Beer Tax Debate Heads To Parliament

Campaigners calling for an end to a policy which pushes beer prices up faster than the rate of inflation have won the right to a debate in Parliament.

The beer duty escalator was introduced by the last government in 2008. It means the cost of a pint rises by an additional 2% every year.

Stephen Pugh is the financial director of the brewer Adnams in Southwold, Suffolk. He believes the policy is misguided.

"The duty will be 50p or so on the pint and the VAT will be a similar amount, so you are talking about adding £1 of tax for the government on that.

"I think that's an expensive and damaging level of costs to the consumer."

Many pubs have been unable to survive in the recent economic climate. Six thousand have closed in the past four years.

It is causing so much concern that more than 100,000 people have signed an online petition urging the government to scrap the escalator. The petition has been organised by the beer campaign group CAMRA.

The issue will now be debated in Parliament on Thursday.

David Sanchez runs the Lord Nelson pub in the Suffolk seaside town.

To get a realistic profit after paying all the tax he says he should sell his bitter for £4 a pint. But he believes that price is too high and so it sells for £3.40.

"You can't really price the beer where it needs to be to maintain the current profitability so we have to keep the beer prices down to encourage customers to keep coming in.

"They still whinge at the price... It's all part of the banter these days."

Beer duty has increased by 42% since the escalator was introduced in 2008 while sales have fallen by 15% in that period.

And the rate of decline is rising. Between July and September there was a 5.6% fall in the volume of beer sold in pubs and shops compared to the same quarter last year, although it is thought the bad weather this summer may have had an impact on sales.

A spokesman for the Treasury said a range of tax measures had been introduced to help the alcohol industry, and pubs in particular.

"However at a time when we are working hard to get down the deficit, alcohol duty revenues do make an important contribution to the public finances.

"Crucially, the Government has not made any changes beyond what was announced at the budget in 2008."

But in the past three months 117 million fewer pints have been sold.

And, according to the industry, that means that tax revenue from beer is actually being hit because people cannot afford to buy it.

The British Beer and Pub Association wants duty to be frozen in the next budget.

Research carried out for the organisation suggests it would save 5000 jobs in the industry.

But the fear is, if prices keep being driven higher, more pubs will be forced to call time for good.