John Healey (Financial Secretary, HM Treasury; Wentworth, Labour)

We now quit cigarettes and move on to beer.

Clause 3 increases, in line with general inflation, the excise duty charged on beer. That is part of a broader package of decisions on alcohol duty that continue progress towards the Government’s long-term aim of achieving a fairer balance of taxation across all alcohol products without imposing real-terms increases on those, such as beer, that currently are more lightly taxed.

Excise duties on alcohol provide a crucial£7.9 billion a year to invest in tackling crime and essential public services, such as schools, hospitals and transport. Beer accounts for more than 40 per cent. of alcohol duty receipts. The inflation-only duty increase, which, together with VAT, is equivalent to about a  penny a pint, is necessary to maintain that important source of revenue. By way of background, I remind the Committee that that modest increase, a freeze inreal terms, follows freezes—actual, not real-terms freezes—in beer duty in three of the past eight Budgets.

However, I am aware also of the pressures on brewers and the pub industry, which play an important part in our economy, our heritage and, for those of us who like a beer, our leisure. This modest, inflation-only increase in beer duty recognises their concerns but maintains an important stream of revenue necessary to support our long-term commitment to continue to increase investment in some of our vital public services. I commend the clause to the Committee.

Paul Goodman (Shadow Minister (Childcare), Treasury; Wycombe, Conservative)

I shall be as brief on this clause as I was lengthy on clauses 1 and 2. We have no quarrel with the inflation-only increase in the price of beer, and do not oppose the clause.

Julia Goldsworthy (Shadow Chief Secretary To the Treasury, Treasury; Falmouth & Camborne, Liberal Democrat)

I should like to thank the hon. Member for Wycombe (Mr. Goodman) for his generous welcome.This morning I was at a PricewaterhouseCoopers conference on public services reform that had been arranged prior even to my joining the Liberal Democrat Treasury team. Unfortunately, the conference was unavoidable and I could not be here this morning.

We have no quarrel with the increases in excise duty on beer in clause 3. Including VAT, it represents a penny a pint and it is sensible to maintain revenues. I should like to raise only one point. Why did the Chancellor of the Exchequer feel it appropriate to freeze duties on sparkling wines, in anticipation of success at the World cup, when the majority of supporters will be drinking beer, not champagne?

Philip Dunne (Ludlow, Conservative)

I should like to raise a brief point, to which I hope the Financial Secretary will respond; it is the obverse of the point that I raised about tobacco duty. There has been an inflation-only increase on duty on beer, but there has been a freeze on spirits for, I think, the eighth Budget in succession; I may have got that wrong. In real terms, the duty on spirits has declined by 18.4 per cent. since 1997.

Put that in the context of the public health aspects of excise duty, which were part of the justification for the increase in tobacco duty. Today we have learned that the primary justification for the increases in excise duty on alcohol is to do with revenue, yet the incidence of alcohol as a cause of admission to hospitals is increasing steadily.

According to my calculations, there was a rise of4.6 per cent. between 1997 and March 2003, the last period for which statistics are available in the 2004 statistical bulletin. That is an increase of 8,000 to 176,100 admissions in which alcohol is cited as the primary reason, or is referred to, in the relevant note. There is at least a case—I should be interested to hear whether the Financial Secretary considered it during  his preparation for the Budget—for using excise duties as a means of improving public health in relation to alcohol-induced illness.

Colin Breed (Shadow Minister, Treasury; South East Cornwall, Liberal Democrat)

In a similar vein, the explanatory notes say that since 1997 the duty on beer has fallen by 6 per cent. in real terms. That is not a huge amount, but it is a fall in real terms. Yet during that period we have seen clear evidence that alcohol, particularly beer, plays a large part in some of the antisocial behaviour, not least binge drinking, that we experience from time to time.

We have recently seen a relaxation of the licensing laws and availability in terms of cost and access has increased. It would not be surprising if we saw more antisocial behaviour, let alone the health problems that the hon. Member for Ludlow described.

We have spent a lot of time discussing the smuggling of tobacco but have not mentioned the considerable amount of beer that is imported during trips to hypermarkets on the continent. The brewery industry is probably right to be concerned about the amount of beer that is being imported in that way.

Overall, there is a case for not objecting because I think the increase is correct, but we should recognise some of the dangers of alcohol, particularly among young people, and recognise that price is a driver, as it is in other areas. The Government should at least look at the overall duty on beer not just as a revenue-raising exercise but as a contribution to health and reducing some of the antisocial behaviour that emanates from the consumption of large quantities of alcohol.

John Healey (Financial Secretary, HM Treasury; Wentworth, Labour)

The reason for the decision on beer duty compared with that on spirits is that spirits are significantly more heavily taxed than beer and we have in place a long-term policy goal of a fairer balance of taxation across all alcohol products. That is the reason for the differential treatment in this year’s Budget.

In reply to the hon. Member for Falmouth and Camborne, spirits are heavily taxed and sparkling wine is the most heavily taxed of all alcoholic drinks. That is part of the reason why the decision that we took in previous years to freeze the duty on sparkling wines was taken again this year. There may be some champagne drinkers among the officials who support me on the Bill because I have a note that says that the freeze on the duty on sparkling wine will affect not only the traditional champagne products to which the hon. Lady referred, but the excellent sparkling wines from Britain, including the 2002 Merret Bloomsbury from the RidgeView estate in East Sussex which was recently crowned the best sparkling wine in the world at the international wine and spirit competition.