(4 years, 10 months ago)
Westminster HallRead Hansard Text Read Debate Ministerial Extracts
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Mike Wood (Dudley South) (Con)
I beg to move,
That this House has considered taxation on beer and pubs.
I am delighted to have secured another important debate covering the brewing and pubs sector in the UK. This one is particularly timely because the all-party parliamentary beer group will hold its event celebrating the beers of the UK in Parliament this evening, to which, of course, all Members are very welcome.
Beer and pubs in the UK are a home-grown manufacturing success story. They are represented in every part of our United Kingdom and in every one of our constituencies. Some 80% of the beer brewed by this country’s fantastic brewers is consumed in this country. The industry supports almost 900,000 jobs in all corners of the country, including more than 1,000 in my constituency.
Nick Thomas-Symonds (Torfaen) (Lab)
I congratulate the hon. Gentleman on securing this debate, and he is absolutely right about the success story of our pubs and brewing industry. However, does he agree that we have seen far too many pubs close in recent years and that we really need to value them as community hubs?
Sir Greg Knight
I am most obliged to my hon. Friend for giving way, and I congratulate him on securing the debate. May I amplify the point that was just made and ask whether he agrees that the public house is the heart and soul of the local village in many rural areas?
Mike Wood
I would go further than that: in many areas, and not only rural areas, the pub is the last service, and often the last facility, in the town or village. Often, it is not just a place to drink, but also the place with the shop or where people get their hair cut. There might also be a jobs club or any number of other services there.
Lilian Greenwood (Nottingham South) (Lab)
The Plough Inn in Radford, which is in the inner city of Nottingham and which is also the brewery tap for Nottingham Brewery, is precisely the sort of nucleus of the local community that he has described and the landlady, Mel, is a legend. Does he agree with the managing director of Nottingham Brewery, Phil Darby, who says he is worried that if action is not taken on beer duty and small brewers relief, the price of a couple of pints in a pub will simply not be able to compete with the price in supermarkets for much longer?
Bill Esterson (Sefton Central) (Lab)
The debate is about taxation of pubs and breweries. I received an email from one of the three excellent small breweries in my constituency—it was from Les O’Grady, who runs Neptune Brewery, as well as a taproom there. He employs three people, and he makes the point that his challenge is the current relief—the taper—and the fact that it is difficult for him to overcome that barrier in growing his business. That is a challenge faced by all small breweries. Does the hon. Gentleman agree that there is a strong case for pressure to be put on the Treasury to change those rules, to enable these brilliant manufacturers and employers to grow as they wish to?
Mike Wood
The small and microbrewers of this country have been one of the great success stories of the past 20 years in brewing. They have transformed brewing and beer across the country—both the diversity and the quality. The small brewers relief scheme that was introduced under the previous Labour Government has done a fantastic job in increasing the number of small brewers. However, we now need to look at the disincentives the existing thresholds create in terms of growth, expansion and employing more people. For example, Black Country Ales, which is based in my constituency, faces exactly the issues to which the hon. Gentleman referred.
Stephen Crabb (Preseli Pembrokeshire) (Con)
I congratulate my hon. Friend on securing this important debate. The hon. Member for Sefton Central (Bill Esterson) and my hon. Friend are exactly right about the importance of the small brewers tax relief. Does my hon. Friend agree that this issue is about not only changing the shape of the relief curve, to remove that barrier to growth for the really successful craft brewers, but maintaining the 50% reduction in duty for the very small craft brewers so that they can get a foothold in the marketplace?
Mike Wood
My right hon. Friend makes an important point. I have a feeling the Minister might just touch on small brewers relief in his response to the debate, because the Treasury has of course conducted a review into it, and we are all looking forward to seeing some of the results of that review—hopefully, we will see them before too long.
Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP)
Will the hon. Gentleman give way?
Dr Cameron
I thank the hon. Gentleman for giving way and for bringing this extremely important debate to the House today. Does he agree that we also need common-sense rateable values? The Glassford Inn in our community is under threat of closure due to the ridiculous rateable value that has been placed on it, meaning that it would actually have to sell a drink to every single person in the village every single night of the week just to meet the rates, never mind make any profit and pay the staff. Does the hon. Gentleman agree that common sense is needed in this agenda and that we must support our rural pubs so that they can continue?
Mike Wood
The system of non-domestic rates—business rates—is fundamentally a system of local taxation that was designed in the 19th century, building on the previous poor law. It really does not suit the needs and features of a 21st-century economy, particularly one where so much retail is increasingly moving out of town or on to the internet—as yet, nobody has designed an effective virtual pub that can serve a virtual beer that is quite a satisfying as the real thing. We are in a position where our community pubs are at an unfair disadvantage, as the hon. Lady says, compared with businesses that can reduce their liabilities.
Mr Steve Baker (Wycombe) (Con)
Will my hon. Friend allow me to intervene before he moves on?
John Howell
I thank my hon. Friend for giving way. One of the things I have been most proud about over the last 12 years is that, at the beginning of that period, we introduced assets of community value. If that system is operated properly, as it has been in my constituency, it allows a huge number of pubs to become self-owned by their communities so that they can continue to prosper. Does he see that system as a good way forward?
Mike Wood
We have some exceptionally good community-run pubs up and down the country; I visited one in Stafford a couple of years ago. It was on the point of closing down and could easily have become derelict. However, because of the assets of community value system, it was possible for the local community to take it on and see it succeed. We are also seeing such pubs in Twickenham, and I have a feeling that the hon. Member for St Albans (Daisy Cooper) may refer to similar schemes in her own constituency later in the debate.
As well creating and supporting jobs, the beer and pub sector is a massive contributor to the economy more widely and, of course, to the Exchequer, as the Minister will know. The sector’s total value to the economy is almost £23 billion; in my constituency, our breweries and pubs contribute £30 million to our local economy. Nationally, the sector pays almost £13 billion into Treasury coffers, which I am sure the Minister is grateful for ahead of the Budget.
