(5 years, 8 months ago)
Commons ChamberRead Hansard Text Read Debate Ministerial Extracts
Mike Wood (Dudley South) (Con)
I beg to move,
That this House has considered beer taxation and pubs.
I am delighted to have secured this important debate, alongside the hon. Member for Stoke-on-Trent North (Ruth Smeeth) and my hon. Friend the Member for Ribble Valley (Mr Evans), and I am grateful to the Backbench Business Committee for allocating us this time.
In the short time that I have available, I hope to set out a compelling case as to why the Minister should recommend to the Chancellor that he cut beer duty in future Budgets, reform business rates and continue to look at new ways of reducing the disproportionate tax burden on pubs and breweries. Representing a Black Country constituency as I do, and as chair of the all-party parliamentary beer group—the largest Back-Bench all-party group in this House—I know what an important issue this is for many of our constituents. My own Dudley South constituency is home to three very distinct and individual brewers: Bathams, dating back to the 1860s; Black Country Ales, which is a much more recent and fast-growing brewery; and Ma Pardoes, one of the original Campaign for Real Ale breweries.
Kevin Brennan (Cardiff West) (Lab)
I congratulate the hon. Gentleman on his great work as chair of the all-party parliamentary beer group, of which—like many other hon. Members—I am a member. Does he agree that, although it is very welcome that the Government extended rates relief to pubs, it is disappointing that they did not also extend it to small music venues, where people often also drink the occasional beer?
Mike Wood
Of course, the business rates relief extension was part of the support for high streets and community pubs in particular. I think there is a particular value to that, but I certainly would not be opposed to the kind of measures to which the hon. Gentleman has referred.
When we last debated beer duty in this House—in Westminster Hall in October 2017—I said that there were 75 pubs in my constituency. I am afraid that there are now only 73, despite my very best efforts.
Dr Rupa Huq (Ealing Central and Acton) (Lab)
The hon. Gentleman talks about disappearing pubs in his constituency. A person does not actually have to be a drinker to enjoy the benefits of pubs. Jo Cox, our late and much missed friend, talked about the loneliness agenda. I am a non-drinker, but I am very upset that we are losing the Goldsmiths Arms in East Acton, which has been there since 1826 when it was a coaching inn. The petition to keep it open has been signed by 2,180 people, but under this Government it often feels that people power and planning law are in conflict, and greedy developers often have too much power on their side.
Mike Wood
I would caution against trying to turn this into a party political issue, because although the number of pubs is still reducing at far too high a rate, it is a rather slower rate than was the case before 2010. There are a number of factors that lead to pub closures, some of which are more in the control of the Government and public authorities than others. Where the Government can act to slow down, stop and reverse pub closures, I would very much encourage them to do so.
Sir Greg Knight (East Yorkshire) (Con)
Does my hon. Friend agree that the closure of a public house often has a far more devastating effect in a rural area, where the pub is the centre and heart of the community, often acting as a shop, a music venue and a tavern to the local people?
Mike Wood
My right hon. Friend is quite right. I will speak about the particular importance of rural community pubs later, but pubs are often key to local identity even in our towns and high streets. In fact, more people probably give directions with reference to pubs than to road names.
Stephen Crabb (Preseli Pembrokeshire) (Con)
My hon. Friend is making a superb speech, as always. On the subject of the decline in the number of pubs, we should not forget that one area of enormous growth in the industry over the last 10 years is the proliferation of craft brewers. I am sure that every single Member here has an excellent craft brewery in their constituency, and these breweries often run tap houses. Does my hon. Friend recognise the importance of the small brewer’s relief to the growth of craft brewers, and will he make that part of his discussion with the Chancellor and the Treasury?
Mike Wood
My right hon. Friend pre-empts the later part of my speech, and the hon. Member for Stoke-on-Trent North is similarly indicating that she may just touch upon this topic later. Yes, the rise in the number and variety of smaller breweries, and particularly craft breweries, over the last decade and a half has been one of the key features of the sector. This is partly down to the success of the small brewer’s relief.
Toby Perkins (Chesterfield) (Lab)
I congratulate the hon. Gentleman on securing this important debate. He is absolutely right about rural pubs. However, the importance of the last pub on the council estates in many of our towns is often overlooked. The last pub has closed on many of those estates, and that has a huge impact on the facilities available for people to get together. Although I entirely support what he says about rural pubs, let us make sure that we do not forget the issue with regards to council estates.
Mr Deputy Speaker (Sir Lindsay Hoyle)
Order. Mr Perkins, if you want to speak, we are on a five-minute limit. I do not want to have to drop people down the list; I want everybody to have the same fair chance. If those who are speaking would take fewer interventions, it would help us all.
Mike Wood
I consider myself duly reprimanded, Mr Deputy Speaker. Suffice it to say that, once again, I strongly agree with the hon. Member for Chesterfield (Toby Perkins), as I have also seen the impact of derelict pubs of varying sizes standing monument within housing estates and town centres across the Black Country.
Stephanie Peacock
I congratulate the hon. Gentleman on securing this debate and on his powerful speech. The Black Bull pub in Barnsley East closed last year, and the 250-year-old building is due to be demolished. Does he share the sadness, and what does he think we can do to improve the situation?
Mike Wood
I share the sadness whenever a well-used pub closes for any reason, and there is a particular impact on the community when that pub is a heritage building in a town, city or village.
Last autumn, 116,000 people up and down the country signed the Long Live the Local campaign—many of them emailing their MPs. It was launched by Britain’s Beer Alliance, and quickly garnered public support from licensees, beer drinkers and many more groups. I know that the success of that petition due to everybody who united behind the campaign was pivotal in persuading the Treasury of the need for action to support beer and pubs. I am delighted that the Chancellor listened to those passionate calls and froze beer duty once again.
The beer and pub sector is vital to our country. Nearly 900,000 people up and down the United Kingdom rely on the industry for work; 43% are younger people aged 16 to 24, and more than half are women. Supporting the pub trade is a fantastic way to reduce youth unemployment and develop skills among young people. This House saw at first hand the impact of apprenticeships across the hospitality sector and the opportunities available, during the apprenticeship showcase in National Apprenticeship Week.
Mr Marcus Jones (Nuneaton) (Con)
My hon. Friend is making an extremely good point about the opportunities for people in the industry. Does he agree that this is one of those industries where someone can quite literally start behind the bar and end up as the chief executive or the chairman of quite a big company?
Mike Wood
My hon. Friend is spot on. When I was helping to judge the parliamentary pub chef and young pub chef of the year competition this time last year, we spoke to a number of people who were not yet in their mid-20s and were not only running their own kitchen but, in a number of cases, were now running multimillion-pound turnover businesses in their own right. There are very few other sectors where people can go into an industry at a young age with next to no start-up capital and have such opportunities for rapid career progression resulting in running their own business.
Brewing is also a true success for home-grown British manufacturing. A staggering 82% of all beer consumed in this country is made in this country, and we have over 1,800 breweries in the UK, 149 in the west midlands alone. In my own constituency, the sector accounts for 1,068 jobs, 315 of them held by people under 25. It contributes over £34 million in gross value added to the Treasury’s coffers, for which I am sure my hon. Friend the Minister is very grateful. Nationally, the sector adds nearly £23 billion to the UK economy and contributes almost £13 billion in taxation to the Treasury. Some of us would argue that that is a little disproportionate. One in three pounds spent in pubs goes straight into Treasury coffers, with an average of £140,000 for every pub in the country being raised for the taxman every year. I therefore strongly welcome the Chancellor’s announcement of a review of small brewer’s relief.
Peter Aldous (Waveney) (Con)
Small brewers such as St Peter’s in my constituency have a proven track record in exporting their beers all around the world. They could expand, open up new markets and create more jobs if export volumes were excluded from small brewer’s relief. Does my hon. Friend agree that the Treasury should consider this exclusion as part of their review of small brewer’s relief?
Mike Wood
I thank my hon. Friend for raising that point, which is one of those that needs to be considered. I understand the Treasury’s concerns about the risk of fraud, the ability to actually enforce it, and particularly, at the moment, legality under the current European duty framework.
Beer duty has divided this House in the past, but there is now a general agreement on all sides that it is already high and we certainly need to avoid rises. When the hated beer duty escalator was introduced by Gordon Brown, beer duty rose by a staggering 42%, while beer consumption in the UK fell by 16% overall and by nearly a quarter in our pubs. Almost 7,000 pubs called time for good, and more than 58,000 beer-dependent jobs were lost. This was a very expensive policy failure, and the price was paid by beer drinkers, publicans and employees alike. I am delighted that, as a country, we are now drinking more beer but also paying less tax on it as a proportion of the cost. However, the amount of this beer being sold in pubs continues to fall, and while the rate of pub closures has slowed, as I said, they are still closing at a disturbing rate.
