one of the largest wine shows in the
world at ExCel, is actually a rather exciting range of newer lower
alcohol wines coming back into style and back into freshness.
Certainly all of our consumer research shows at this moment in
time that consumers are looking for lighter wines, and I think
the industry will drive in that direction as a result. We have
produced huge levels of consumer research over the last few years
that suggests that is the way the industry should go. I would
not be in favour of adding that extra complexity into it. A wine
is allowed to vary in alcohol level point five degrees ABV either
way, so a 12% wine could be 11.5 or 12.5. They vary from batch
to batch because it is a product with natural variations and adjustment
If you are buying grapes from South Australia the alcohol content
of the grape from one part of South Australia to another part
may vary. So there is variation in there. I think you would create
huge difficulties for the industry in actually even being able
to assess the difference on an accurate basis between a 12.5 and
a 12% wine in various batches. So I would not be in favour from
a wine perspective.
Q426 Sandra Gidley: Beer?
Mr Blood: Beer has a linear approach
already: stronger is also more highly taxed. I think it is a very
interesting way of looking forward. I would support looking at
how you might do that—some tax favouring for low alcohol
products and perhaps some higher rates of duty for very strong
products—because I think one of the trends, which I do not
think has been entirely benign, over the last 20 years has been
that the average strength of beer consumed has for 15 years gone
up. I do not think that is a good thing. I am pleased that actually
in the last two or three years it has started to go down again,
which is good news. I want to break the link between brands that
are considered to be premium and alcohol strength. I think it
is an unhelpful link, and the industry tends to link high prices
with high alcoholic strength. If you look at the cider market,
there has been a huge growth in premium ciders, so very expensive
ciders amongst the more expensive alcohol units in both supermarkets
and pubs, and those premium brands are at 4.5%, the bottled ciders,
Bulmers and Magners, whereas other ciders are stronger than that.
That is an encouraging development, in my view, where we are trying
to break down the link between alcohol strength and brands that
have high value. I would support looking at things we can do in
that area.
Mr Benner: To add to that, Jeremy
is right. The average strength of beers, in particular real ales,
are starting to come down, so CAMRA would be in favour of a proposal
to apply what can already be applied under European law for a
zero rate on beers below 2.8% ABV. It is perfectly possible to
brew interesting quality beer at around that level, and I think
that would be a good step. The other thing that we are pushing
for as part of the Excise Directive Review in Europe is that a
preferential rate of duty is applied to draft beer or beer sold
in pubs, once again, to make it more attractive to people to drink
in that regulated environment. At the moment that cannot be applied
by Member States but we are taking that proposal to the European
Commission.
Q427 Sandra Gidley: Would it make
any difference from a supermarket perspective? Would it change
the balance of what was sold, do you think?
Mr North: I think we would have
to do the analysis, to be honest, to come to a conclusion on that.
Q428 Sandra Gidley: So some agreement
there then. This one might divide you. Is it good for public health
that the duty on beer has risen above inflation in recent years
but the duty on spirits, such as whisky, has not? I suspect the
influence of the Scottish whisky industry on the Chancellor and
the Prime Minister here. Is that a good thing, that change in
shift of taxation?
Mr Beadles: I think I am correct
in saying that it is not current Treasury policy to link taxation
and public health. Taxation on spirits has historically been considerably
higher than on wine.
Q429 Sandra Gidley: Historically,
but with the recent changes for spirits, the taxation has not
increased as much?
Mr Beadles: Certainly from our
perspective, I think that there are different views from different
parts of the industry; I am not sure there is a homogeneous view
on that question. From a wine perspective, we have had, obviously,
a 20% increase in the last year alone, taking us over two pounds
a bottle in tax.
Q430 Sandra Gidley: From a public
health point of view.
Mr Beadles: My understanding is
that the Chancellor does not make duty decisions based on public
health grounds, he makes duty decisions based on revenue raising
grounds, and, therefore, he is not looking at these issues from
a public health perspective. That is my understanding of his statements.
Mr Blood: I think, from my perspective,
you will get the logic of my previous answer: if you can use excise
duty to encourage consumption of products that are lower or more
moderate in alcohol, then I think that is something that is interesting
and good. That is my answer.
Mr Benner: Beer still represents
over 60% of the wet turn-over through lots of pubs and it is only
right that it should be priced accordingly, because, again, pubs
are losing out because of that.
Q431 Sandra Gidley: I want to come
back to cider. Putting the premium product to one side, although
I drink cider I do not touch White Lightning with a barge pole
because it has a high alcohol content. A lot of young people seem
to buy it because it gets them drunk quicker, and yet the duty
on it is comparatively low. Should that anomaly be addressed?
Mr Blood: We produce White Lightning.
We bought Paul's business five years ago and inherited a big brand
in White Lightning that was sold at 7.5% alcohol. We had two choices
on how to develop that brand. Fundamentally I do not feel 100%
comfortable with that brand, so we could have withdrawn it completely
and that would have left the market. There are many other white
ciders out there sold at that strength and that price. What we
have done, as leaders, is we have increased the price, we have
stopped doing three-litre bottles with 50% extra free, and recently
we have reduced the alcohol strength of White Lightning from 7.5%
to 5.5%. So we are trying to do it. We could, Pontius Pilate-like,
wash our hands of it and abandon it but because we are cider market
leaders we are trying to lead the other producers in the market
place to try and sell white cider in a more responsible way, in
our view. You ask: should we change the anomaly on cider duty?
I think there is not unanimity amongst the National Union of Cider
Makers on that one, because there are a lot of craft ciders, vintage
products, which have got quite a high alcoholic level, that I
would encourage. On beer we have done a thing called progressive
beer duty, where smaller craft breweries get a more favourable
duty regime to protect their interests. I think there is maybe
a way of looking to protect the craft vintage artisan production
and maybe look at it like that. Again, I would be interested in
how we could approach that. I think that is a good area for us
to be investigating.
Chairman: I hesitated to say that that
was the last question, but it was. Could I thank all four of you
for coming along and helping us with this inquiry this morning.
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