Thursday’s Commons debate on beer taxation is about far more than whether we want to pay an extra 8p or 9p on a pint come next year’s Budget. Of course we don’t. Particularly in London where the price of the most exclusive pint is rapidly heading towards a fiver.
The debate is around the Beer Duty Escalator given to us by the last Labour chancellor Alistair Darling back in 2008. This decreed that, up until 2014, the annual rise in duty on beer should be 2% higher than inflation.
His excuse was to “ensure alcohol duties kept pace with rising incomes”. Unfortunately real incomes have been falling for the past five years and are down 13% since 2008.
Since that date tax on beer has increased by 42% and, according to Oxford Economics, around 10,000 jobs could be saved in the pub and brewing industries if duty rises were held off for the next two years. Almost half of those jobs are held by young people who currently are finding it nigh on impossible to find a full-time job.
At the same time the Treasury admits that the Beer Duty Escalator will raise just an extra £35 million during the next tax year.
That is peanuts next to the potential job losses, cost of more pub closures and the reduction in revenues (including to the Treasury) if people drink less beer. But this is far than a mere fiscal matter. Pubs are still part of the social fabric. They are the one place where young people can learn to drink under supervision and even, in some cases, with their parents.
Clubs, teenage parties and even the local bus shelter do not have the same kind of pastoral care. Jonathan Neame, chairman of the excellent Kent-based Shepherd Neame brewery is in no doubt: “We need to recognise that not all drinks are the same.
“Spirits are the drink of choice among young adults on a ‘big night out’, with vodka increasingly favoured by under-18s. Although taxation is a blunt tool to tackle alcohol misuse, it should at least encourage consumption of lower-strength drinks, such as beer.” In the three months to September, the British Beer & Pub Association says beer sales in pubs fell by 4.6% — or the equivalent of 117 million fewer pints being drunk than in the same period last year. Yes the weather was bad but not that bad.
Keith Bott, founder of Stoke-on-Trent’s fabulous Titanic Brewery and chairman of the Society of Independent Brewers, points out that the other end of the scale, cider duty, is now less than half that of beer. He says: “The disparity between beer and cider duties is nothing less than an invitation to large international drinks producers to swap their consumers from beer to cider — as witness the rush of global brewers who have moved into cider production.”
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The day is coming when I will be poured a pint of Stella Cidre instead of Stella Artois. And because brewers love their cider profits, I won’t notice any difference in my change. Thursday’s debate — initiated by Andrew Griffiths, chairman of the all-party Parliamentary Beer Group, and Greg Mulholland, chairman of Save the Pub, after more than 100,0000 signed an online petition — only calls for a review of the escalator’s “social and economic” impact.
The Government should accept the call and conclude that the escalator should be scrapped before the 2013 Budget. Anything less would be a betrayal of one of our oldest industries.
