Each year the tax on beer, known as the beer duty escalator, automatically increases the price of beer by 2% above the rate of inflation. Since its introduction in 2008 by then-Chancellor Alistair Darling, the escalator has produced a staggering 42% rise.
The decision to schedule the debate was taken by the Backbench Business Committee, after an online petition to scrap the escalator received over 100,000 signatures, triggering its eligibility for discussion in Parliament.
For the first time since 2008, the debate could force the Treasury to launch a full review of the beer duty escalator.
Claire Cain, campaign officer for the Campaign For Real Ale (CAMRA) said: “We are delighted the Backbench Business Committee has responded to 100,000 signatures calling for fairer beer duty with a three-hour main chamber debate.
“Pub-going is becoming more and more unaffordable, causing this unique British institution to decline at an alarming rate. The debate calls on the Government to review the impact the escalator is having on our local economies, and will show that this out of date policy will no longer recoup revenue to tackle the Budget deficit, but instead threatens the one million jobs the brewing and pub sector brings to the UK.”
It seems the decision has come at the right time, since just hours before, research published by the British Beer and Pub Association (BBPA) showed that UK beer sales had fallen by 5.6% in the third quarter of 2012.
Despite the predicted boost in sales from both the Olympics and Euro 2012, the ‘Beer Barometer’ figures showed 117 million fewer pints were pulled in April, May and June compared with the same months in 2011.
Pub industry insiders have been calling for review of the beer duty for many months now for its devastating impacts on communities, with research consistently showing that the regular hikes are impacting on the livelihood of pubs across the country. Both the BBPA and CAMRA have identified a direct correlation on the numbers of pubs closing down.
In a recent speech at the BBPA’s third annual dinner, chairman Jonathan Neame described the “crushing tax burden, despised by pub-goers and hated by beer drinkers” as “a tax on socialising, on communities, on friendship”.
In March 2009, just one year after the escalator was introduced, figures from the BBPA revealed that around 6,000 pubs had been forced to close, and the trend was shown to have continued this year, with research by CAMRA – undertaken by CGA Strategy – showing that from September 2011 to March 2012, 300 pubs permanently closed down.
Of these, London was one of the worst hit regions with 43 closures, second only to Lancashire’s 68 closures, which were attributed largely to its rural and often difficult to access pub locations.
Mike Benner, CAMRA’s chief executive, blamed the closures on the tax rises: “Unsustainable beer tax increases by the Government are ripping the heart out of community centres,” he said.
Earlier this year, in a bid to stop the tax increases, Chris Schofield created the online petition that has now triggered the debate to be held next month. On 20 September, it became only the twelfth Government e-petition ever to reach the threshold of 100,000 signatures – out of over 16,000 that have been submitted. To date, it has received an astonishing 104,082 signatures.
Responding initially to the petition, the Government said: “Pubs and brewers make an important contribution to local communities and to the wider economy, in addition to providing local employment and promoting responsible drinking. This is why at Budget 2012 we announced no further changes to alcohol duties, beyond the increases pre-announced at Budget 2008 by the previous Government.
“The revenues from alcohol duty make an important contribution to tackling Britain’s debt crisis. Budget 2012’s duty increase and increases to 2014 – 2015 form part of our credible plan to reduce the Britain’s debt, which is required to ensure low interest rates and a stable platform for growth. It would be worse for everyone if the Government did not take action to tackle the deficit.”
Stating its ambition for the UK to be “the best place in Europe to start, finance and grow a business”, the Government went on to outline “a number of steps to boost business, from which pubs will benefit” including a reduction in the rate of corporation tax, and benefits for small businesses including reducing the small profits rate and extending the small business rate relief holiday.
With the debate now looming, it seems campaigners, pub owners and beer drinkers alike can start to build up hopes that changes may be on the horizon. And that’s surely something worth celebrating.
Stay tuned to be updated on the November debate!