Giles Watling (Clacton) (Con)
Does my hon. Friend agree that the pub is not only, as he described, a great financial asset to the UK, but a unique selling point for it? People come from all over the world to visit our pubs, including our rural pubs, right across the country. That is why we must support them by having differential rates.
Mike Wood
Again, my hon. Friend pre-empts a later part of my speech. In terms of attracting tourists and investment into the United Kingdom, beer and pubs are one of the top three things tourists say they want to do while they are visiting. Of course they want to have fish and chips. Normally, they also want to visit some of the heritage, whether it is Buckingham Palace or Stratford-upon-Avon. The third thing that always comes up is that they want a pint of proper British beer in a proper British pub.
Mr Steve Baker
My hon. Friend is being incredibly generous in giving way, and I know he wants to make progress, but will he help me put on record the sheer scale of the attendance at this debate? Clearly the Minister would be incredibly popular if only he cut tax on beer and pubs. With that, I will let my hon. Friend resume his magnificent speech.
James Gray (in the Chair)
Order. The hon. Gentleman prompts me to comment that this debate is hugely popular. A lot of Members would like to speak—I have some 17 on my list. It is of course up to the hon. Member for Dudley South (Mike Wood) whether he takes interventions, but constant interventions will mean that his speech is very long and that there may be time for only five to 10 speeches from Back Benchers. If we keep interventions a little bit under control, we can get more speakers in later on.
Mike Wood
I will endeavour to follow your guidance, Mr Gray. My hon. Friend the Member for Wycombe (Mr Baker) makes the point extremely succinctly. I would like to pretend that I was the big attraction in this debate, which has brought so many Members from all parts of the House to this Chamber, but it probably has a little more to do with the quarter of a million people who have signed the Long Live the Local petitions. That has resulted in nearly 130,000 emails being sent from constituents to Members of Parliament, encouraging them to support our beer and pubs and to press for the kind of support that my hon. Friend was calling for the Minister to announce. I know the Minister will not feel too confined to his briefing and his mandate; I am sure he can go a little off-piste later.
It is not an exaggeration to call the pub an essential part of British life, but the link between beer and pubs is completely inextricable. Seven in 10 of the alcoholic drinks sold in pubs are beer, and beer accounts for more than half of a pub’s turnover. A thriving brewing sector is intimately entwined with successful local pubs. The statistics, the employment and the economic contribution are extremely impressive—including the £100 million raised for charity every year by pubs up and down the country—but there is so much more to beer and pubs than figures alone.
The great British pub is one of our most loved national institutions and is the heart of so many of our communities. We only have to think of the times we have stopped for directions in our constituencies. Those directions are more likely to be, “Turn left at the Old Cat and then go straight on at the Red Lion”, than to refer to street names. Pubs also make a huge difference on social issues. Loneliness and isolation are among the top social issues facing our society, and pubs do so much to help.
We have already talked about the many services that pubs offer. When the pub is the last service or facility in the town and it closes, it is not only a place to drink that goes, but all the services. Visiting Cornwall with the wonderful Pub is the Hub charity in 2018, I saw pubs that were home to convenience stores, hairdressers and jobs clubs. Last year, the all-party parliamentary beer group conducted an inquiry into unlocking pubs’ potential, which we should be publishing in the next few weeks. We heard evidence of the social contribution made by pubs in rural and urban areas alike, whether that was pubs providing meals for people with dementia and their partners, Christmas meals for the isolated and lonely, free meals for older people, yoga classes, literacy groups, or parent and toddler groups. Pubs are the original social network, bringing people and communities together. Unlike some more modern social networks, Facebook pays just over 1.5% of its UK turnover in tax; pubs typically pay about a third. That averages to some £142,000 a year a pub to the Exchequer.
A large part of that money is in the form of business rates. The recently announced extension of the pub-specific relief, which knocks £1,000 off the bills of pubs with rateable values of less than £100,000, will help a huge number of pubs—in particular, smaller ones—as will the 50% reduction in business rates bills for certain businesses. For pubs, the burden of business rates remains particularly acute because of the way pub valuations work. Pubs account for 2.8% of all business rates revenues, despite accounting for only 0.5% of rate-paying business turnover. That amounts to an overpayment of £500 million every single year. Pubs pay more in business rates compared with turnover than any other sector. That is a basic fairness issue.
Every extra pound on the business rates bill makes it harder for a pub to survive, while some sectors of the economy simply do not seem to be paying their fair share. We need the fundamental review of business rates that the Government promised in our election manifesto and a new system that reflects the realities of the 21st-century economy.
The other main tax burden on our beer and pubs is duty, and beer duty remains much too high. It is much higher than in any other major beer-producing country in Europe. In fact, someone who bought a pint in each of the five other major beer-producing countries—Germany, the Netherlands, Spain, Belgium and Poland—would still have paid less duty on those five pints than they would on a single pint in Britain.
Successive coalition and Conservative Governments have taken action to limit the impact of beer duty on pubs since abolishing—I have to call it this—the hated beer duty escalator in 2013. That has saved pubs and pubgoers millions of pounds, which can be seen in the change in the fortunes of many of our brewers and pubs. I hope the Treasury will go even further by offering support for British beer and pubs in next month’s Budget, because keeping a lid on beer prices helps to keep pubs viable. What is more, taking action to limit beer duty increases sends a positive signal to the quarter of a million supporters of the Long Live the Local petition, not to mention the 25,000 individual pubs backing the campaign. A cut or freeze in beer duty will appear on the Treasury’s books as a cost, but evidence suggests that keeping costs down for brewers and consumers leads to increased revenue.
Mr Alistair Carmichael (Orkney and Shetland) (LD)
The hon. Gentleman may wish to remind his colleagues in the Treasury of a helpful precedent that they may wish to follow. The coalition Government cut the duty rate on spirits by 2p. At the time, that was expected to reduce revenue; in fact, revenue increased fairly significantly as a result.
