Clause 3 - Duty on beverages made with spirits
Finance Bill
12:15 pm
Mr Christopher Chope (Christchurch, Conservative)
I thank you for your tolerance, Mr. Gale.
Specifically, the amendments would put the Government back in the position in which they should originally have been. If they intend to change the taxation regime for a particular product line, they should consult the industry and have proper information available on which to base their decisions. Amendment No. 1 states:
''The Treasury shall lay before Parliament on or before 31st December 2002 a report on the operation of duties on alcoholic beverages that shall include—
(a) information about the market in lower-strength alcoholic beverages;
(b) an estimate of the impact on consumption of the rates of duty on beer, cider, wine and spirits in comparison with the rates of duty on those beverages falling within the provisions of section 1(9) of the Alcoholic Liquor Duties Act 1979;
(c) a summary of any representations received by the Treasury after the day on which this Act is passed relating to section 1(9) of the Alcoholic Liquor Duties Act 1979.'.''
If the industry had had a chance to make representations before the Budget, they would have included those to which I have referred from Bacardi-Martini on the proposal's impact on its investment and the damage that it would do to its confidence in the Government.
A firm called Halewood has recently spent £2.5 million on two new bottling plants; not all of that was its own money. It received Government grant—regional selective assistance—from the Department of Trade and Industry because it is in an area of high unemployment in Liverpool. It received Government subsidies to invest in plants to bottle the very coolers to which the Government now seem to be cold. GBL International is likely to postpone the purchase of an additional bottling line at the Mansfield brewery. It currently employs 80 people and was planning to expand up to 200. The Bacardi-Martini group has around 65 per cent. of its business in those products, which are very successful.
The result of the announcement being made without consultation is that the industry is in a state of flux. Amendment No. 2 would prevent the clause from coming into effect for the time being and until there has been some consultation.
I shall give an example to explain the state of flux. Each recipe for flavoured alcoholic beverages must be approved by Customs and Excise before it can be put into production. Following the Budget, producers asked what recipes can be authorised, but as of 13 May Customs and Excise has been unable to give clear guidelines and agreement on new recipe formulations. That shows that the impact of the measure has not been thought through by Customs and Excise. Recipe experts, monitors and approvers are sitting on their hands not knowing what they can or cannot do. Meanwhile, the industry is waiting for a lead. Had there been proper prior consultation, the industry would not be in that state of flux.
Equally important, production will be severely affected, which will have an impact on jobs, consumers and exports. The Government's justification for the measure is that the price of coolers in the retail trade and pubs has increased by 60p during the past two years and that that shows that there is sufficient price flexibility to absorb a significant increase—more than 60 per cent.—in the rate of duty. I have been told that it is impossible for the industry to find out from Customs and the Government where they obtained the information that coolers have increased in price by 60p in the past two years. I was told that the price had risen by around 20p rather than 60p, and I hope that the Financial Secretary can explain the basis of that assertion, which the
Government are using to justify the introduction of the measure.
I should also be grateful if the Minister would explain why the Government think it reasonable to single out those products instead of others. We had part of that debate under clause 2 when we discussed cider. Last Friday, I carried out something of a survey in the Christchurch Conservative club.