Clause 2 - Rate of duty on beer
Finance Bill
9:30 am
Mr Stephen O'Brien (Eddisbury, Conservative)
I, too, welcome you to the Chair, Sir Nicholas, and your colleagues, Mr. McWilliam and Mr. Gale. As one of the proliferation of Members from the north-west, and not least as a Cheshire Member, I find it a particular privilege to serve under your chairmanship.
I thank the Economic Secretary for his contribution in the Committee of the whole House, although we were disappointed that he was not minded to accept any of our amendments. The issues raised were given a fair time for debate, but deep regret was felt on the Opposition Benches, and by many professional advisers and those who take an interest in the City, that the operation of a knife at the end of the first day meant that we were not able to debate the important area of stamp duty. That was a serious omission, and stamp tax was a real victim of the draconian timetabling procedure under which we have to suffer. Having put those comments on the record, I take this opportunity—as it has not been mentioned so far—to wish the Financial Secretary to the Treasury well. I know that she is quite rightly on maternity leave, and we all hope that it proceeds satisfactorily so that she will be able to add to her happy, and already somewhat numerous, family.
Clause 2, as the Economic Secretary has said, provides for an increase in the rates of excise duty charged on beer in line with inflation at 2.8 per cent., which came into effect from midnight on 30 April, on the assumptions that the Committee feels minded to support that proposal and that it will receive the backing and support of the House in due course. Although that is a very important duty, it would be right, in taking account of the proper admonitions that you hope we will be mindful of and abide by, Sir Nicholas, to note that the arguments that we raised in some detail in relation to tobacco products, and the other issues that came up during the new clause debate on the Floor of the House, apply equally to smuggling and cross-border issues relating to beer.
I do not think that it would be proper use of the Committee's time to delve into those issues one more
time. We have gauged the Government's reaction to what I hope were seen to be considered and responsible proposals, which were an attempt to tackle a genuine issue that affects users, not least, and corner shop owners and others, whether we are talking about tobacco or beer or other drink. Finding where elasticity in approach should fall is an increasing problem.
We all wish to curb smuggling. There is of course the phenomenon of cross-border shopping. The reality of that activity for personal consumption has been recognised, and that has to be considered part of the principle of freedom to shop. The House has seen personal allowances for such shopping raised, but there is concern that the duties that continue to be applied to such products are not bringing about the Government's desired objective by curbing smuggling to the necessary degree.
I shall not seek to spend particular time on that issue, given that we have debated tobacco, especially the proposal for a comparative control group that could test how the Government's strategy is working in relation to smuggling, how we can link it to pricing and differentials to tackle smuggling, and how it connects to the attack on corner shops that the increase in cross-border shopping represents.
I seek the Government's assurance that they will give detailed consideration to the impact of inflationary duty increases on smuggling and cross-border shopping. We are concerned that much information behind the advice given to Treasury Ministers is not being made broadly available, and not to those of us who have to scrutinise the Government's policy. There is a genuine need to protect the revenue raised from those products. I look to the Minister for those assurances so that we may have a detailed commitment to a programme of report on the elasticity of prices, duty and differentials between marketplaces. That would be particularly helpful.
It would also be helpful to ensure that the Government's assessment includes a proper analysis of the effect of duty increases on consumption, particularly in relation to tobacco. Let us not forget alcohol, too, which, while a pleasure in moderation, can result in a serious and damaging condition for some people. The health issue must genuinely be borne in mind with beer, as with tobacco products, about which there has been much fuller discussion.
I would be grateful if the Economic Secretary would share with us any detailed analysis that has been done or ensure that such analysis will be done. I would like to know about any commitment to a continuing programme that supports the fairness of the decision to increase duty on beer and wine, the effect on consumption—taking into account commercial and health issues—and, above all, where the elasticity factors range for each product in respect of smuggling and cross-border shopping.