Mike Wood
I agree with the right hon. Gentleman. Indeed, there is an even more recent example. The excise revenue from beer is up £250 million compared with Treasury forecasts since 2017-18. That appears largely to be down to boosts to beer and pubs following freezes in duty in the 2017 and 2018 Budgets. Further action on beer duty in the Budget would clearly boost jobs and investment in beer and pubs. It would also likely lead to additional custom, which generates extra revenue.
Beer duty needs to be lower overall. Within that, we need to look at how that beer duty is levied. We need a wider review, first to look at the operation of small breweries relief and whether it acts as a disincentive to growth and expansion, and secondly to look at how beer duty can better support our community pubs, rather than the “stack ’em high, sell ’em cheap” produce in some off-licences and supermarkets.
Now that we have left the European Union, with the implementation period ending at the end of the year, there is an opportunity for a fundamental review of how duties are structured. I urge the Treasury to look at how beer duty could be levied at a lower rate for beer that is likely to be sold in pubs, and particularly when it is levied on draught beer, kegs and casks rather than small-pack cans and bottles. Supporting our community pubs in that way, without giving the dead cost of duty cuts to supermarkets, would make a big difference to many of those pubs.
Members on both sides of the House will not need persuading of the intrinsic value of pubs to not just the economy but society as a whole. As ever, it bears repeating that the pub is in many ways synonymous with the UK.
Mr Toby Perkins (Chesterfield) (Lab)
I congratulate the hon. Member on securing this incredibly important debate. Alongside what he said about the economic and social value of pubs, does he agree that the pub is also the safest place for drinking to take place, particularly for problem drinkers? Supporting our pubs has a huge benefit in terms of health expenditure too.
Mike Wood
Further to that, research from Professor Dunbar of the University of Oxford suggests not only that it is safer to drink in moderation in a well-run pub, but that people who drink regularly and in moderation in a local pub are more likely to be happier and healthier—both their physical and mental health is likely to be better. Although the immediate appeal of the modern temperance movement, calling for large increases in duty to try to reduce consumption, is understandable, high levels of duty tend to move consumption away from well-regulated and licensed premises to people buying cheap alcohol to consume at home, or in public, without the protections that licensed premises provide. The issue is therefore one of safety, health and public health.
I am delighted to see so many Members present to support Great British brewing and the pub industry. I hope the Minister will hear the messages of gratitude for the action that has already been taken, as well as the messages of hope and desire for—and even expectation of—continued support, which is needed to ensure that brewing in pubs remains viable for many years.
Several hon. Members rose—
James Gray (in the Chair)
Order. It will not take a genius to see that around 22 Members wish to speak in the 40 minutes or so before I call the Front Benchers, which would mean around two minutes per speaker. I do not intend to impose a limit, because I think that that sacrifices quality in favour of quantity, but I appeal to colleagues to limit their speeches, if they can, to two or three minutes, to allow each other in. I call Siobhain McDonagh.
Siobhain McDonagh (Mitcham and Morden) (Lab)
Thank you, Mr Gray. I am delighted to be called to speak so early. My only problem is trying to rule out a lot of my speech, and the important pub puns I had included in it—there was to be a gift of a pint for those who identified all of them.
My contribution will focus on small breweries and small breweries relief, particularly in relation to the Wimbledon Brewery in my constituency—I cannot imagine why they wanted to call it the Wimbledon Brewery, rather than the Mitcham and Morden Brewery, but I will leave that to Members’ imaginations. Although the relief is vital, the current system stifles growth and profitability for small brewers, discouraging exports and mergers. For the benefit of Members without small breweries in their constituencies, let me explain that if a brewery produces less than 5,000 hectolitres per year, it pays 50% of the full excise duty of the big breweries. That is to help balance the economies of scale from which the biggest breweries benefit, ensuring that the consumer has a greater choice and that smaller breweries can stay in business.
However, the 5,000 hectolitres point is a cliff edge. If production goes above that level, the brewer pays excise duty not just on the additional amount produced over the threshold, but on the whole production. A brewer would need to reach levels of around 20,000 hectolitres to offset the additional tax by the economies of scale. Wimbledon Brewery was in no man’s land, producing around 8,000 hectolitres per year—above the threshold but far below the 20,000 summit. It was therefore burdened with the extra tax, but without the economies of scale. For a business of that size, no man’s land is simply not an option, and it was forced to fall back below the threshold, limiting production and reducing the staff count from 15 to 10.
In its current form, the small breweries relief has punished Wimbledon Brewery’s good business practice and disincentivised its growth. The relief has acted as a barrier to mergers and acquisitions for everyone other than the biggest breweries in the industry. Surely a more progressive scale of relief is necessary, aligned with the industry’s economy of scale, to ensure that all brewers are incentivised to grow. Take the Irish relief for small brewers—the Irish are always good people to look to when talking about alcohol. A proportion of their export volume is excluded, yet such brewers can still obtain the maximum relief.
Urgency is paramount, with small brewers warning me in advance of the debate that a further period of consultation would simply lead to even more unintended consequences. For those brewers, this hangover really has gone on for too long. The upcoming Budget is the Government’s opportunity to support this much-loved sector, to make the system fairer and to support business growth. Long live the local.
Giles Watling (Clacton) (Con)
It is an honour to serve under your chairmanship, Mr Gray. I had prepared a speech but will throw it away, as you have 17 speakers; you will be delighted with the speech I will read instead, as it is very short and to the point.
There has been a 0.8% increase in pub numbers, which has led to a 1.6% expansion of employment in the pub industry. That sounds very good, but it is all to do with food and town centres rather than our rural pubs. For 55 years I have been an actor touring the country, and I am known in most pubs across the country. My wife is always amazed when we turn up in some strange town, and I go into the local pub in the wilds of Nottinghamshire or somewhere and the landlord says, “Hello, Giles.”
