The escalator that’s pricing beer into insensibility

On Wednesday upward of a thousand enthusiasts descended on Westminster to demand protection for one of the nation’s great heritage assets. Beer.

The Labour government of old was unduly fond of price and tax escalators, which generally take the form of retail price index plus a bit more. I have always regarded this as a rather odd fiscal mechanism because it simply creates a circularity that feeds itself. Costs go up, the RPI duly rises, and costs go up again as a result.

It beats me why the coalition has decided to maintain this blunt policy. Fiscal escalators might be acceptable in times of plenty, but as the economy bounces in and out of recession the circularity begins to consume itself. If prices are raised when money and credit is scarce, people buy less. Businesses are undermined by struggling sales and rising costs. Tax revenues fall and welfare payments rise. People buy less, and the circularity spirals downwards.

This brings us back to beer. The escalator adds 2% plus inflation to beer duty. There has been a 42% increase in duty in just four years and tax is now around one-third of the price of pint. The result is that beer sales are falling and pubs are closing.

Local beers are the vernacular within the international gastronomic landscape of Britain. Britain has a unique landscape of local beers that should be celebrated by the government, not undermined by crude taxation mechanisms. It has a unique network of pubs, many still individual and idiosyncratic in a world dominated by national and international branding. They deserve a chance of survival.

Beer is an indispensable part of the economy of rural areas. Here in Shropshire, around 4,800 are employed in our 651 pubs, and many more in our 18 breweries. They underpin much of the tourist industry – not only by serving food and drink, but by providing a place where tourists can meet local people. Tourists chip in around £50 million a month to our local economy, supporting nearly 16,000 jobs. This is no small beer in a county with a population smaller than that of Southampton.

If beer is priced out of pocket for locals and for tourists, our small breweries will go out of business. The country will once again become swamped with unified brands. The Ghost of Watneys Red Barrel will be resurrected to stalk the land. Pubs, which are often the only social centre in rural communities, will close forever.

The government has seen sense by cancelling the next fuel duty escalator rise. It is time for it to see sense over beer.

This article was first published on Lib Dem Voice on 12 December.