Helen Whately (Faversham and Mid Kent) (Con)
I commend my hon. Friend on his speech. Pubs are very important in my constituency, where the brewery Shepherd Neame is the largest employer as well as the producer of excellent beer. I see colleagues nodding. Lower-alcohol beers are becoming increasingly popular, so does he agree that there may be a case for looking at the threshold at which brewers get duty relief for such beers?
Mike Wood
My hon. Friend is absolutely right. I know that my hon. Friend the Member for Waveney (Peter Aldous) would also agree, with St Peter’s being a major advocate of this argument as well. The European Union, within its beer duty framework, is in the process of changing those thresholds. I would hope that the Treasury, regardless of what form of Brexit we end up with, will make sure that, at the very least, we follow the mechanisms that are already in place, amending the threshold for low-alcohol beers to one where it is rather more viable for brewers to produce at that strength. Encouraging people to go down from over 4% to around 3% is better for their health, and if we can make sure that it is fiscally better for the brewer as well, then so much the better.
As CAMRA has made clear, one of the opportunities as we leave the European Union—we know from last night’s discussion that there is an element of disagreement as to what should happen next—is that we are able to take back control of our excise duty regime. This gives the Chancellor an opportunity to look afresh at how we tax beer in pubs, in particular—how we can use fiscal measures to help pubs to thrive, to support responsible drinking, and to redress the competitive disadvantage that our community pubs have as against, in particular, supermarkets that are able to stack drinks high, sell them below cost, and use them a loss-leader.
Mary Glindon (North Tyneside) (Lab)
Does the hon. Gentleman agree with Colin Shevills of Balance North East, who commissioned an independent survey of publicans, that it is cheap alcohol—cheap booze—in the supermarkets that is most dangerous to our pubs and causing more closures than alcohol duty?
Mike Wood
There is a range of factors. Beer duty is certainly part of it, but business rates are a massive factor in the pressures affecting our pubs. For these pubs to flourish, to remain the beating heart of our communities, and to continue to compete as businesses, they need the investment that comes, and is only possible, if the tax burden is kept at a sensible level.
Mike Wood
I really cannot—I ought to have finished by now.
The three duty cuts and two beer tax freezes that we have seen under successive Conservative Chancellors have secured thousands of pub jobs and hundreds of pubs. They have boosted confidence in our brewing and pub businesses, which have continued to invest in the sector. They have increased beer sales, boosting the Treasury’s total tax take from beer. This is a win-win situation, and I encourage the Minister and the Chancellor to win even more by giving us a fair deal on beer taxes. I ask the Minister to encourage the Chancellor to go further. Hard-pressed UK beer drinkers still pay 40% of all Europe’s beer duty despite drinking only 12% of the beer consumed. One could argue that 12% is possibly not yet enough. Crucially, seven in 10 alcoholic drinks sold in pubs are beer. By helping British beer, we are helping British manufacturing and also helping our community pubs. We have to address business rates. We need fundamental reform. The relief announced in the Budget last autumn was enormously helpful, with about 80% of pubs benefiting, but they are still hugely overtaxed. Despite only making up about 0.5% of total business turnover, our pubs represent nearly 3% of all business rate payments.
Beer and pubs are a great British success story. We can help them to prosper and to succeed if we can spare industry and consumers from the burden of high beer duty and unfair business rates, and use our duty framework to support our community pubs. I thank the Backbench Business Committee for finding the time for this debate, thank Members for supporting it, and look forward to the Minister’s response.
Several hon. Members rose—
Mr Deputy Speaker (Sir Lindsay Hoyle)
With a five- minute limit, I call Ruth Smeeth.
Ruth Smeeth (Stoke-on-Trent North) (Lab)
I congratulate my friend, the chairman of the APPG on beer, the hon. Member for Dudley South (Mike Wood). It is an honour to serve as his deputy and as the Labour lead in the House on the issue of beer.
I must declare an interest—not one in the register—in that I am the hon. Member for the Titanic brewery, the best small brewer in the United Kingdom.
Ruth Smeeth
I think I am going to be heckled throughout by my hon. Friend and neighbour.
Titanic has benefited hugely from small brewer’s relief, which I will touch on in a moment. First, I would like to put on record my thanks to Keith and Dave Bott not only for the support that I receive from them, but for the investment they have made in my community. They have ensured that small brewers have had a voice in this place, and others, for many years.
It is a pleasure to talk about a B-word that has nothing to do with Brexit. I think we can all agree that we have spent enough time on that for a little while. Instead, I would like to talk about the value of pubs to our society.
While the sector supports more than 1 million jobs in the country, and we heard various statistics from the hon. Member for Dudley South about it, we need to touch on the other things that the pub sector delivers, such as the impact on loneliness—especially providing somewhere for older gentlemen to go—and on our communities.
Martin Docherty-Hughes (West Dunbartonshire) (SNP)
Does the hon. Member recognise the importance of linking community pubs with craft breweries, such as Loch Lomond and Lennox breweries in my constituency, which reduces social isolation and consumption of alcohol at home?
Ruth Smeeth
There is a huge opportunity for us to debate the benefits of off-licence versus on-licence, the support that people get when they enter a pub and the responsibilities of the landlord. That is especially the case when we talk about loneliness.
Bob Stewart (Beckenham) (Con)
I was stirred to action by the hon. Lady, my good friend, using the words “older gentlemen”—I qualify, but I am not lonely. The way to keep the pubs in our communities alive is for people to visit them. If we get more people going to the pubs, they will live longer. That is very important—and, by the way, that includes me.
Ruth Smeeth
I thank my friend for his intervention. I think a pint of Steerage from the Titanic brewery will definitely help him live longer.
Pubs bring everyone together in the community. Whether it is fundraising for local charities, increasing awareness of illnesses or just everyone coming together on a Sunday evening, pubs are at the heart of our communities when other institutions are falling away.
Louise Haigh (Sheffield, Heeley) (Lab)
I congratulate my hon. Friend on making an excellent speech about the importance of the pubs at the heart of our communities. We are losing so many community pubs because of the terrible imbalance in our business rates regime. I am sure she will come on to it, but does she agree that this disparity—pubs pay 2.8% of the entire business rates bill but account for 0.5% of turnover, an overpayment of £500 million a year—desperately needs addressing?
Ruth Smeeth
I will touch on taxation in a moment.
I want to talk about the role of pubs in British culture and society, because they are a core part of who we are. People enjoy coming to the UK for tourism—an issue that we need to discuss even more as we head towards Brexit—and there is nothing more English or British than holding a pint. Tonight at the Sentinel business awards, which I cannot attend because of the debates in the House, everyone will toast their awards with a pint of local beer, because it is part of our community and our culture.
Ruth Smeeth
I am afraid that I have run out of time for interventions.
As my hon. Friend the Member for Sheffield, Heeley (Louise Haigh) said, there are some stark figures about the impact of taxation on the sector that we need to acknowledge. Amazon UK paid £4.5 million in corporation tax last year. Black Sheep brewery, chaired by the wonderful Andy Slee, a Stoke-on-Trent constituent, paid £8 million in beer duty. Amazon UK has a turnover of £1.98 billion. Black Sheep brewery has a turnover of £19 million. Minister, there is an issue here. In 2016, eBay UK paid £1.6 million in corporation tax. Titanic brewery paid 25% of its turnover to HMRC—£2 million.
On the disparity in business rates, following the rate revaluation last year, Titanic brewery pubs’ rateable value went up by 20% across Staffordshire. The Amazon warehouse in Stoke-on-Trent fell by 10% in rateable value. There is a disparity, and it is simply not fair for online and offline businesses. Breweries and pubs cannot move off the high street, nor would we want them to.
Small business rate relief has been touched on, but I am going to run out of time. All I can ask the Minister at this point is to look at the requests made by the Society of Independent Brewers about the impact of the changes. We are at a cliff edge, and unless this is smoothed out, investment to enable smaller brewers to reach the next level will stop. I reiterate my invitation to the Minister earlier this year to come and have a pint with me at Titanic brewery at his earliest convenience.
Mr Nigel Evans (Ribble Valley) (Con)
I declare an interest, as president of the all-party parliamentary beer group. It is great to follow the hon. Member for Stoke-on-Trent North (Ruth Smeeth). I do not think she heard, but when she told us that she was the MP for the Titanic brewery, I shouted, “I suspect she’s sunk a few of those.” I know I have.
Mr Deputy Speaker (Sir Lindsay Hoyle)
It was not a good joke the first time you said it.
Mr Evans
As you know, Mr Deputy Speaker, I live next door to a pub; there cannot be much more commitment than that. At times, I feel that I should pay my council tax for the pub rather than the house I live in. I celebrated my 50th birthday in that pub, and I welcomed you and your wife Catherine to the pub. Only a few weeks ago I was at the superb Caledonian brewery in Edinburgh and sunk a few of its pints while celebrating Wales on their march to the grand slam.