The pub is a feature of our countryside and it is terribly important to preserve it. There is a little village near the wonderful town of Stratford-upon-Avon. When I first stayed there, 25 or 30 years ago, it had a beautiful pub called The Crown. The community would coalesce in that pub of an evening. The landlord was responsible; if he saw that old Fred in the corner was drinking too much, he would ensure that he was all right, that he could get home, and that he did not drink to his detriment. If Mrs Miggins around the corner had a problem, they would talk about it and look after each other. The pub was a great centre of the community. At that time, the village had a vicar, the pub, the village hall and the local copper. Well, the copper was taken back to Stratford-upon-Avon because there was no crime in the village; everybody looked after each other.
I went back after 20 years or so to work again in the Stratford-upon-Avon area, and I went back to the same village. The pub had closed and been developed into housing. I now found a place where people were no longer talking to each other. The heart had been torn out of the community. It is not about going out and drinking too much, because in that pub everyone was under the watchful gaze of a responsible landlord, who had a very good reason to look after his clientele: he wanted his pub to thrive. However, it had gone and the village had fundamentally died.
People were now buying their cheap supermarket booze, going home and watching their high-definition, widescreen televisions. Who could blame them? The booze is cheaper and the entertainment is superb. If we went back to 405 lines, we would go to the pub again. But no; we have widescreen televisions. People were no longer talking to each other, so people did not trust each other. That is why I support not just a cut in taxes, which we have done—since 2010, a pint is now 14p cheaper than it would have been—but a differential cut, to support our rural pubs, which are the centres of communities right across the country.
Grahame Morris (Easington) (Lab)
It is an honour to serve under your chairmanship, Mr Gray. I congratulate the hon. Member for Dudley South (Mike Wood) on securing this most important and popular debate.
In the brief time available, I want to make a few points about the value of supporting and expanding the resurgence that we have witnessed in British brewing. The debate is of interest to me on several levels—my interests are very well known. I am fortunate to have the exceptional Castle Eden Brewery in my constituency, under the excellent leadership of Cliff Walker and David Travis. They have provided me with an insight into not just quality beer—I hope we will be able to sample it in the Strangers’ Bar at some point— but some of the problems that the industry faces.
As we have heard, British beer is being exported to markets right across the world in traditional markets such as the USA and the EU. In more recent years there has been significant growth in new regions, particularly China. Some years ago, before I was a Member of Parliament, I had the opportunity to visit the huge Tsingtao Brewery in Shandong. Beer is the UK’s third largest food and drink export. The brand of “British beer” is a global trademark of excellence and innovation, which we must exploit, support and promote post Brexit.
I fully support the points that have been made by Members across the Chamber today. I support the campaign to reform business rates and freeze beer duty to support our local pubs. I am also a proud supporter of the Long Live the Local campaign, and I want to highlight the importance of small breweries relief. I am grateful that my hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh) mentioned that it was Labour that introduced small breweries relief in 2002—some credit should be given. That has seen some success in that we have seen a resurgence of the British independent craft brewing industry, with a fivefold increase in small brewers.
Kirsten Oswald (East Renfrewshire) (SNP)
Would the hon. Gentleman agree that, in setting alcohol duties and regulating the price of alcohol, which the Scottish Government are leading the way on, it is important that we protect small-scale breweries, craft brewing, high-quality products and local jobs, including those provided by the Kelburn Brewery in my constituency?
Grahame Morris
Absolutely, and there are a number of measures that the Minister can take. Despite the success that we are all very proud of within the craft brewing sector, it accounts for only around 7% of the UK market, compared with the 88% share of the market controlled by the big four global brewers. Small breweries relief has given small brewers the opportunity to compete with their larger multinational counterparts, but they benefit from economies of scale, brand recognition and huge and expensive advertising campaigns on a scale that small brewers simply cannot compete with, and which allow the big four to dominate the market and to offer significant discounts to wholesalers.
The other challenge we face across the country is the shrinking number of outlets that the brewers have for their products, with the number of pubs falling from around 54,000 in 2012 to 46,000 last year. That is a separate debate, and I know we are very short of time, Mr Gray, but I must take the time to criticise the large pub companies and the unfair rents and terms that they offer their tenants, which has contributed to the situation.
Post Brexit, manufacturing and exports will be vital in determining whether the UK will be successful outside the EU. I hope the Minister will take on board the comment made here today. There will be consensus across the House, if he comes up with a suitable formula.
Danny Kruger (Devizes) (Con)
I will be quick. I very much welcome this debate, which comes in the context of a great thrust of Government policy towards investing in economic infrastructure, which I wholeheartedly welcome. Equally, we should surely be investing in the institutions of our communities, and that should be just as important an area of Government focus. We are thinking about all sorts of interesting ways that we can do that and about new forms of investment in the social capital of our communities. What we have already is the tax regime around pubs and, as we have heard, in many places pubs are the absolute heart of our communities.
Mr Gray, the Devizes constituency is of course the most beautiful part of Wiltshire. We have a whole number of brilliant pubs and brewers there. There is the great Wadworth Brewery in the heart of Devizes town, there are Ramsbury ales, and there is a small micro-brewery that I visited recently, called Stonehenge Ales, run by a Danish couple who came over here many years ago because of our culture of brewing and because they believed in the traditions of English ales and brewing. They have made a tremendous success of that.
I echo the points that have been made, particularly around small breweries relief. There is a clear problem with the cliff edge and a need to smooth the withdrawal of the benefit. Surely any loss to the Exchequer that would follow from increasing the tax relief for brewers would be more than made up for in the growth in receipts as the industry grows.
Business rates are probably the biggest barrier to the hospitality sector and the role it plays, particularly in towns and high streets. I very much welcome the Government’s review of business rates, because we need to see our pubs strengthened as the heart of our communities.
