HL Deb 29 June 1993 vol 547 cc28-9WA
Lord Cocks of Hartcliffe

asked Her Majesty's Government:

Whether they are satisfied that the new system for levying duty on beer is fiscally neutral; and

What representations they received from the Brewers' Society that the new system for levying duty on beer was not fiscally neutral, and what were the dates and form of such representation; and

What is their response to the Brewers' Society's calculations that the new tax system is not fiscally neutral for brewers; and

Whether the Brewer's Society has made representations to them regarding the apparent need for some brewers to raise the prices and weaken the strength of some of their beers in order to satisfy the financial requirements of the new tax system.

The Minister of State, Department of Transport (The Earl of Caithness)

The new duty rate was calculated following close consultation between Customs and the Brewers' Society and a survey of about 97 per cent. of UK produced beer. The initial rate for the new duty system was calculated to produce, overall, the same amount of revenue as would have been collected if the old system had remained in place.

In June 1992 the Paymaster General informed the society of the approximate figure for the new duty rate. The new rate was confirmed to the society in early March 1993. The society did not challenge the fiscal neutrality of the new rate until it told Customs on 7th May that it believed it would raise about £60 million in additional duty, thereby putting financial pressure on brewers. The society produced data to support its claim on 28th May and 4th June.

On 21st June it informed Ministers that because the new duty rate was not fiscally neutral some brewers would be forced by commercial pressures to adjust the price or strength of products.

Customs are currently evaluating the society's data. No conclusion has yet been reached, but we have agreed to take the data into account in the course of designing the next Budget.