I congratulate my hon. Friend the Member for Nuneaton (Mr Jones) on securing this debate. He is a big supporter of beer and pubs and it is a great pleasure to be working again with him and colleagues from across the House who support our national drink and our community pubs. This seems to be a case of here we are again, and here we go again.
As chair of the all-party save the pub group, it is always a pleasure to discuss these issues, but I hope that this is the last time we have to discuss the beer duty escalator in Parliament, because I hope that in two weeks this ill-conceived tax—it has not done what the Chancellor in the previous Government predicted, but has caused damage and held back our brewing industry—will become a thing of the past and that we need not ever discuss it again.
I am pleased to see the Minister in his place, and I thank him for the way he has engaged in the matter and listened. He is a supporter of beer and pubs, and he has acknowledged the important role of the brewing sector and pubs, and the opportunities for growth and to be part of getting the British economy back on its feet. I warmly welcome that. He has been listening carefully and reflecting, and I hope that that can also be said for the Chancellor and the Chief Secretary to the Treasury. I urge coalition Members particularly to ensure when we bump into them in the Lobbies that they are also listening. However, the listening must be coming to an end, because there has been a lot of it, as well as a lot of reflecting and campaigning. It is now time for action, and the message from this debate is that nothing other than announcing the abolition of the beer duty escalator in the Budget in two weeks will be acceptable. We urge the Minister to ensure that.
I want to emphasise to the Minister, the Chancellor, the Chief Secretary to the Treasury, the Prime Minister and the Deputy Prime Minister that this is a hugely positive opportunity. Too often in debates, MPs say that they want a tax break here and a tax break there, or a favour and a leg-up. That is not what this argument is about. It is simply about two things. From an economic point of view, the tax simply does not add up. It does not make sense. Even the Treasury’s figures have shown that if the predicted rise in beer duty goes ahead in two weeks’ time, the revenues from beer duty will fall, yet we do not need to be geniuses to see what effect the duty is having on brewers, particularly medium-sized brewers. We need to remember that the tax is a producer tax; it is levied on brewers at the point of production, so it directly affects that sector. Taking it away would lead to a change in investment decisions by those companies.
I had a very powerful and stark conversation with Lancaster brewery—it is not in my constituency. The brewery has done incredibly well to get above the level
of small breweries relief, to the extent that it is helping either very little or not at all. I heard about how much the brewery would have to pay in duty, and where it would spend that money otherwise. It would spend it on investment, on employment, on increasing production, on taking on more people, and on supplying more beer around the region, and no doubt, around the country.
If the Minister wants clear evidence—I know that he is both a pub lover and a very capable economist—he only has to look at the astonishing effect of small breweries relief since it was introduced in 2002, and I am not churlish enough not to give credit to the previous Government for doing that. I did so at the time, and it has been hugely important. Some people have the idea that small breweries relief is simply something that has helped small breweries—these cuddly microbreweries—to brew beer, and that that is great for beer lovers, but actually, we are talking about incredibly powerful facts.
Figures from the Society of Independent Brewers—SIBA—show that volume sales of locally brewed SIBA beer, against a declining level of sales in the on-trade, were up 6.8% in 2012. Those local brewers already employ nearly 5,000 people, and the really stark figure is that on average, SIBA brewers invested 23% of their turnover back into the business, and into employment, increasing production, and growth. Clearly, there is a direct link between the level of beer duty and level of investment that brewers are able to make into their business, and that has a huge knock-on effect. As the chairman of the all-party save the pub group, I am deeply concerned about the number of pub closures in this country. It would be wrong to suggest that that is down to one factor, when a number are involved, but clearly the unfair level of beer duty is a factor, and it is time to address it.
The reason why pubs are affected in a powerful way is that supermarkets can absorb any increase in duty that the Treasury throws at them. They have ways of doing that and even now, they are selling alcohol at a price that many people believe is not responsible. The difference between the price of a pint in a supermarket and a pub is now tenfold—it is ten times cheaper to buy alcohol in a supermarket, compared with in the controlled, sociable environment of the British pub, which as we know, provides community value. The Institute of Public Policy Research published an excellent report, which estimated that the wider social value provided per pub was between £20,000 and £120,000, on top of the economic benefits. An interesting fact for the Treasury and BIS about the local pub is that for every pound spent in a pub, compared with a supermarket, twice as much is then circulated and invested in the local economy.
Therefore, it really is a win-win situation. We all know that the Budget has to focus on growth—I look forward to some of the excellent suggestions from Lord Heseltine being included—and here is a simple opportunity to send the message to Britain’s brewers that we want them to invest, to continue to succeed, and not to fall into the trap that we currently have with small breweries relief, where if brewers start to be too successful, they find themselves being penalised.
I also ask the Minister to look carefully at the levels of duty for all drinks, because when it comes to beer, there has been a blind spot that many of us simply do not understand. Beer has been seen as a cash cow for the Treasury, and that must end. However, I also urge
the Minister and his colleagues to look at other levels of duty, and particularly to consider the situation with cider. Cider is, of course, another wonderful drink, which is often produced by small producers. There is also a relief for small cider producers, but interestingly, it does not go as far as the relief for beer.
However, I need to bring the Minister’s attention to the situation we have in which huge, mass-produced cider brands—the likes of Magners and Bulmers—pay a fraction of the duty that equivalent large beer brands pay, and that is simply because of the idea that all cider is produced by small producers. I am afraid that there is a lot of dishonesty in the cider market. When it comes to Magners, the so-called “Irish cider”, if it really was Irish cider made from Irish apples, every Irish apple would be making something like 20 litres of cider. Some marketing kidology is going on—I say that as someone who used to work in marketing—and there is a profound unfairness.
I want to see a way of helping our wonderful small cider and perry producers. That is absolutely important, and perhaps the relief to them could be extended, but we must also ensure that someone buying a pint of Marston’s Pedigree or Fuller’s London Pride is not paying significantly more—currently more than double the duty—than someone buying a pint of Strongbow, Magners or Bulmers. There is no justification for that, and that inequality must end.