Daisy Cooper (St Albans) (LD)
I thank the hon. Member for Dudley South (Mike Wood) for securing this debate. As the newly elected vice-chair of the all-party parliamentary group for beer, I am pleased to be able to speak in this debate.
In St Albans, there are a number of independent businesses that do not know if they will survive this financial year because of eye-watering increases in business rates. This Government have seven weeks to save them. St Albans is not only home to CAMRA—the Campaign for Real Ale, of which I must declare I am a member—but has regrettably also become home to the Save St Albans Pubs campaign and the national Save UK Pubs. More than 30% of our pubs have a rateable value greater than £51,000, which means they are not eligible for the business rate relief announced in the Queen’s Speech. I urge the Minister to look at that cap again and, as an immediate measure, extend the business rate relief beyond the £51,000 cap for pubs.
We all know that the business rates system is broken. We all know that it punishes property-based businesses, as well as those successful licensees who increase their turnover, but the implication of that is that our landmark pubs are most at threat—the landmark pubs that draw people into our towns and city centres. They are part of our landscapes and our tourist guides. They are the pubs that are printed on postcards, that are at the centre of food and drink festivals, and that host the charity events. They are steeped in our nation’s history and heritage.
Let me try to persuade the Minister with a few examples. Sean Hughes is the licensee of a pub called The Boot—the war of the roses started on its doorstep. The pub’s rateable value has gone up by 281% from £27,000 to £76,000. The Boot now has to sell an extra 22,000 pints a year just to cover the increase in business rates. It is simply not possible.
Christo Tofalli is the owner of Ye Olde Fighting Cocks, which dates back to the eighth century and is recorded in “The Guinness Book of Records” as the oldest inn in England. It has been forced to close two days a week to make savings to off-set the increase in business rates. The Cock, a grade II listed building, dates back to around 1600. Its rateable value is up by 216%.
Let us consider this disparity in a tale of two pubs: the Rose and Crown, and the Six Bells. These two pubs, both in the beautiful village of St Michael’s, on the edge of Verulamium Park, are less than 30 metres apart—it takes just one minute to walk from one to the other. They are a similar size and, until 2017, the difference in their rateable value was just over £8,000. Since the business rate review, despite being broadly the same size and practically next door to each other, the Rose and Crown has had a very welcome decrease in its rateable value, but that of the Six Bells has almost doubled. The gap has widened from £8,000 to a massive £43,250. The rateable value of the Six Bells is now three times as much as the Rose and Crown.
How on earth does the Minister expect that pub to compete, when the Government are hammering its ability to do so? They have got to get a grip. They have been dragging their heels on business rates reform for years and years. We need immediate rates relief to save some of these pubs, which are at the heart of our heritage, and we need wholesale reform of the entire system.
Anthony Mangnall (Totnes) (Con)
It is a pleasure to serve under your chairmanship, Mr Gray. I thank my hon. Friend the Member for Dudley South (Mike Wood) for securing this debate. If he is successful in his mission, this will surely be the last time we see him sober. In my constituency and across the country he will be welcome in taverns and pubs. I want to make four brief points, but first I should like to welcome the Government’s decision to reduce business rates for pubs across this country, and I also welcome the further rate review mentioned by the Chancellor and Chief Secretary. It is welcome news indeed.
To add to the remarks made by my hon. Friend the Member for Clacton (Giles Watling), the essence of a pub makes it community-orientated. When I think about the pub, I think about community ownership through organisations such as the Pub is the Hub, which provides services such as libraries. I think of the integral value that it has for rural and urban communities. It is important to remember that urban communities play a significant part in the role of the pub.
I want to touch on the economic aspect. We know that when we reduce the tax revenues on beer duty we can get more people into pubs and see revenue rise. Perhaps Members will cast their minds back to the 1600s and the introduction of tea and coffee into this country. The high prices drove people out of the coffee shops and into the pubs and taverns, and I would like to see that again. I am sure many Members will agree.
On the essence of localisation, every Member in this House embraces having a strong local community and a vibrant local economy, and pubs are at the heart of that. Perhaps we can encourage further business and attach new businesses to our pubs. We have an opportunity to do so. The history and culture of our pubs goes back to the Romans. I am sure my right hon. Friend the Member for North East Somerset (Mr Rees-Mogg) could do the Latin; if only I could, but I am afraid I shall disappoint colleagues.
I want to mention three pubs in my constituency. The Queens Arms in Brixham has recently fund-raised to put a defibrillator outside its own building as a service to the local community. The second is the Avon Inn, which has recently branched out to help host local community groups. The third is the New Inn in Moreleigh, which has been there since the 1700s and is family-run. Those are all embodiments of community spirit. They are localised and drive the local economy.
Ms Marie Rimmer (St Helens South and Whiston) (Lab)
It is a pleasure to speak under your chairmanship, Mr Gray.
Ms Rimmer
Pubs have always sat at the heart of our communities and our societies. I remember how my dad, at the end of a hard day’s work, would go to his local for a pint to enjoy the companionship and relax. If we look back at history, we see how many of our rights originate from people sitting down in the local and planning for a better world: democracy, workers’ rights, trade unions. All of those had many of their roots in this country in the local pub. Even today, pubs play an important role. They are where we celebrate our success in work, love and life. It is where we cheer on our nations in sport and mourn our losses in wakes, raising a parting glass for those we have lost.
Pubs remain an integral part of the St Helens, Whiston and Prescot communities. We have many fantastic pubs across the constituency, including the Cricketers Arms, which deservedly won the 2017 national pub of the year award, but we have seen dozens of pubs close. Many local pubs across the country are struggling under current taxation arrangements, which makes it extremely difficult for local pubs to compete with massive supermarkets and large pub chains. People in the UK pay almost 40% of all the beer duty in the EU, while consuming only 12% of the beer. If we compare ourselves to similar sized nations such as Germany, their beer duty is 11 times lower than the UK’s rate. We need to ask ourselves why our taxation rate is so much higher. Some will argue that it is to discourage people from excess drinking: an aim I completely agree with. It is vital we make sure that people drink responsibly.