It is great to have a debate in this place where we are all coming together, rather than knocking six bells out of one another. The pub is such an important focal point for people. I live in a rural village, and it is great when people can get together. Pubs do so much to raise funds for numerous charities, and they are a place for sporting groups—whether it is darts teams or football teams—to come together.
Mary Robinson
I am grateful to my hon. Friend for giving way and to him and his colleagues for securing this debate about beer taxation and pubs. The wider aspect of this is pubs as a community hub. It is Mother’s Day on Sunday. Our pubs will be full of people celebrating, dining and drinking and having a great time. Does he agree that the loss of these pubs would be a real detriment to our society?
Mr Evans
Absolutely. I hope that many people will be taking their mums out to pubs in their communities to thank them for being their mums; we do not need any other excuse than that. We hardly pass a pub these days that does not have a board outside informing people that Mother’s Day is coming up and they should book early to avoid disappointment. There are so many occasions when one can go to a pub and celebrate. In fact, any day with a “y” in it will do, as far as I am concerned.
Pubs bring people together. The best way to see that is to go to a village where the only pub has closed. It tears the heart out of that village. I know the pressures that pubs are facing, whether due to business rates, which are crippling some small pubs, environmental standards—it is right that they have to meet those—or investment in new fridges.
Pubs generate a lot of economic activity, and not just through the sale of beer, which is a fantastic product. They provide jobs in rural areas where jobs can be scarce. In particular, they provide badly needed extra income for younger people who are perhaps at college and can be flexible with their time.
Dr David Drew (Stroud) (Lab/Co-op)
The hon. Gentleman is making a wonderful speech, as I knew he would on this topic, which he knows only too well. Has he considered communities that have gone even further and bought their pub? The community-owned pub is now a really important part of some villages. I congratulate the Plunkett Foundation, which does an awful lot of work to tell communities how they can buy their own pub.
Mr Evans
Yes. At times, there must be immense pressure for pubs that have closed to be turned into a block of flats, because there is a lot of money in housing, but there is an opportunity for them to be turned into a community pub, if the community come together to raise money and keep it going. There are countless examples of those throughout the country, and it means that the community still have a focal point where they can come together. I hope that more publicity will be given to those opportunities.
I have three breweries of different sizes in my patch: InBev, which makes Stella Artois, Thwaites brewery, which was moved from Blackburn into the Ribble Valley, is much smaller but is the famous brewery with the shire horses—there is a lot of corporate responsibility within that company—and Holmes Mill, which brews the great Bowland beers in the heart of the Ribble Valley.
Bob Stewart
My hon. Friend speaks with forked tongue. I have been to the pub beside his house with him twice or three times, and it is a wonderful pub, but when we go next door he always leaves behind the lady who lives in his house. She is called Alexa. He has never taken her.
Mr Evans
I am not mentioning Alexa.
It is a great pub—it was actually the CAMRA pub of the year in 2013—but I have other pubs such as the Freemasons at Wiswell and the Parkers Arms in Newton. A lot of pubs rely on offering food as well. The hon. Member for Ealing Central and Acton (Dr Huq) mentioned that she does not drink, but people do not have to drink alcohol to go to these places because there is so much more on offer.
Mention has been made of taxation on beer, which is huge. At £13 billion, it is massive. Almost 1 million jobs are provided by the industry. We need to look at ways of lowering that taxation. There is something wrong when taxation goes up, people drink less and less money actually goes to the Inland Revenue. There should be a common-sense approach to lower taxation, increase sales and ensure that HMRC gets more money out of that.
Taxation is high if the alcohol by volume rate is high; it drops only at below 2.8%. We need to look at ways of increasing the rate to 3.5%. It would encourage more people to drink lower strength alcohol and have a great time; it would incentivise them to do that. It is worrying when a lot people drink high ABVs—5%-plus. Drinking a pint of beer is good for one’s health, but drinking too much beer with a higher ABV is not.
Tomorrow night, I was due to be in a pub celebrating a big event, but that big event is not happening; it is being deferred. All I can say is that, on 22 May, I hope to be saying, “Cheers, Brexit!”
Liz McInnes (Heywood and Middleton) (Lab)
I am pleased to be able to make a contribution to this very important debate, and to follow the hon. Member for Ribble Valley (Mr Evans), and I thank the hon. Member for Dudley South (Mike Wood) for securing it.
I am particularly interested in this subject for several reasons, including as a constituency MP with a medium- sized family-run brewery in my constituency, J. W. Lees —John Willie Lees—which provides employment for about 1,100 people, owns 140 pubs across the north-west and north Wales, and is a major contributor to our local economy. My interest is also as the daughter of a landlady. My mother ran the Owain Glyndwr pub in Corwen, north Wales, during the 1980s, and then she was allowed to return home to the Duke of York in Heyside, Oldham—they were both John Willie Lees pubs —where I spent many hours, most of them happy, helping out with bar work in the evenings and at weekends.
Giles Watling (Clacton) (Con)
I thank the hon. Lady for giving way because she has just reminded me of something. I have been to the Owain Glyndwr pub in Corwen, when I was working at Theatr Clywd over the way. As an actor who toured the country for the best part of 50 years—I probably visited everybody’s constituency, apart perhaps from that of the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone)—I have visited many taverns in many towns and, much to my wife’s surprise, people know me by name. The tragedy is to revisit a place—as we know, at one period some 50 pubs a week were closing—and find that the heart of the community has been torn out because the pub has closed. In Kirby-le-Soken in my own constituency, two of the pubs closed, but they have now reopened. Should we not celebrate the fact that some publicans are being innovative and creating new business, and we should support them through taxation?
Liz McInnes
The hon. Gentleman is absolutely right that a lot of publicans are having to be innovative in the way they run their pubs to keep them open. I do not know when he visited the Owain Glyndwr, but if it was in the 1980s, I may well have served him.
Liz McInnes
Then it could well have been me who poured his pint.
As the hon. Gentleman has just said, pubs are at the heart of our communities. For me, there is no greater pleasure than going down to my local on a Sunday evening—I try to make it my night off from politics—fending off all the queries about Brexit and what on earth we are all doing in this place, as well as providing a sympathetic ear for the landlord’s often expressed concerns about business rates and the future of his pub.
The facts are simple: pubs are closing at a rate of two to three per day. Our high streets are already struggling from the effects of bank branch closures, post office closures and the rise of online shopping. This is just piling on the problems in the face, I am afraid, of this Government’s increasingly incoherent policy on the future of our high streets. Pubs are being taxed left, right and centre with duty, business rates and employment taxes, as well as full VAT at 20%, while people are shopping online, staying at home and not coming out to socialise with others. This is not good for society, and a healthy pub is the heartbeat of its community.
The Campaign for Real Ale is calling for a fundamental review of the tax system to stem the tide of pub closures. CAMRA welcomes the Government’s business rate relief introduced in the 2017 Budget, but has said recently—just this month—that more action is needed to ensure the survival of the remaining 50,000 pubs. I am pleased that the Treasury is reviewing small brewer’s relief, which hon. Members have already mentioned. I look forward to hearing the results of the consultation, which closed on 17 March.
While small brewer’s relief has been helpful in the start-up of many new micro-breweries, it has also meant a reduction of one third of brewers, such as John Willie Lees in my constituency, which are squeezed between the large international brewers, with huge economies of scale, and the smaller brewers that benefit from a beneficial duty rate. As has already been mentioned, business rates do not help, and many pubs are closing because of high costs.
John Grogan (Keighley) (Lab)
Does my hon. Friend think it would be good if the micro-brewers agreed with the family brewers a proposal for a new structure of duty relief that would have weight with the Treasury? SIBA was in contact with family brewers last year, but the talks broke down. Does she agree that if the industry could agree a scheme, that would have considerable weight?
Liz McInnes
I think that is a very sensible suggestion, and I hope my hon. Friend has fed it into the consultation. As I have said, I am looking forward to hearing the results of the consultation. I do not want to set up the small brewers against the medium-sized brewers, but I think we need to find a solution to this issue.
We have heard already from CAMRA and the British Beer and Pub Association that for every £3 spent in the pub, £1 goes straight to the taxman. The beer duty freezes in 2017 and 2018 were a welcome measure, after the damaging 3.9% increase in March 2017, but British beer remains overtaxed. Britons pay nearly 40% of all the beer duty paid in EU nations, but we consume only 12% of the beer. The beer duty rate in Germany is 12 times lower than the UK rate. A modest cut in beer duty in the next Budget would create thousands of additional jobs and help to ensure the sustainable future of our surviving pubs. This has been supported by the over 115,000 people who have signed up to the recent Long Live the Local campaign.
Finally, I want to finish with a point that was also made by the hon. Member for Ribble Valley. If the Government were to increase the threshold for lower strength beer to qualify for duty relief from 2.8% to 3.5%, this would stimulate further investment in lower alcohol products and increase the range of low and no-alcohol alternatives available to encourage the healthy social drinking that our pubs—our community hearts—so desperately need.
