European union?

As the EU proposes harmonisation of duty levels, the difference between Britain and the continent grows ever larger. Jackie Annett reports

It's a cold, rainy day towards the end of November and while most people are hard at work, a significant number are embarking on a short journey to France to stock up on cheap booze for the festive period.

They bring vans, people-carriers and trucks, and fill them with cut-price wines, beers and spirits to drink at home over Christmas and New Year.

Each bottle, can and pint bought in France means one less bought in the UK, and it is the pubs, brewers and off-licences that feel the pinch.

This migration is caused by high tax rates in the UK, with duty on beer costing the consumer around 34p a pint, compared to just 5p a pint in France.

And although the Government says bootlegging has been reduced greatly in recent years, estimates suggest a million pints of beer are still being smuggled into the UK every day.

A licensee would have to serve behind the bar for 11 years to sell one day's worth of this smuggled beer, the British Institute of Innkeeping's Georgina Wald told thePublican.com, during a recent trip to France organised by the All-Party Parliamentary Beer Group.

The beer group, which has been supporting trade calls for a cut in duty levels to ease the problem of bootlegging, arranges the trips regularly to highlight the issue among the nation's MPs, 16 of who were on board for this visit.

One of the companies also represented on the visit, Kent brewer Shepherd Neame, has felt the full effects of bootlegging.

Vice-chairman Stuart Neame said some of the company's pubs, especially those situated close to the port of Dover, had lost up to a quarter of their trade since the introduction of the single market in 1993.

He wants the British Government to cut taxes so that the UK can compete on an even footing with France.

Mr Neame said that despite the fact that other countries were either raising or reducing taxes in an effort to bring them in line with the European target of 6.7p, the British Government was continuing to raise taxes, increasing the already huge gulf between France and the UK which now stands at 29p.

"There have been eight duty rises since 1993," he said.

"While France is trying to help by bringing its duty down, the British Government is continuing to put duty up."

Even the owner of the Eastenders booze warehouse in Calais, Dave West, thinks that UK taxes are too high.

He said the millions of people who come over to France to buy alcohol from his store were directly campaigning against the UK's high duty rates by voting with their feet.

"Twelve million people a year come over to France to put pressure on the Government over the high taxes on beer and the Government is not even listening," he said.

The EU agrees that the high levels of smuggling and duty fraud in the UK would be better tackled by reducing duty levels.

Ultimately, it wants to introduce harmonisation of duty across member states, which would mean low-tax countries such as Spain would have to raise duty while high-tax countries like Britain would be forced to drop its levels.

But the Treasury has insisted that this is out of the question.

It claims it is tackling the fraud by drawing in extra customs officers at channel ports and injecting extra cash into Customs and Excise.

Because of the Government's refusal to toe the line, the European Commission has begun legal action that could force Britain to reconsider its position on smuggling. Europe has criticised British Customs and Excise officers' "heavy-handed" approach, because of the large number of vehicles that are being confiscated.

And it has also condemned Customs for illegally enforcing EU guidelines on the amount of alcohol a traveller can import into the UK.

While the Government admits that it loses more than £200 million a year in tax revenue as a result of the current policy on beer duty, the problem does not stop there.

The British Beer and Pub Association's Mark Hastings, who was also on the Calais trip, said high duty rates caused crime and disorder and damaged British industry. He also said the Government's insistence to raise duty rates contradicted its pledge to boost tourism after the dramatic loss in trade after the events of September 11.

"More than a third of 15 to 17-year-olds know where to buy bootlegged booze," Mr Hastings said.

"What is less well documented is that duty increases imposed over the last five years have magnified this evil by some 50 per cent.

"Every penny on duty makes a significant difference to cross-Channel imports and smuggling. We believe that a duty cut would significantly reduce the level of illegal beer smuggling."

On a different note, he said cutting beer duty would actually increase the Treasury's tax take and free up more money for public services. "The extra money would pay for 27 more secondary schools, 6,000 more nurses or four hospitals."

But while the Government insists that it will not lower duty rates, it seems it may not have a choice if European Commissioner Fritz Bolkestein is successful in forcing Britain to reconsider its position on smuggling.

If British Customs and Excise officers are forced to loosen their tight grip on confiscating vehicles, bootleggers will either be given free reign to bring in as much alcohol as they want or something will have to be done to stop a trip to France proving such an attractive day out.

The story so far in 2001​

• Jan 2001:​ Regional brewer Elgood & Sons launched a month-long protest over the UK's high duty rates on beer in the run-up to March's budget.
• Feb 2001:​ The trade took its fight for a cut in beer duty to Europe, as pressure mounted on Chancellor Gordon Brown to tackle the issue in his forthcoming Budget.
• March 2001:​ Kent brewer Shepherd Neame released the results of a report which showed that the higher the duty the higher the price of a pint and the less happy the consumer is. These lost sales hit the amount of legitimate duty revenue coming in to the Treasury.
• May 2001:​ The Independent Family Brewers of Britain renewed its fight for the European Commission to impose a cut in UK beer duty rates.
• July 2001:​ Customs & Excise chief Paul Boateng ruled out a cut in beer duty. He said a lower duty rate would not stop smuggling.
• Sep 2001:​ The European Commission began legal action that could force Britain to reconsider its position on smuggling.
• Nov 2001:​ A survey commissioned by investment bank Dresdner Kleinwort Wasserstein discovered that, on average, alcoholic drinks were priced at 70 per cent more than the European average.
• Nov 2001:​ High taxes on drink in Britain were criticised by European commissioner Fritz Bolkestein who is in favour of harmonising taxes across the European Union.