If we look at the Green Budget published by the Institute for Fiscal Studies in February 2016, we see:
“The current structure of alcohol duties is not well targeted at harmful alcohol consumption.”
In fact, because local pubs cannot afford to offer the same prices as supermarket chains, people drink excessively at home in pre-drink sessions. They feel under pressure to drink as much alcohol as they can before going for a night out at a pub or wine bar, where prices for drinks are higher than in supermarkets, partly because of the way in which our taxes are applied.
Alex Sobel (Leeds North West) (Lab/Co-op)
Many independent pubs in my constituency, particularly in Otley, complain about business rates as well as beer duty. Does my hon. Friend agree that that is also an important taxation issue?
Ms Rimmer
Of course it is. We have heard colleagues talk about it today.
If the aim is to raise money for the Exchequer, I agree with that aim, as taxes are important and pay for the vital things our society needs. However, the brewing and pub industry is a massive employer, with almost 900,000 jobs across the UK. The loss of those jobs would have a major impact on our economy and offset much of the income from the high taxes. We also find that the taxes are not applied evenly, with wine and spirits’ duty rates per litre of pure alcohol on an almost constant decline since 1978, yet beer has largely stayed constant and has gone up in some cases.
I therefore call on the Government to look at the way in which we support our local pubs. One way to do it is by improving the current structure of the small brewers relief. I also call on the Government to implement a modest cut in beer duty so that we can help our local pubs.
As the hon. the Member for Dudley South (Mike Wood) has said, 250,000 people have signed up to the Long Live the Local campaign, showing that the British people want to protect our pubs. Let us take the steps necessary to ensure that our great British institutions do not have to call for last orders permanently. I urge the Government to act.
Caroline Nokes (Romsey and Southampton North) (Con)
I congratulate my hon. Friend the Member for Dudley South (Mike Wood) on securing this debate. My brief speech will not be a tale of gloom and doom, but will be about success and Bar SO16, a new pub set up by the community—I went to its opening on Friday night. It was incredibly badly timed because it was still dry January. The community found an investor and premises and really pulled behind a new venture in an area that has lost both the Stile and the Stoneham Arms in the past few years. So that is a success story.
In Nether Wallop, the community has come together with a neighbourhood plan and the Five Bells is going through the process to be registered as an asset of community value. People are optimistic that they will get a pub that has been closed for seven years back up and running again. Likewise, people in Longparish are pursuing the same objective for the Plough Inn.
The challenge is not finding the community that wishes to pull behind its local. It is finding the economic environment in which it can thrive. I respectfully point out to my hon. Friend the Minister that that is about the taxation of beer, as we have heard this afternoon—I will not bore anybody with stats again—and it is about business rates. It is about making sure that we have an environment in which the pubs we are hearing about this afternoon from all corners of the Chamber have the circumstances in which they can not only set up, but go on to thrive.
Alex Davies-Jones (Pontypridd) (Lab)
Diolch, Mr Gray. I am sure many people will offer to buy the hon. Member for Dudley South (Mike Wood) a pint after this debate. As a south Walian MP, it will come as no surprise to Members that I have numerous breweries, big and small, in my constituency that I know will be impacted by the proposed changes to beer duty.
Along with rugby and music, pubs and clubs are a vital part of our community across Rhondda Cynon Taf. They were at the heart of our miners’ institutes, and today they serve as a common meeting place for a range of people and remain at the heart of our communities. Long may they continue to do so. When Wales plays at the Principality Stadium, one would be hard pressed to find a pub that was not full to the brim of passionate fans, full of hwyl, eager to support our team on the turf. I promise not to mention the weekend scores.
Although I am lucky to have small breweries such as the Bragdy Twt Lol and the Glamorgan Brewing Company in my constituency, I know that they face immense pressures and tax burdens. We all know that UK beer duty is among the highest in Europe. It has already been mentioned that there is a 5% beer duty on a UK pint. It is 54p compared with 5p in Germany. For Bragdy Twt Lol in Treforest in my constituency, where a team of five led by Philip Thomas produce a quarter of a million pints every year, the duty has a massive impact.
Like other colleagues, I am also concerned by the review of the small brewers relief, which has allowed breweries specialising in British independent craft beer to grow and thrive. If the relief is reduced, or the production level lowered, it will make the market extremely challenging for the small breweries that are so central to the local economy, in south Wales and beyond. Smaller breweries are often denied access to markets because larger breweries are often tied to pub chains, and I am aware that some larger breweries are using what we might call more aggressive approaches, offering incentives to pub landlords in return for buying all their beer through their brewery chain.
I am sure that all colleagues will agree that we need to support small businesses that produce beer unique to our areas and heritage. I fear that if beer duty is reduced it will be the local economy across Rhondda Cynon Taf that will suffer. Far from being just about output, small breweries such as those in my constituency often support local talent and other local companies, procuring their services for a range of purposes. Small breweries in Rhondda Cynon Taf are also regularly involved in charity events. As others have said, they make a vital contribution beyond just their beer production. I shall continue to work ceaselessly with breweries in my constituency to oppose any plans to reduce the small brewers relief. It must not happen, if we are to continue our proud heritage of brewing craft beer in Pontypridd and beyond.
Steve Double (St Austell and Newquay) (Con)
It is a pleasure to take part in this important debate. I have the great honour of representing a constituency with St Austell Brewery at its heart. St Austell Brewery should be of particular interest to us, because it brewed the beer for the Long Live the Local campaign. I had the great honour of sampling one of the very first pints that were produced. I pay tribute to James Staughton, who has for many years been the chief executive of St Austell Brewery, and recently retired and stood down from that position. He was rightly recognised in the honours list with an OBE. He has been the driving force that has led the brewery’s success over the past 20 years or so, so that it now produces the finest beer in the country, Tribute.