Mrs Anne Main (St Albans) (Con)
It is a pleasure to follow the hon. Member for Heywood and Middleton (Liz McInnes). This debate has been very good humoured, and it is a pleasure to take part—I’m fed up with this place at the moment! Beer duty has been mentioned, and I should declare an interest: the headquarters of the Campaign for Real Ale, which is in the forefront of the campaign on beer duty, is in my constituency. However, I want to focus on pub business rates.
Generally speaking, people do not go to the pub to get drunk these days. There are so many other things: some pubs run mini-libraries or toy libraries, while others run campaigns to support local people in need or help charities. Some hold darts matches. They are a focal point for many people who have nowhere else to go to meet friends and can be a place for celebrations with relatives as well. A pub is so much more than just the price of the liquid in the glass, and we really have to get that over. That is why I want to focus on the premises in which the liquid is served. A reduction in beer duty would be good, but as a wine drinker I want to focus on how we keep pubs in business so that we all have somewhere to go.
I took part in the previous, very well attended, debate on this issue in Westminster Hall. I am trying to get a meeting with the Financial Secretary to the Treasury to raise this important issue and some of my constituency’s pubs and landlords have come to meet my hon. Friend the Exchequer Secretary to the Treasury, who is on the Front Bench now. But the reality is that those people do not feel that there is a real awareness that the much welcomed reduction in business rates will not reach all the parts that other beers cannot reach. In my constituency, the reduction reaches a mere 50% of the pubs, on average. Many of the pubs have contacted me about a massive hike in business rates; they have to cut staff or close their businesses altogether. That cannot be the message that the Government intended to send out.
Mr Jim Cunningham (Coventry South) (Lab)
This, of course, is not the first time we have had a debate about pubs; we have had them for years, although we never seem to make much progress when it comes to their taxation. The other affected area is the working men’s clubs, a lot of which are now dying out. It is important that the Treasury has a good look at the situation to see whether it can help pubs. At the end of the day, pubs are a catalyst for the community. The hon. Lady is on the right track.
Mrs Main
I am pleased that the hon. Gentleman mentioned the community aspect in his valuable intervention. Some pubs threatened with closure are taken on as community assets, but it is incredibly hard to make the business case, given how business rates are. No matter how willing the community is, there are only so many pints of beer that anyone can drink to help provide the income it needs, unless we want to encourage people to be blotto night and day. We have to ask whether the business model is workable, and for many pubs it just is not.
The cut of 33% in rates for businesses with a rateable value of under £51,000 was a major step, but in areas such as St Albans it is not having an impact. Areas with high property values such as St Albans are almost totally overlooked. Many people have mentioned heritage and beautiful buildings: pubs in my area are under a huge threat of being turned into domestic properties. That is a real worry. They are struggling at the cliff edge, and we have to address the issue now.
The 2017 business rates formula for pubs uses a methodology for setting the rateable value based on fair maintainable trade. Nobody seems to understand how that works. The rateable value is driven mainly by the pub’s turnover and it takes into account property valuations. That means that even small pubs in St Albans are having huge hikes in business rates because they happen to be settled among much higher-value domestic properties. The formula does not take that into account, so it penalises small business operators.
The hon. Member for Keighley (John Grogan) mentioned micro-breweries: the formula also penalises the independents, which is a real problem. We may lose some of the quirky pubs on our high streets that offer that level of interest and difference and prove a huge pull for tourists who come into areas such as St Albans and appreciate pubs such as The Boot and Ye Olde Fighting Cocks, many of which have historic backgrounds and architecture to match. That means that it is difficult to expand or increase footfall, because they are extremely small.
Save UK Pubs has compiled a useful document outlining the increases that pubs face. I have given it to the Minister before, but I will send it to him again in case he has lost it. The Boot, which I have just mentioned, is an absolutely tiny heritage pub—some people have bigger sitting rooms. People there reckon they would have to sell an additional 22,000 pints to cover the additional £51,000 in business rates that they now have to pay—a 280% increase. That is unsustainable.
If the Chancellor came up with the model, he certainly was not looking at St Albans when he did. Christo Tofalli of Ye Olde Fighting Cocks told me that unless there is proper reform of the relevant taxes, licensing laws and duty costs, his pub will be finished. He bought this beautiful, historic pub; people can work out from its name that it goes back a long time. Bringing it back to life has cost him a huge amount of personal investment. Having pulled it back from despair, he expects people in this House to get how important a pub is. It is not necessarily a drinking outlet—there are plenty of those. A pub is family to some people and part of the community to many people. Once it has been turned into a posh house, as happens in my constituency, it will never come back. I put in a plea for the Minister not to hide behind all the different things that have been done. It is not enough, and we need to look at the situation again.
Toby Perkins (Chesterfield) (Lab)
It is a great pleasure to follow the hon. Member for St Albans (Mrs Main), who called at the end of her speech for more to be done to support our pubs—the theme of this entire debate.
Pubs are absolutely crucial to our communities and certainly to my constituency. Chesterfield has 105 pubs, and 1,419 people there rely on beer and pubs for their employment. In Chesterfield alone, £15 million goes into the local economy through wages paid to people who work in our pubs. Alongside the economic value that pubs provide—we have talked about the huge tax contribution that they make—pubs also make an incredibly important social contribution. As we have heard from other hon. Members, when a pub closes on an estate there is no longer a focal point for the community.
What is the first thing that comes to mind when we think about soap operas? We think of The Rovers Return or the Queen Vic, which are the hub of their communities. When people visit our country, the first thing they want to do is visit the local and have a pint of British ale. We cannot overestimate the incredibly important role that pubs play in our social fabric.
Alex Sobel (Leeds North West) (Lab/Co-op)
My hon. Friend is making a wonderful speech. In the market town of Otley in my constituency, there are two grade II listed pubs—the Black Bull Inn and The White Swan, operated by Star Pubs & Bars. It has ruined the heritage of those pubs. Does my hon. Friend agree that that goes against the heritage and tourism that we need to engender? Should we not have more local powers to ensure that that sort of thing cannot happen to grade II listed heritage pubs?
Toby Perkins
I certainly feel strongly that the owner or landlord of a pub is its custodian for the local community. Pubs valued by a community have often been lost as a result of the irresponsibility or inadequacy of the people who have run them. When pubs close, that has a huge impact on the local community. Sometimes, we have got too bogged down with the numbers; where pubs close is also important. We have heard about the importance of rural pubs, and I mentioned previously the importance of pubs on the local estate.
The Brampton Mile is a famous area in Chesterfield with 17 pubs within a single mile. Some have attempted to visit them all in a single night—I cannot entirely remember how it ended, but it started well. When a pub closes in an area with a huge number of pubs, the impact may not be the same, but when there is only one pub in an area, it is incredibly important, and we feel strongly about that. Some 243 people in Chesterfield signed the “Long Live the Local” petition.
Here in Parliament, we recognise how important pubs are. The hon. Member for Dudley South (Mike Wood) who started the debate, is chair of the all-party parliamentary beer group. I am chair of the all-party parliamentary pubs group. This year, we held the first ever parliamentary pub of the year competition. I was delighted that so many MPs entered. There was a fantastic array of entries. My own entry, the Chesterfield Arms in Chesterfield, was a finalist, but was ultimately defeated by the Four Elms pub in Cardiff, Central. It was an event in which we came together and celebrated the role that pubs play in our communities.
There are always claims that if the Government only taxed businesses less, the pubs would do better. As a former shadow Business Minister I recognise the extent to which such calls are heard. The Government were elected in 2015 on a manifesto that promised a fundamental review of business rates. I appreciate that that commitment disappeared from the 2017 manifesto, but the Government have not considered themselves to be held to many items in that manifesto. The system of business rates disincentivises investment, whether in pubs, manufacturing or retail. When people make their premises better they pay a higher tax bill, which flies in the face of the sort of investment that we all want to see. I would love the Government to put less focus on reducing corporation tax at the expense of business rates. Corporation tax is businesses paying tax on profits that they have made, whereas business rates are a tax on owning a property. At a time when pubs and so many retail units are closing, the taxation policy achieves the opposite of what the Government intend.
If I had more time, I would talk about the pubs code, and I look forward to the review that the Under-Secretary of State for Business, Energy and Industrial Strategy, the hon. Member for Rochester and Strood (Kelly Tolhurst), is undertaking. Pubs are crucial to our communities, and I am delighted that this debate has taken place. May we all continue to trumpet that crucial role.
Bill Grant (Ayr, Carrick and Cumnock) (Con)
It is a pleasure to follow the hon. Member for Chesterfield (Toby Perkins). As a nation we need to have a balanced approach to the provision of alcoholic drinks, their sale, their taxation and the licensing of pubs. I will take this opportunity to make a cautionary remark: it is well publicised that there are proven consumption levels that should not be exceeded in order to minimise the risks to our health. The key is to enjoy drink in moderation and, best of all, in the local pub.
