Treasury says removing beer duty escalator 'would cost £105m'

Chloe Smith, economic secretary to the Treasury, responded to calls from MPs for the beer duty escalator in particular to be abandoned during a debate last night.

Smith pointed out that the policy has already been accounted for in Government finances until 2014/2015, and removing the inflation-plus-2% escalator for all alcohol types would cost the Treasury £35m for 2013/2014 and £70m in 2014/2015.

“The duty increases that we are talking about... form a vital part of the Government’s plan to tackle the debt left by the previous Government,” she said.

“It would be worse for everybody if we did not tackle that debt. When I say “everybody”, I mean beer drinkers, cider drinkers, spirit drinkers, wine drinkers, brewers, publicans and, of course, all those who never touch a drop. The high interest rates that would result if we abandoned our credible plan to tackle the deficit would not help anybody.”

Smith responded to claims that abandoning the escalator for beer would help the economy by stimulating growth in the industry and providing jobs.

“The Treasury and the Government face a number of proposals from different industries that say, ‘Ours is the industry that holds the key,’ and I am sympathetic to those arguments,” she said.

“There is, of course, much evidence to go into for all such proposals, but it is important to proceed as a responsible Government, and to try to take into account the revenue that is required to fund vital public services and that helps everybody.”

The Norwich North MP, who said she is a pub-goer herself, added that the price of beer is “not the only factor” affecting prices in pubs. Smith said the most recent duty rise ,including VAT added just 3p to a pint, and the total duty on a pint is now 47p, which she described as “not an overwhelming or unreasonable amount”.

She added that the decline in the beer and pub industry is due to a “number of factors”, including lifestyle changes. “Removing the escalator and the pre-announced duty increases would not solve those problems.”

However, the minister did promise to “keep all taxes under review and monitor the impact of alcohol duty”.

The debate was called by Conservative MP Gavin Williamson, who bemoaned the “detrimental impact on our pubs and breweries” of the escalator.

Andy Slaughter, Labour MP for Hammersmith, pointed out that Fuller’s, the London brewer based in his constituency, pays 37% of its turnover in duty. “Should not the Government take notice of that?”

Encouraging​

However, Andrew Griffiths, chair of the All-Party Parliamentary Beer Group, said that it was "incredibly encouraging" that 40 MPs made it to the debate, which is more than how many make it to some afternoon debates.

He said: “I think it was incredibly encouraging by the level of commitment and determination of MPs of all parties to get the message across about the duty escalator. The fact that the debate tookplace just after midnight, to have 40 MPs in the chamber demonstrates how strongly Parliament feels about the issue.

“Of course, we were disappointed that the minister did not have something more positive to say but we did not expect her to say that.

“The message is that Parliament is becoming angrier about the impact of taxation on Britain’s brewing industry. I hope that we can build on this to ensure that when the petition reaches 100,000 and we have a longer debate in Parliament, we can expect a huge amount of support from Parliamentarians.”