There are 85 pubs in my constituency. I do not claim to have visited every one of them, although I suspect that over the past 40-odd years I have probably visited the vast majority of them. Every one of them is important to the community that it is a part of. As we have heard from many hon. Members, pubs are about much more than drinking beer. They are the heart of our communities—important for bringing people together to celebrate, commemorate and even, at times, mourn together. They are great for social cohesion and good for mental health. I believe it is possible that one reason we see mental health deteriorating is that people are not gathering to socialise, support one another and build friendships around a pint. We should therefore recognise the important role that pubs play. They are also important for raising money for charities. Many community pubs raise thousands or even tens of thousands of pounds every year to support local charities.
I am all for taxing things that do harm. I am all for tax on cigarettes. I think it should be higher. My question, however, to the Minister is why, if we recognise that pubs are so good for and important to our communities, we tax them so highly. According to the statistics that I have, pubs in my communities contribute about £105 million a year to our local economy, but they pay £30 million a year in taxation. That is too high. I call on the Minister: let us do all we can in the coming Budget and in the years to come to reduce tax on pubs. Yes, we can do it by cutting beer duty. We should do it as quickly as possible by reviewing business rates for pubs; but I ask him also to look carefully at how we can have a differential duty rate for beer sold in pubs—particularly on draft beer. If we can find a way to lower the duty on beer sold in pubs it would be an important step towards protecting pubs and making sure that they succeed for the future.
Dave Doogan (Angus) (SNP)
I thank the hon. Member for Dudley South (Mike Wood) for securing the debate. Is not it interesting that it is so well attended, and that we are all in such accord on one issue? I think it will be a long time before we find another one on which we are in such accord.
None of us has a monopoly on fantastic breweries and pubs in our constituencies, and that fact signifies the key importance of the issue. The debate, by my reckoning, focuses on two principal issues: one is the fairness of taxes that breweries and pubs face, and the disproportionate burden they must support; and the other is the value of pubs. To begin with the second issue, the pub, as many hon. Members have pointed out, is a venue for solidarity between members of communities—particularly small communities, or communities within larger conurbations. It is an opportunity for company for the isolated, and it provides opportunities for entrepreneurial advancement, whether artistic or in micro-brewing and other things. Notwithstanding any of those softer, more pastoral benefits that pubs generate for communities, they also generate £23.1 billion for the economy, which is not to be sniffed at either.
It seems to me there is something important for the Government to do. First, they need to admit that there is a problem. By the calculations of the Office for National Statistics, 11,000 pubs—23% of the entire estate—closed in the past 10 years. I think that we would all pretty much recognise that that signifies a problem that we need to deal with. We need to take a collective look at the burden of rates, VAT and duty on pubs. I am pleased that pubs in my constituency and elsewhere in Scotland benefit from the most competitive rates regime in these islands, but that is no help to anyone in England, Wales or Northern Ireland—so there is work to be done there.
I am not sure whether we should touch on the question of VAT, but we should touch on duty. In the research that I undertook to prepare for this speech, I could find only Ireland and Finland ahead of the UK, in the European context, for beer duty. I cannot speak for Finland, but I know that Ireland is also wrestling with a pub closure problem. A yawning gap between the price of on-sales and off-sales in the UK is feeding directly into the pressure on pubs. As many hon. Members have pointed out already, off-sales products are much more attached to the more harmful types of drinking—particularly lone drinking. Also, something that I believe is now popular with younger people is pre-loading before going out. I do not know anything about that, but it is definitely associated with problems of excessive consumption, leading to matters of public health concern, and to public order concern when things get a little out of control. If we do nothing else by coming here, I join colleagues in other parties in their pleas to the Minister to take a serious look at beer duty. I hope it will be reduced. Many of our brewers need that, and many pubs will not survive without it.
Tom Hunt (Ipswich) (Con)
No area or constituency has a monopoly of beer and brewing heritage, but Suffolk comes close. In Adnams, Greene King and Aspall, it has some of the largest brewers in the country, and it has many small ones as well. When I think about the time I spend in my constituency, many of my best moments have been in pubs. Last Friday I was at the Kingfisher pub at the heart of the Chantry community, celebrating Brexit. Also, I decided on my flat on the basis of where the nearest pub was—the Greyhound, a fantastic pub. We have a fantastic heritage, but we are struggling. In 2010, there were 75 pubs in Ipswich: in 2017, there were 55. That is quite a rapid rate of deterioration in the number of pubs in our town.
I agree with my hon. Friend the Member for Totnes (Anthony Mangnall) about the importance of urban pubs as well as those in rural areas. They are crucial in Ipswich. There are 1,500 jobs tied to pubs in my constituency, with more than £19 million in wages, so I want to say to the Government that the tax regime in which pubs must operate at the moment does not work. It is bad for jobs and communities, and for the country. Earlier this week I wanted, before speaking today, to talk to local landlords so I could relay the points that they raised with me directly through the debate. One of them said that he sometimes feels like a tax collector, not a small business person. The small business people who own pubs are creative and dynamic. They want to move their businesses forward and strengthen our communities. Let us get 150% behind them in the Budget.
Amanda Solloway (Derby North) (Con)
To say that pubs are the pillars of our community and the foundation stone of British culture is a cliché; but it is a cliché for a reason, because it is true. There is much to be said for pubs and what they bring to the country. I am sure that we all have some great memories of being down the local, although I could not possibly comment about my own experiences. Derby North has some spectacular pubs, such as the Wilmot Arms in Chaddesden, with its incredible quiz master, Jerry, and the Nags Head in Mickleover. In London, especially within zone 1, one would think that pubs were going through a renaissance. However, it is very different outside the metropolitan zone, where pubs are closing in their droves. So many of our communities have lost their heart as a result of those closures.