Our pubs provide a social meeting place, encouraging people to meet and converse with others in convivial surroundings. The majority of pubs in Scotland are convivial— although some may not be—and an important part of our infrastructure. In the United Kingdom, pubs and drinks producers are also major employers, with approximately 900,000 employees. Many of those businesses—and of course the consumer—will benefit from the rates discount of one third for small retailers in England and Wales from April 2019, and in Scotland we have had the small business bonus for a number of years, which has been of great assistance, but neither scheme goes far enough to assist pubs. Another good thing is the freezing of beer, cider and spirits duty for yet another year—I thank the Chancellor very much for that.
I have previously expressed my support for the freeze on duty, given my constituency includes Grants of Girvan, producing whisky and Hendricks gin, Caledonian Bottlers in Cumnock, and the small Ayr Brewing Company, which produces excellent real ales consumed and enjoyed by many.
Even though we are discussing beer, it would be remiss of me not to mention the Scottish whisky industry, which remains a great British success story. Exports are worth some £4 billion per annum, comprising almost a fifth of the UK’s food and drink exports. Duties on alcoholic drinks are forecast to raise £12.3 billion in 2018-19. Surely the Chancellor has a bit of wiggle room for some kindness towards the pub trade.
Luke Graham (Ochil and South Perthshire) (Con)
My hon. Friend makes a good point about the whisky industry which the Government have supported so well by freezing the duty for the last two years. For a constituency such as mine, which has Diageo, Strathearn distillery and others, that provides vital support, domestically and with exports. Does he agree that our pubs supply not only great drinks but fantastic food, like the Kirkstyle Inn in Dunning in my constituency? That food can bring families in and, combined with local music, can make the pub the heart of the community.
Bill Grant
I completely agree, and pubs are great outlets for locally grown produce which we can be very proud of in the UK, in particular in Scotland.
As with all good news, there is a negative. One of our local businesses raised concerns with me recently about post duty point dilution and the proposed ban on this. I am aware that it will hit some businesses hard and cost them dearly to maintain their standards, only to fund the Exchequer, where their methods involve this practice. I ask the Minister to consider whether any flexibility can be applied when the legislation is drafted this year.
Sadly, pubs are still closing. In the village of Patna in my constituency, we have gone from four pubs to one over the last 15 years, in Drongan from three to one and in Rankinston, the village of my birth, we have had no pub for many years. We have seen the sad demise of these much loved institutions. Indeed, in the last decade almost a quarter of UK pubs have closed. However, it is not all bad news—in Cumnock, the 1906 Bar in the square has just been refurbished and reopened as an excellent eatery and pub. The Kirkton Inn in Dalrymple—you may know it, Madam Deputy Speaker—has recently been purchased and refurbished. The owners have breathed life back into and it is now an excellent pub and eatery. I wish individuals behind those business ventures every success.
There are many reasons for pub closures, including lifestyle choices, supermarket prices and ease of purchase from convenience stores. Despite the temptation of the aforementioned, I very much enjoy supporting my local pubs, but I cannot be the saviour of every pub—we all need to participate. If we want them, we have to use them, although as always the beer should be consumed in moderation.
The issue of business rates comes up constantly, and I have been approached by bar owners and publicans in my constituency who are concerned by the cost, despite the small business bonus scheme. They face long delays when they appeal their rates, and they find it very hard. CAMRA has long campaigned to reduce the rates for pubs. How often can we repeatedly punish these wee facilities in rural communities and towns and treat them as a cash cow for taxation? We need to take a serious look at the issue.
Communities still value their local pubs and eateries as part of the social fabric of towns and villages. I recognise the work the Government have undertaken recently, but I urge the Minister to continue to recognise the value of pubs, the employment they create and the safe, supervised environment they provide for the consumption of alcohol and engaging with others. We cannot afford to lose many more and it is vital that the value of pubs to the local community is reflected in the taxation applied.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
I congratulate the hon. Member for Dudley South (Mike Wood), my near neighbour, on securing this debate. He mentioned Baynhams beer, of which I am a regular consumer and supporter, and Ma Pardoes pub, where I am a regular visitor. In fairness to all the other Black Country beers and drinking places, I must say that it is a fantastic area for anyone who loves their beer. The sheer range of craft and real ales there is phenomenal.
I particularly welcome the debate because it is framed in the context of the taxation regime for pubs. We need a change in that regime, but that alone will not protect our pubs and their heritage unless it is allied with a change in the supervisory and regulatory relationship between pub tenants and pub-owning businesses.
Let me touch first on the tax regime, although Members have covered most of this. There is obviously a case for looking at alcohol duties. The fact that high-alcohol beers and ciders are taxed at hugely different rates is in itself a reason for looking at them. The fact that high-alcohol spirits are taxed at a lower rate is another reason for looking at them. Ultimately, it is the job of the Treasury to have a comprehensive review of these duties. That should be designed first to promote social drinking, secondly to sustain pubs and lastly to sustain Exchequer revenues.
Ruth Smeeth
My hon. Friend has touched on the fact that there are differential duties. Does he agree that it is ludicrous that there is still, in effect, a subsidy for cider producers whose products contain high levels of alcohol, when that is not the case for beer? There needs to be a level playing field across the sector.
Mr Bailey
I agree with my hon. Friend. Given the increased consumption of cider and the increased tax revenues from it, I would have thought there was a case for looking at the relative taxation levels of the two drinks.
Business rates have been mentioned. I will not go over the details, but we have a ludicrous situation whereby someone who invests in their business and increases their turnover often gets a huge increase in their business rates as well. One example given to me involved somebody who took over a pub that had traded at £200,000. He raised that to £700,000 but then found that his business rates had gone from £8,400 to £37,000. He did get that reduced to £24,000, but the mere fact that he had such a big increase and that it was then revised would seem to demonstrate that the process for evaluating business rates is deeply flawed. I recognise the Government’s attempts to do something about that, but we really need a comprehensive review of business rates so that they are geared in such a way as to promote and reward investment rather than penalise it.
Mrs Main
The hon. Gentleman is absolutely right. I have had similar experiences, with pubs putting in the investment and then finding themselves penalised. However, they say that when they put in a challenge, it takes a long time and it is difficult to get an explanation as to why the final figure is arrived at. There is not the transparency over the rateable system that there should be.
Mr Bailey
I totally agree. The process is opaque and would often appear to be perverse as well. There is a big case not only for revising it but for making it far more transparent so that anybody investing in their business can get a clear idea of what the potential financial penalty—if that is the word—would be on their investment.
I want briefly to touch on the pubs code and the Pubs Code Adjudicator, which my hon. Friend the Member for Chesterfield (Toby Perkins) mentioned. I am the former Chair of the Business, Innovation and Skills Committee, and a member of its predecessor Committees, and we examined time and time again the relative balance in power between the pub tenant and the pub owner, as well as the relatively low level of income that tenants running even the most successful pubs obtained from all their efforts, relative to the revenues accrued by the pub-owning business.
The pubs code was agreed by the Secretary of State for Business, Innovation and Skills in the previous coalition Government, and I give him credit for that. A Pubs Code Adjudicator was appointed to adjudicate and to try to ensure that there was a fair balance of risk and reward between the two parties. It is fair to say that the appointment of Paul Newby was controversial, and a lot of concerns were raised. On the basis of the evidence we are getting back from tenants, those concerns were well founded. The changes do not seem to have affected the rate of pub closures whatsoever; indeed, the number of tenants who are still finding that the reward they get from all their efforts is totally inadequate does not seem to have changed either.
I welcome the fact that the Government are about to undertake a review of the working of the code and the adjudication. The essential thing is for the Pubs Code Adjudicator to act as an adjudicator and not just to enable negotiation between the pubco and the tenant, which actually reinforces the imbalance of power between the two. All too often, pub tenants find themselves negotiating against not only the pub company but their solicitors as well, and they are not in a position to have equivalent legal advice.
I conclude by saying that saving the pub involves two things: a radical transformation in taxation, but also the reinforcement of the legal protections for the pub tenant against the pub-owning business.
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
I thank the hon. Member for Dudley South (Mike Wood) for bringing this debate before us. As other Members have said, this is light relief compared with the dark place we have been in for far too long—let me put it that way.
Many of the points I would have made have already been made, so I will crave your indulgence, Madam Deputy Speaker, and tell a little anecdote from the past. As some Members know, prior to appearing rather unexpectedly in this place, I was much involved in amateur dramatics and the local pantomime group—I have, indeed, been the dame in my time. On a Thursday night—to go back to the halcyon days of pubs—we would repair to a particularly famous old pub in my home town. At 11 o’clock, the barman, Sandy, would say, “Well, well, boys and girls, I think we will need to lock the door.” He would shut the massive, great door, turn the key and then carry on pulling the pints. One Thursday, I turned to a new member of the cast beside me at the bar and said, “Goodness me, do you think the bobbies might come knocking on the door tonight?” He laughed and said, “Ha, I’m an off-duty police sergeant,” which caused a slight reaction around the bar. Then, a voice further down the bar said, “That’s nothing. I’m an honorary sheriff’s substitute.” They were lax days, but I just wanted to tell Members that anecdote.
