Contribution
It is a pleasure to serve with you in the Chair once again, Mr Turner. I congratulate my hon. Friend the Member for Farnham and Bordon (Gregory Stafford) on securing this important debate. In Blur’s immortal words, he knows his claret from his Beaujolais, but I will not have anyone say he is a charmless man.
It is a pleasure to speak in support of an industry that is doing well in this country, although it is facing some challenges. Wine is a home-grown success story, with more than 1,000 vineyards and nearly 5,000 hectares under vines across the country. In my North West Norfolk constituency, I am fortunate to have wineries including the award-winning Burn Valley and Cobble Hill, which are contributing to the local economy, supporting tourism and creating jobs. Overall, the wine and spirits industry contributed £76 billion in economic activity last year, with nearly half of that coming from the wine sector. Despite this success, the Government are putting more burdens on the sector.
This has been a good debate, and I think my hon. Friend the Member for Weald of Kent (Katie Lam) wins the prize for the number of wineries in her constituency. The hon. Member for Edinburgh South West (Dr Arthur) made some important points about public health. Unfortunately, the hon. Member for Witney (Charlie Maynard) could not resist mentioning Brexit—he seems slightly obsessed.
The domestic sector is largely made up of small producers, with two thirds producing fewer than 10,000 bottles a year. Generally, these are family businesses, local employers and passionate entrepreneurs. Employment in the sector has grown significantly over the past few years, and since 2010 bottle sales have increased to over 9 million.
The UK is a global hub for the trade, being the second largest importer of wine by volume and value. This is a sector that we should be nurturing, not penalising. When we were in government, that is what we did. We introduced the simplified duty system, based on taxing alcohol by strength, with an 18-month easement to help the sector. We encouraged businesses to diversify and move into wine production.
Importantly in the context of this debate, we froze alcohol duty rates in the 2023 autumn statement, and we continued that in the spring Budget of 2024. That is a record of support, but sadly this Government have taken a different path. At last year’s Budget, they raised the headline rate of alcohol duty by inflation. As we have heard, around 60% of the cost of a bottle of wine is now tax, and Wine GB warns that the increases are driving down demand and, in turn, cutting revenue to the Treasury. One in four drinkers say they will buy less alcohol as a result of the price increases.
Let us be clear that producing wine in Britain is not easy. Yields are 30% to 50% lower than in France or Spain, labour costs are higher, the weather is obviously unpredictable, and input prices keep rising. But instead of backing the sector, the Government keep piling on costs. Alcohol duty—up. Business rates—up. National insurance—up. As we have heard, the Wine and Spirit Trade Association has said that revenues from alcohol duty are down £300 million in the first six months of this financial year. If that continues, the Treasury will be bringing in £1 billion less than was forecast by the Office for Budget Responsibility at the spring statement.
The Government are putting the country on the wrong side of the Laffer curve, not just on alcohol taxes but across the board. The Minister is relatively new in post, but has he commissioned advice on the duty’s impact on the sector? Has he taken a fresh look at the data or at the assumptions used by the OBR? If not, will he do so, and do so rapidly? The Opposition are firmly on the side of Britain’s wine producers. It is a vibrant, innovative and home-grown sector that deserves support, not more taxation.
Of course, it is not possible to have this debate without talking about the hospitality sector, as a number of colleagues have. Wine is more than a drink; it is about socialising and shared experiences. The sector clearly depends heavily on pubs, restaurants and hotels to introduce consumers to this great British product.
However, under this Government, hospitality, like so many sectors, is struggling. Nearly 90,000 jobs have been lost since the disastrous Budget a year ago, and today we have seen the unemployment rate hit 5%—it has gone up every month under this Government. That is the result of the Chancellor’s terrible judgment in making it more expensive to employ people. With rising employment costs, the jobs tax, the extended producer responsibility and higher business rates, we see layer upon layer of additional cost, so it is no wonder that UKHospitality has described the Government’s approach as a “hammer blow”.
The wine sector has put forward some suggestions for the Chancellor and Ministers ahead of the Budget. First and foremost, it asks that they reconsider some of the decisions to increase business taxes, and it asks them to consider a freeze on excise duty or a wine tourism relief. As was highlighted by my hon. Friend the Member for Bridgwater (Sir Ashley Fox), and echoed by others, it also asks for the alignment of small producer relief with the realities of the wine industry. Those are all practical ideas that are worthy of consideration, so will the Minister commit to looking seriously and carefully at all of them?
Rather than taxing success, we should be nurturing it. The wine sector is a model of sustainable, rural growth, and it deserves our support. Its ask of the Minister is simple: will the Government work with the sector and listen to it, and will they look at the evidence and commit to easing the burden on our wine producers?