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Government minister claims beer duty escalator 'helps' publicans and drinkers

By Peter Ruddick , 05-Jul-2012
Last updated on 05-Jul-2012 at 18:09 GMT

A Treasury minister has pledged the Government will continue to monitor the impact of the alcohol duty escalator but claimed the rising beer duty was a 'help' to publicans and drinkers as it was contributing to deficit reduction.

Chloe Smith, economic secretary to the Treasury, made the comments during a debate this week on the beer duty escalator which had been called by Gavin Williamson MP, a member of the All-Party Parliamentary Save The Pub group.

£105m

After MPs argued the beer tax was having a detrimental impact on pubs and breweries, was affecting jobs in the industry and was arguably pushing drinkers to tipples with higher alcohol content, Smith told Parliament the cost of removing the policy was too high.

"The value of removing the escalator would be £35m for 2013-14 and £70m after that," she said.

The Minister argued the rising taxes on beer, which now has duty of 47p per pint, were a vital part of the Government's plans to slash public debt.

"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."

Marginal

The claims were met with incredulity by the British Beer and Pub Association (BBPA). "The current policy of huge Beer Tax rises does absolutely nothing to tackle the deficit," Brigid Simmonds, chief executive of the BBPA, told BigHospitality.

"A freeze in beer duty in the Budget would have saved 5,000 jobs – just this year alone. Studies by Oxford Economics have shown that the marginal rise in beer duty revenues the Government will achieve is all but wiped out by a fall in income from employment and other taxes. So on this point, the Government has got it wrong," Simmonds added.

In the debate Smith rebuffed the point that a cut in beer duty would help employment in the industry. “I am the first to support the notion of encouraging young people into work and work experience, but we have to be realistic," she said.

"The Treasury and the Government face a number of proposals from different industries that say, 'Ours is the industry that holds the key'."

Comparisons

Smith also denied the alcohol duty escalator was the only problem the pub and beer industry faced. "It is important to be clear that duty is not the only thing affecting the state of the pub industry."

"On the price of a beer, I point out that the pre-announced alcohol duty increases in question added only 3p to a pint of average-strength beer, including VAT. That addition in the Budget this year is not an overwhelming or unreasonable amount."

However a BBPA spokesperson pointed out to BigHospitality that in comparison with other countries the duty on beer in the UK was unreasonable. British pubs face duty eleven times higher than that in Germany where it stands at just 5p per pint.

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