Government beer escalator makes pints 'too expensive'

01/11/12

There are calls for the government's beer tax 'escalator' to be scrapped.

Under the annual rise, beer costs rise by 2% plus inflation meaning the price of a pint in the UK rises by between 5p and 10p.

MPs are debating whether the formula, which has been in place since 2008, should be scrapped after 100,000 people signed an e-petition.

The British Beer and Pub Association (BBPA) says a fall in beer sales is due to high prices putting people off.

The breakdown of a pint of beer

In the three months to September there was a 6% fall in beer sales, or 51 million fewer pints sold, compared to the same time last year despite the Olympics.

The BBPA says if the beer tax escalator is dropped next year 5,000 jobs in the industry could be saved.

The industry says it has also had to deal with the effects of the smoking ban and the slow-down in the economy as well as tax rises.

Chris Parsons working as a tour guide
Image caption Breweries and pubs often employ young people to help cut costs

MPs will now decide whether there should be a change to the annual increases.

Ministers argue alcohol taxes play a big part in reducing debt and that the industry has had tax breaks elsewhere, including employer national insurance savings.

Brewers argue that more than 600,000 people in the UK rely on beer and pubs for their livelihood.

They say with more than £1 from every pint going on VAT and beer tax, things have to change.

Jobs affected

Chris Parsons, 22, is a tour guide at a brewery in Witney, Oxfordshire.

"It's absolutely not fair," he said. "It's just aimed at the pubs to get back the deficit.

"But you can't just aim it at pubs as they are closing all the time."

The brewery Chris works at is in Prime Minister David Cameron's constituency.

Chris says if sales continue to fall he's worried for his own job.

A lorry being unloaded with kegs of beer.
Image caption Brewers say they need more than £2 a pint to make a decent profit