There are two points I want to pick up on in my brief contribution. The hon. Member for Stoke-on-Trent North (Ruth Smeeth) made the point that publicans and their staff are trained, and they know the danger signs when somebody is drinking too much. As often as not, they will refuse to serve them, or they will get them into a taxi and get them out of the place. How much better is that, as she said, than having some lonely bloke drinking himself into a stupor at home on cheap White Lightning or cheap wine? We all know that far too many household fires are caused by somebody being blootered in their seat and dropping a fag down the back of the settee or whatever. There is therefore a safety aspect to this.
If someone goes on holiday to Spain, Italy, or wherever, if they are like me, fairly quickly they think, “I’ll pop down the village”. It is a hot day, there is a place with nice wee tables outside, and they have a pint of lager. Let us switch that the other way round. Visitors come to the highlands of Scotland and find no pubs—are you kidding? Tourism is crucial to the highlands, and the one industry that is fundamentally sustainable in the long term. If there are no pubs, the visitor experience will be much impoverished, to say the least, and the bad news is that the next year, people will think, “Perhaps I’ll not go there again”. Pubs have a far wider role than has yet been touched on in this debate, and I echo all that has been said about pubs being part of the social fabric of our communities.
Bob Stewart
The Jolly Woodman in Chancery Lane in my constituency is the nearest pub to my house, and it provides quality real ale. People come from miles around to visit that pub, and that is the sort of reaction we want to pubs in our areas.
Jamie Stone
I could not agree more, and I hope that one day the hon. Gentleman will take me to that splendid place and introduce me to the delights of that nectar.
I have said enough. As soon as I have the opportunity, I shall invite the hon. Member for Clacton (Giles Watling)—he is not in his place at the moment—to my constituency, and introduce him to its local delights, of which there are many. I hope there will carry on being many, because if we lost them it would be a tragedy.
Hugh Gaffney (Coatbridge, Chryston and Bellshill) (Lab)
I thank the hon. Member for Dudley South (Mike Wood) for securing this debate, and I congratulate my local Coatbridge brewery, the Veterans, on its successful launch on Armistice Day 2014. It was built by ex-servicemen, and I visited it recently.
Many years ago, I worked in the pub trade for 10 years as a barperson and landlord, and it was the most enjoyable job. I wish to thank my local, the Windmill Tavern in Tannochside, because it was the customers who made my job so happy. I also thank Gates Bar in Bellshill, where I worked part-time. We had many debate nights when we would be pulling pints and talking politics—multi-tasking.
In those days the pubs were busy. Day and night people were out socialising and enjoying a pie and a pint. Changed days—30 years later we have empty pubs and landlords who struggle to compete with the off-sale market given the price of a pint and the price of socialising. Sadly, although we still love our local pubs, I have also seen a change in the hotel and catering trade. Staff wages are low and zero-hours contracts are used and abused. What really annoys me is when staff tips are taxed, and in most cases managed poorly. In conclusion—in the tradition of last orders—can we look at beer taxation, eradicate zero-hours contracts, and stop taxing the tips?
Jim Shannon (Strangford) (DUP)
I did not expect the last two speeches to finish that quickly, but I am sure I do not qualify for the extra time. If I could I would use that time, Madam Deputy Speaker, but I accept that you would not let me under your rules.
I commend the hon. Member for Dudley South (Mike Wood) for so ably setting the scene and being generous with interventions, and I thank the Backbench Business Committee for selecting this debate. From the fore I wish to be clear that I am aware of this House’s duty to encourage people to drink sensibly, and our policies, taxation, and legislation must carry a message that a sensible balance must be achieved by those who choose to drink alcohol. For that reason I, along with other Members, oppose supermarket cheap deals on alcohol—the hon. Member for North Tyneside (Mary Glindon) referred to that, as have others—because that is clearly a contributory factor to those who have problems with alcohol. Some people buy too much and then imbibe too much. They end up in A&E, and with broken families due to their abuse of alcohol.
I fully support my local pubs, and I want to ensure they have that support in every corner. They have contributed a lot to the local economy in Northern Ireland. With local pubs it is clear—either use it, or lose it—and we cannot continue with the losses that we have unfortunately experienced over the years. I also understand the benefits of drinking in a pub that is a safe, local environment. As others have said, that might include someone who is able to reach over, take someone’s keys and call them a taxi, or an Uber, which is what young people use today, or someone who says, “Okay Billy, or Pat, that’s enough for tonight”, as opposed to them drinking in the home where there is no limit to what can be consumed. I believe that most pubs encourage responsible drinking, which is why I am in favour of this motion.
When we consider the pub industry in Northern Ireland, the figures are clear. We have around 1,216 pubs in Northern Ireland, and the pub and beer sector alone contributes £390 million in gross value added to the economy. It sustains more than 16,000 jobs and £200 million in wages, and the total tax contribution is around £260 million annually—that is some contribution.
There is little doubt that the industry makes a key contribution to the supply chain in Northern Ireland, generating additional value, jobs and wages for the economy. The sector has been in a precarious trading position over the past few years, as demonstrated by the instability of its gross value added performance over time. That is also reflected in the fact that Northern Ireland’s pub sector is the only one in the 12 UK regions to have experienced negative capital expenditure in 2016. That cannot be ignored. It contributes three times more in business rates than its profitability in the economy. The business rating approach to pubs in Northern Ireland is based on old case law that determined that pubs were more profitable than other businesses. Valuation is therefore based on an archaic law that no longer has any basis.
I can well understand the argument that, as things stand, the sector is paying too much relative to its contribution to the economy. We can demonstrate clearly that it is certainly not more profitable than other businesses. The difference between Northern Ireland and the rest of the mainland is clear. The sector contributes 2% to non-public rates in Northern Ireland, but accounts for just 0.7% of the profitability of the local business economy. Northern Irish pubs account for just 1.6% of UK pub sector GVA, but pubs contribute 2.5% to UK business rates and 2.5% to the overall direct tax burden for the sector across the UK. It would seem to me that this is an overtaxed business area as it is, and that does not take into account the fact that, with people finding it more and more difficult to make ends meet, pub beer can be swapped for home beer. The mentality of “I can drink more if I drink at home” is not what we seek to endorse. We are trying to make sure that people stay in the pub.
I am not in favour of a cut to alcohol taxes per se, but I do believe that a cut targeted specifically at our pubs, bars, hotels and restaurants should be considered, as the social benefit would surely outstrip the initial duty cut cost. The industry is struggling, and my fear is that more local pubs will close. It is important that we do not encourage youngsters to chance their arm at supermarket self-service so that they never experience the safety measures that come with drinking in a local pub, where the tap stops, the keys are removed and there is no trouble. I fear for a generation who will only experience alcohol as a means to get wasted and not as a social event. I believe that pubs have a role to play, and we need to ensure that they can continue to trade and to step into people’s lives—and possibly even save lives. This is about social interaction and drinking sensibly. It is about having pubs in our areas.
Kirsty Blackman (Aberdeen North) (SNP)
It is a pleasure to take part in this debate. I congratulate the hon. Member for Dudley South (Mike Wood) and other Members on ensuring that this debate took place. I thank the Backbench Business Committee and all those who have contributed to what has been a very good-humoured debate with very little disagreement. We need to support our local pubs, and we need appropriate taxation regimes that ensure, in particular, that responsible drinking can take place.
I want to talk about a few issues in relation to Scotland and make some wider points on tax. In Scotland, we pioneered minimum alcohol pricing. It mostly affects cheap supermarket alcohol and ensures that, for example, incredibly cheap high-alcohol-content ciders that are sold in supermarkets have to be sold at a higher price. That, however, is not what we would in an independent Scotland. In an independent Scotland, we would be looking for a comprehensive review of alcohol taxation overall. In fact, we asked the Government to do that, and we moved such a provision in a previous Finance Bill. We can only look at individual elements of alcohol taxation for a few years before an overall review is needed. We think that that review should be based on the amount of alcohol in each drink, and that taxation should therefore be levied on an appropriate basis.
I know that this debate is about beer and the taxation of pubs, but in pubs 42% of alcohol sold by value is wines and spirits, so it is important that that is considered in any decisions made. Given that women consume three times as much wine as beer, it is important to consider wine in this context and not just beer. As someone who likes a pint rather than a glass of wine I am on the other side of this argument, but I understand that an awful lot of people are concerned about wine taxation.
On post duty point dilution, which has been mentioned by a number of Members, I am pleased the Government are bringing forward a review. I have been approached by constituents who are keen to see a change. It would be useful if the Minister, in his summing up, could let us know what is happening with the timescale for that. I am not clear about the timescale going forward, although the Government may have talked about it in the past.
