Some surprise has been expressed that the petition to scrap the beer duty escalator is crawling along on the slow line, still below 90,000, while that urging the government to reconsider its decision to take the West Coast rail franchise away from Virgin Trains has stormed through 100,000 in a couple of weeks.
By the general standards of government e-petitions, 89,000 is a very respectable number, but I can think of several possible reasons for this relative lack of traction:
- To the man (or woman) in the pub, the issue isn't as clear-cut as you or I might think. “Freeze beer duty until the next election” would have been a more easily grasped message – which of course is the equivalent of what fuel tax campaigners are now asking for.
- The petition has lacked mass-media exposure. No national newspaper or TV channel has taken it up, which is important in getting the message across to the general public.
- The escalator applies to all forms of alcoholic drinks, so perhaps the petition would have been better worded to refer to the “alcohol duty escalator”, thus giving consumers of wine, spirits and cider more reason to sign it.
It also seems to me that some of the core arguments in favour of the petition are not wholly convincing. In his open letter to Chloe Smith, Roger Protz says:
The reality is that the government loses far more than £35m every year as a result of the impact of the eye-watering levels of duty and VAT levied on beer, brewing and pub retailing. Every time the government increases duty, fewer people go to the pub. When the consumption of beer goes down, less duty is paid to the Treasury. The same holds true for VAT.However, although each 2% on duty will bring in less than 2% extra revenue, as it suppresses demand to some extent, we are still a long way from the point where increasing duty leads to an absolute reduction in revenue. (A point which has now been reached with tobacco duty)
It is also incorrect to say that the escalator uniquely impacts on the pub trade. In fact, as margins are much greater in the on-trade than the off-trade, each increase in duty has a greater proportionate impact on the price of a bottle or can in the supermarket than a pint in the pub.
A pint of 4% beer currently bears duty plus VAT on duty of 53.2p. We have now had five years of the escalator so, without it, the duty would be 5 or 6p a pint lower. Obviously the escalator doesn’t help, but there are many reasons for the decline of pubs apart from price, and I don’t really see that 6p off a pint is really going to make much difference to their general viability. Indeed, as I have argued in the past, some sections of the pub trade seem to shoot themselves in the foot on the pricing issue.
Rather more convincing arguments against the escalator would be:
- Even on its own terms, it is unlikely to be effective in combating problem drinking. The demand for alcoholic drinks is fairly inelastic and, the higher the individual’s consumption, the less elastic it becomes
- Increasing prices will not simply reduce consumption – rather it will inevitably lead to an increase in smuggling and illegal alcohol production, often of very dubious quality
- The responsible consumption of alcoholic drinks is something that has been enjoyed for hundreds of years by a large majority of the adult population in this country, and it is fundamentally wrong and illiberal to impose punitive taxation on it