If it’s possible to read anything into the drinks Chancellors have sipped while delivering the Budget over the years – water (Gordon Brown), whisky (Kenneth Clarke), gin and tonic (Geoffrey Howe), brandy and water (Benjamin Disraeli), sherry and beaten egg (Gladstone) and spritzer (Nigel Lawson) – then I hope tomorrow that George Osborne opts for beer, Britain’s favourite drink.
But more importantly, I hope the Chancellor heeds the increasingly urgent cross-party appeal for a fair deal for British beer. More than 100 MPs have signed my Early Day Motion calling on the Chancellor to suspend the beer duty escalator planned for this month.
Everyone involved in the beer industry, including the brewers in my constituency of Burton, the home of Britain’s beer, are rightly worried about the impact that additional increases in beer duty will have on their businesses and community pubs round the country. Beer tax in the UK is already the second highest out of the 27 EU member states and since 2008 beer duty in the UK has gone up a further 26%. Coupled with January’s VAT increase this has pushed the average pub pint through the £3 barrier for the first time. This has hit our pubs hard – the latest figures show that last year, 25 pubs closed every week with the loss of an estimated 13,000 jobs around the country. Every pub is a small business, employing on average ten people.
Despite these closures and job losses, brewers and pubs remain a significant contributor to the British economy and one with the potential for growth. The sector sustains almost 1 million jobs in towns and villages throughout UK; contributes £13.4 billion in wages and £21.4 billion Gross Value Added (GVA). Beer sales generate 50% more tax in revenues than spirits and its jobs are spread throughout a UK-based supply chain – around 600,000 jobs in pubs; 20,000 jobs in agriculture and 15,000 jobs in breweries and brewery companies. This compares with 45,000 jobs in total generated by that old favourite of the last Labour administration, the Scotch Whisky industry. In my constituency alone, 4,500 jobs depend on the beer and pub trade and around the country 85% of pubs are small, often family-run, businesses, injecting on average £80,000 into the local economy.
It simply doesn’t make economic or political sense to increase beer duty any further. Economically, the Exchequer receives less and less additional revenue from beer duty increases as a result of falling sales and businesses failing. Recently published research by Oxford Economics shows that up to 10,000 jobs would be saved in 2011/12 alone if beer duty were frozen in this week’s Budget. Overall tax revenues would actually increase by an estimated £40 million. This research proves that the abolition of Labour’s beer duty escalator would be a step in the right direction for British business. With the right tax policies, the brewing and pub sector has the ability to sustain and create jobs quickly and help drive economic growth.
Clearly, duty policy should also consider the wider social impacts of different drinks. A move to stronger, largely imported drinks sold through the supermarkets not only means fewer UK jobs but also encourages people to buy cheap, strong booze and drink at home. This further diminishes the role of the pub in the community as a place where people drink responsibly and enjoy a pint or two without getting into trouble.
We need to recognise the pressures on community pubs and local brewers with smarter taxes which help the traditional pint. Under the present system strong ciders and spirits remain the cheapest alcohol available per unit to the consumer. We should, instead, target the high-strength drinks which are more damaging to our health and less helpful for our economy and communities. Why for instance is the duty on a pint of beer double that on a pint of cider of the same strength?
So tomorrow, let’s hope George Osborne brings some cheer to British beer and ends Labour’s war on the good old British pint!