I think there are three different reasons for taxation in general: to generate revenue for the Government; to discourage negative behaviour; and to encourage positive behaviour, particularly in the case of reliefs. In assessing taxation on alcohol and pubs, the Government need to think of those three things going forward. What do they want to encourage? What do they want to discourage? How much revenue do they need to generate from any decision that they take? I think the view around the House is that responsible social drinking is the way forward, rather than people drinking at home and choosing drinks with incredibly high alcohol volumes.
On business rates, in Scotland we have the friendliest environment for business rates in the UK. Two out of every five pubs in Scotland receive the small business bonus and pay zero or reduced business rates as a result. In Scotland, 90% of properties also pay a lower poundage than they would if they were in the rest of the UK. We have done everything we can to ensure that we have the most competitive taxation regime for properties.
Let me just say a wee bit on the contribution of beer and pubs to the economy in Scotland, which is £1.7 billion a year. The brewing and pub industry supports the employment of 60,000 people in Scotland, which is significant. In my constituency, although I do not have breweries, I have the first pubs for Fierce Beer, six°north and BrewDog, so it is nice to be able to give them a shout-out.
I appreciate the tone in which this debate has taken place. If the Minister could answer my question on the post duty point dilution review, that would be incredibly useful. If he could also commit to a review of alcohol taxation in general, that would be great, but I am not sure that he will be able to go that far today.
Anneliese Dodds (Oxford East) (Lab/Co-op)
I congratulate the hon. Member for Dudley South (Mike Wood) on securing the debate. As my hon. Friend the Member for Coventry South (Mr Cunningham) said, this is not the first time that we have debated many of these issues, but I very much agree with the hon. Member for Aberdeen North (Kirsty Blackman) that this has been a good-humoured debate, albeit one with rather too many puns. This debate is also important, as so many Members from right across the country have said, because the UK pub is renowned around the world—the oldest one was established right back in the 11th century—and an essential feature of our national life.
We have already gone through many of the statistics, so I will not do that now, but I very much agree with the hon. Member for Ribble Valley (Mr Evans) that much of the economic impact of the pub and brewery sector is indirect as well as direct. We have talked a lot about the impact on employment. It was very interesting, in particular, to hear about the experience of my hon. Friend the Member for Heywood and Middleton (Liz McInnes) and about her working life. It was also the first taste that I had of working life. Working in a pub and restaurant I was paid the princely sum of £2 an hour before Labour’s minimum wage was introduced.
This sector is very important, supporting around 1 million jobs in the UK. Those who work in it contribute many payroll taxes as well. However, pubs are really also community hubs, as so many hon. Members have said. My hon. Friend the Member for Ealing Central and Acton (Dr Huq) referred to the role that they can play in combating loneliness. We have heard about how pubs can help older gentlemen—I do not know why I am gesturing in the direction of the hon. Member for Beckenham (Bob Stewart)—and how they are open to mothers in the run-up to Mothers’ Day.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
We recently had a consultation in the west of Wales on the reconfiguration of health services. Dr Rhys Thomas, one of the lead consultants, informed us that one of the biggest public health challenges that we face is loneliness, so there is a public health aspect to this as well.
Anneliese Dodds
I absolutely agree with that point. There is now evidence of that. Work has been undertaken, commissioned by CAMRA, which set out clearly that there is a positive impact of people using pubs in the kinds of ways that we have been talking about during this debate. The point has also been made that many people who use pubs are not necessarily drinking alcohol. They use them in a whole variety of ways. I would also mention the fact that many pubs—particularly community pubs, and I will come back to that point later—are setting up special sessions for people with different conditions, such as dementia, so they are very important institutions from that point of view.
We have seen some worrying developments, which many Members have referred to. We have seen pubs closing at an alarming rate. Last summer, we saw figures showing that 18 pubs a week are closing. Those closures are occurring at the same time as the closures of libraries, post offices, banks and many local shops. They are happening in rural areas, as has been mentioned, but in urban areas as well. My hon. Friend the Member for Chesterfield (Toby Perkins) noted very movingly what happens when the last pub leaves an estate, and my hon. Friend the Member for Barnsley East (Stephanie Peacock) raised the same issue.
Members on both sides of the House rightly referred to the importance of local pubs, but also drew attention to the challenges they face. The first of those challenges relates to the tax system, and involves beer tax, small brewer’s relief and business rates.
We are in a peculiar position when it comes to beer tax. I agree with the Institute for Fiscal Studies, which has said that
“The UK’s current system of alcohol excise duties is a mess”,
and that the way in which we tax our alcohol does not necessarily
“fully correct for the social costs of alcohol.”
I hope that the Minister will spell out what the Government intend to do in the longer term, because a longer-term approach is needed, given the developments at EU level that were mentioned earlier and given the development of the low-alcohol beer sector, which was mentioned by the hon. Member for Faversham and Mid Kent (Helen Whately) and many others. Those developments are significant, but the tax system has not yet responded to them.
Many Members, including the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone), my hon. Friend the Member for North Tyneside (Mary Glindon) and the hon. Member for Strangford (Jim Shannon), referred to the corrosive impact of low-quality, high-alcohol products which are drunk at home and are cheaper to drink at home.
We had an interesting discussion about small brewer’s relief. My hon. Friend the Member for Stoke-on-Trent North (Ruth Smeeth) spoke of its importance to small breweries, but I think we should also look carefully at its calibration in the light of the unintended consequences that were mentioned. My hon. Friend the Member for Keighley (John Grogan) made some good suggestions, and I hope that they will be noted in the review that is currently being undertaken. Despite those pressures, however, we are seeing incredible innovations, especially in the craft brewery sector. I want to plug the micro-pub movement which is taking place in my constituency, and our amazing covered market as well.
Many Members referred to business rates, which have been extremely damaging to pubs and to many other businesses that are based on bricks rather than clicks. My hon. Friend the Member for Stoke-on-Trent North, and many other Members, talked about the imbalance in that regard. A business pays corporation tax only when it has become profitable, but the Government appear to have focused on reducing the corporation tax rate. My party would not take that approach, because we value the high streets and we value bricks-and-mortar-based businesses. Of course, that does not just apply to pubs. My hon. Friend the Member for Cardiff West (Kevin Brennan) mentioned the impact on music venues, many of which are, in practice, in the same place as the local pub. We need to look at these issues in the round, and, in fact, we should look at them in relation to council tax as well. That is why we have committed ourselves to a proper review of local taxation, which we think is well overdue.
However, pubs face many other impediments that are not related to tax. That point was made very forcefully by my hon. Friend the Member for West Bromwich West (Mr Bailey). The pubs code, which was intended to level the playing field for small pub tenants, has not operated in the way in which many of us hoped that it would. It appears that the situation is being manipulated, which is immensely problematic, because, as was pointed out by my hon. Friend the Member for Leeds North West (Alex Sobel), tenants are still subservient to pub companies. That is also a big problem for the social mobility referred to by my hon. Friend the Member for Coatbridge, Chryston and Bellshill (Hugh Gaffney), because it means that people who start off pulling pints cannot end up as pub owners.
I should like to hear from the Minister when the compulsory review of the pubs code will be announced. I thought that it was to be announced this month. Can we also be assured that the process will be open and accountable? We need to restore trust and accountability to the process. We also, as was mentioned by my hon. Friend the Member for Stroud (Dr Drew), need to make sure communities are aware of that social value process so they can take over those community assets when they want to; many communities are not aware of it.
Many of us have said this debate is a refuge from Brexit, but, sadly, it is not entirely of course. That is first because the workforce is very important to the pub sector and we are all aware of many of the concerns about what will happen if in particular we have a threshold of £30,000 to get workers into the UK. UK Hospitality has said the current proposals are illogical. We need to deal with this challenge. Also, the hon. Member for Waveney (Peter Aldous) rightly referred to the importance of exports from our brewery industry in particular; we must not impose any additional bureaucracy on those exporters, particularly in growth fields and innovative parts of our brewing industry.
I hope the Minister will respond to my points in his remarks, particularly on the beer tax, small brewer’s relief, business rates and some of the legal issues.
The Exchequer Secretary to the Treasury (Robert Jenrick)
I thank the Backbench Business Committee for securing this debate. As numerous Members have noted, it has felt rather like finding a good pub on a long walk when we are feeling weary and looking for a welcome break. The debate has been conducted in a very good-humoured manner throughout. I was first elected at the end of the coalition Government, and pubs was the only vote I believe that that Government lost in all those years, whereas today we are united on this topic but it is just all the other votes we seem to be losing.
I thank my hon. Friend the Member for Dudley South (Mike Wood) for sponsoring the debate. Like the hon. Member for West Bromwich West (Mr Bailey), he spoke about the Black Country’s long association with beer and brewing. I grew up in the shadow of Banks’s brewery in Wolverhampton and spent my teenage years, like the hon. Member for Oxford East (Anneliese Dodds), working in pubs that my hon. Friend’s constituents might drive out to Staffordshire and Shropshire to visit. I also thank the hon. Member for Stoke-on-Trent North (Ruth Smeeth) for her contribution; I have had a few drinks near her constituency in the Potteries, not least on the night I lost my first election in 2010. Given the scale of the result I probably should have drunk a pint from the Titanic Brewery.
But I do not want to be too negative about what we find today, because there are many great positives about beer and the brewing industry across the United Kingdom, many of which have been heard over the past couple of hours, not least the flowering of the British craft beer industry. That has brought fresh life to the market, creating a new generation of entrepreneurs, many of whom I know from my own constituency, a former brewing town, Newark-on-Trent, which has seen several new breweries created in recent years. This has given people across the length and breadth of the country unprecedented choice and, as we have heard, word has spread across the world and exports have risen very significantly.
Toby Perkins
The Minister is right that the small business brewing relief is an example of Government forgoing a bit of tax and a huge industry flowering on the back of that. Might he take note of that example for some of his other decisions?
Robert Jenrick
It certainly is, and I will talk shortly about the relief the hon. Gentleman mentions, which has played a significant part in that flowering and which I believe we can make better and fit for purpose for the future.
The value of beer exports has risen now to £500 million a year, and we heard earlier about the tremendous results also with respect to Scotch whisky and other spirits.
Small brewer’s relief gives the smallest brewers across the country a 50% reduction in duty and, as we have heard, it has helped fuel the explosion in the number of local breweries; we now have over 2,000 breweries across the country. At the autumn Budget we announced a review of this relief to give brewers the opportunity to share their thoughts on a relief that is now 17 years old and which has not been reviewed systematically over the course of that period. We have opened the review and had over 500 responses which we will carefully consider and report back on in due course.
Our motives at the Treasury have not been to extract more revenue from the sector, and certainly not to end the relief. However, for some of the reasons that the hon. Member for Keighley (John Grogan) and others mentioned, there is some evidence that although the relief has been hugely positive in some respects, it has limited the growth of some businesses that would like to expand and employ more people and that are concerned about the cliff edge that the relief creates. I hope that we will be able to work with breweries and organisations such as the Society of Independent Brewers to work through that and to do something positive for the industry.
With respect to beer duty, we have taken a number of steps over the past nine years to improve the situation in a country that has been widely acknowledged to have high levels of alcohol taxation. We removed the beer escalator, and we have either cut or frozen beer duty in six of the last seven fiscal events, so that the duty on a pint is lower now than it was in 2012. In real terms, this long-term and significant action by the Government has kept prices low for everyone, in contrast to the period from 1997 to 2010, during which beer duty increased by 60%. This was underlined at the most recent Budget with another freeze on beer duty, meaning that the price of a typical pint of beer is now 2p lower than if prices had risen with inflation. I appreciate that there is always more that we could do this respect.
We are also focusing on other alcohol, such as cider and spirits. My hon. Friend the Member for Ayr, Carrick and Cumnock (Bill Grant) talked about the importance of spirits to his constituency and to many others across Scotland. The hon. Member for Aberdeen North (Kirsty Blackman) talked about their importance to the wider Scottish economy. She also asked me a question about post-duty point dilution. We have given this matter considerable thought for some time, and we announced at the Budget that we will be bringing this practice to an end from April 2020. She also asked, as did the hon. Member for Oxford East, about a wider review of alcohol duty more generally. This is a complex area, and there are clearly no easy answers. There are certainly few answers that are fiscally neutral and that would create no losers, which would be important to many who work or own businesses in the sector. It is perhaps premature to conduct a review at this moment, because the greatest flexibility will be available to us after we leave the European Union. A future Chancellor might then have the choice to take action.
We heard from the hon. Member for Strangford (Jim Shannon) and my hon. Friend the Member for Faversham and Mid Kent (Helen Whately) about responsible drinking, and they asked whether we could lower the duty on low-alcohol beers. We are somewhat constrained in that respect by EU law. The EU alcohol structures directive sets the maximum threshold for reduced duty on low-alcohol beer at 2.8%. Her Majesty’s Government charge a reduced duty of 6p a pint on beers with a strength between 1.2% and 2.8%. Until we leave the EU, we cannot raise the threshold for low-alcohol beer above 2.8%, but this is something that we will work on with our partners across Europe, and we could have further flexibility in the years ahead. The Government have taken action in some specific circumstances—with respect to white cider, for example—and our approach is that we will continue to take action as necessary where there is clear evidence that certain alcohol duty rates are causing difficulties for society.
We have heard a great deal about pubs, which are, as we heard from numerous colleagues, the bedrock of many rural and urban communities. As the hon. Member for Chesterfield (Toby Perkins) rightly highlighted, they boost the economy, create jobs and, crucially, act as hubs for our communities. We have heard about their importance in tackling loneliness, and about the issues for older people, whether older gentlemen or others. They are great places for people to work and start their careers in. The pub industry currently employs about 450,000 people, many of whom are younger people, as has been said.
Bob Stewart
I rise, again, as an older gentleman. We have been talking about what pubs do. Let us imagine people who live in pretty awful accommodation—a bedsit or something like that. The local pub can provide a really nice, friendly, warm environment. That is the sort of place that those people can go to, and in my view that is the real advantage of local pubs.
Robert Jenrick
I agree with everything that my hon. Friend just said.
I will talk briefly about business rates in the short amount of time available to me because they have been an important element of this debate. My hon. Friend the Member for St Albans (Mrs Main) brought some of her publicans to see me at the Treasury to discuss the matter. We have taken several actions to support pubs by lowering their tax burden. The most important of them—this comes into effect on 1 April—is the Chancellor’s Budget announcement that the business rates bills of small and medium-sized retailers, including pubs, will be cut by a third. The policy has been set for maximum impact among retailers and pubs with a rateable value of £51,000 or below. I appreciate that that will have less impact in communities such as my hon. Friend’s, where rateable values are high, but 90% of retailers and between 70% and 85% of pubs across the United Kingdom will benefit, with pubs seeing a tax saving of up to £8,000. We also previously had the £1,000 discount for small and medium-sized pubs, and many pubs will also benefit from up to 100% small business rates relief or the 100% rural rate relief. Of course, all ratepayers are benefiting from the switch from RPI to CPI.
The hon. Member for North Tyneside (Mary Glindon) mentioned the request of many, including the industry, to create a rate of beer duty that differentiates between people drinking in a pub and people purchasing beer in a supermarket or convenience store. I can see the strong argument for that, but it is unfortunately not possible under EU law. Duty is levied on production, not on the place of consumption. However, we might be able to turn to that should we have sufficient flexibility.
I conclude by thanking the Backbench Business Committee and my hon. Friend the Member for Dudley South and the hon. Member for Stoke-on-Trent North, both of whom gave superb speeches. This debate unified the House and demonstrated the important role that pubs can play in our communities. I will certainly relay the strong feelings from across the House to my right hon. Friend the Chancellor with respect to the next Budget and the future of beer duty. The House’s voice is clear that it wants, like people the length and breadth of the country, further and continued support for beer, breweries and our important pubs.
Mike Wood
I thank all right hon. and hon. Members for their contributions today. We have had well over 20 contributions from Members representing six out of the seven parties in the House and all four nations of our United Kingdom. The contributions from the Minister, the shadow Minister and the SNP spokesperson, the hon. Member for Aberdeen North (Kirsty Blackman), showed the breadth of agreement and support for British beer and pubs and the need for us to support them where we can.
If people watching this debate take away just one message, I want it to be that British beer and pubs are a force for good in so many ways. As the hon. Members for Heywood and Middleton (Liz McInnes), for Chesterfield (Toby Perkins) and for Aberdeen North said, they are good for jobs and local economies. As my hon. Friends the Members for Cheadle (Mary Robinson) and for St Albans (Mrs Main) pointed out, they are good for communities and for families. My hon. Friend the Member for Ribble Valley (Mr Evans) said that pubs are good for charities and for community sport, the hon. Member for West Bromwich West (Mr Bailey) said that they are good for promoting local investment, and the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) said that they are good for attracting tourism.
There are other non-economic benefits, too. As the hon. Members for Stoke-on-Trent North (Ruth Smeeth) and for Coatbridge, Chryston and Bellshill (Hugh Gaffney) pointed out, they are essential for tackling loneliness and strengthening the social fabric. The hon. Member for Strangford (Jim Shannon) referred to the vital role that good community and high street pubs play in offering a safe place for responsible drinking. Pubs are a force for good in so many ways. Think just how much more good they could do if we can get the tax burden under control, give our beer and pubs a fair deal, and support these key industries and the role that they play in our communities.
Question put and agreed to.
Resolved,
That this House has considered beer taxation and pubs.