Pubs bring so many benefits, which I could talk about until the end of days, really. They combat loneliness; in fact, I have a nibble and natter down at our local, the Travellers Rest, for that very reason. They foster community cohesion and promote social wellbeing, and if somebody happens to have one or two too many, there is always a friendly face to offer them a glass of water. It goes without saying that pubs also make an economic contribution. In Derby North alone, there are 52 pubs and 11 breweries supporting 888 jobs. The industry in my constituency pays about £10 million in wages, £2 million in investment, and £9.1 million in taxes. However, pubs are under a lot of strain as a result of high rents and supermarket prices.
The Government are not blind to the issue. They have introduced a raft of measures such as the asset of community value scheme, a freeze on beer, cider and spirit duty, and business rate reliefs. The results have been spectacular: the rate of pub closures has halved. However, we can do more. We can bring down the number of closures even further, so that no pub has to close its doors. The Budget would be an excellent opportunity to do so, and I would wholeheartedly support the Government in that endeavour.
Jonathan Gullis (Stoke-on-Trent North) (Con)
I thank my hon. Friend the Member for Dudley South (Mike Wood) for securing this important debate. Pubs form the iron core of British culture. Whether we are going for a Beck’s Blue in January, sneaking in a swift half on a Sunday with our mates, or soaking up the sun and spilling out on to the pavements at five minutes past 5 on an idle summer afternoon, pubs facilitate a strong sense of community and act as a social fabric across the country. They are indispensable.
In Stoke-on-Trent North, Kidsgrove and Talke, we are the proud home of the Titanic brewery, which has benefited from small breweries relief. Titanic is a local, family-run success story; as its website boasts, the brothers Keith and Dave Bott went from brewing
“7 barrels to over 4 million pints a year”.
Is that not the Conservative vision: family, passion and the entrepreneurial spirit to be the change we want to see in the world? How then can it be right that Titanic’s tax contributions are more than Amazon’s corporation tax, and 10% of what Facebook pays? I want to see more entrepreneurial spirit. I want this Government to make it easier for breweries, landlords, business owners and punters. There are three ways in which that could be done, many of which have been touched on already.
First, we need to establish a long-term, sustainable model for business rates. If a pub wants to expand, or a new starter wishes to get on the property ladder to become a publican, that investment in a site is immediately taxed through business rates. Secondly, we must reduce beer duty. We have one of the highest rates of beer duty across the continent, and I want this Government to take advantage of our release from EU regulations and provide relief to pubs by lowering beer duty.
Thirdly, small breweries relief is a fantastic scheme, and I very much support its principal aim. Currently, a 50% reduction in beer duty is offered to all breweries that produce under 5,000 hectolitres per annum. However, there is a harmful cliff edge for breweries that go above that amount. Increasing the threshold for the volume of beer produced per annum will relieve all brewers of some extra cost, while removing a barrier to growth, investment and the creation of employment opportunities. Just under 900 people in Stoke-on-Trent North, Kidsgrove and Talke are already the beneficiaries of those opportunities.
Pubs are so important in Stoke-on-Trent North, Kidsgrove and Talke that on the day of recent general election the Foaming Quart was part pub and part polling station. As I have said, pubs are the very fabric of our society. I have been busy working hard on behalf of pubs in my constituency, nominating them for national and regional awards, and I am scheduled to hold my first pub surgery soon. I am grateful to have had the opportunity to speak in this important debate, and I hope that more help will be offered to publicans and brewers alike.
Mr Toby Perkins (Chesterfield) (Lab)
I congratulate the hon. Member for Dudley South (Mike Wood) on securing the debate. There will be a huge level of excitement and enthusiasm across the publicans’ world when they see the number of Members of Parliament who are showing their support for the industry. Many important points have been made about the overall burden of taxation, the inequities of the business tax regime, and the importance of making sure that small breweries relief continues to work and acts as an incentive for those brewers to grow into new areas.
It is also important that we continue to put pressure on the Government regarding beer duty. A lot has been said about the beer duty escalator introduced in 2008, but we should remember that it remained in place for three years under a Conservative Government. They milked that cow very well until 2013, and the level of duty paid on beer is actually more now than it was in 2010. However, whichever side of that argument Members are on, a message is being sent loud and clear right across the political divide that there needs to be a reduction in beer duty.
Finally, we sometimes overlook the role that taxation plays in damping down investment in the production of goods that can be exported around the world. We export huge amounts of whisky, gin and other spirits, and British alcohol producers are also tremendous innovators in many ways, including by creating products such as the ready-to-drink beverages that are manufactured in my constituency by companies such as Global Brands. If the Government listen to what has been said today, that will make a real difference to our industry.
Mrs Flick Drummond (Meon Valley) (Con)
I, too, wish to speak about how small breweries are taxed. Unlike pubs, which are closing, small breweries have experienced amazing growth over the past 20 years; there were 400 in 2002, but now there are over 2,000. As we have heard, every constituency seems to have one, and Hampshire has 35. However, that growth has stalled, and I believe that the Government can help.
I look forward to the review of small breweries relief. That relief is vital but, as we have heard, it tapers away at over 5,000 hectolitres. A brewery that doubles its production from 5,000 to 10,000 hectolitres might incur a 250% increase in duty. This Friday I will be visiting The Flower Pots in Cheriton, a Meon Valley brewery, which has told me that this punitive tax tapering means it is unable to expand. Small brewers everywhere face the same problem. This well-intentioned tax regime benefits small breweries, but it can also hamper their growth. Relaxing the taper rate could result in more production and employment, leading to higher tax receipts in the long run. I hope that the Government will consider giving small breweries that much-needed shot in the arm in this year’s Budget.
Mr Richard Holden (North West Durham) (Con)
I congratulate my hon. Friend the Member for Dudley South (Mike Wood) on securing the debate. I will be brief.
We have over 100 pubs in my constituency, many of which I have already visited, and I pledge today to have visited them all by the time of the next general election. As my hon. Friend for Dudley South has said, in many parts of my constituency pubs are the last community facility. I support the recent business rate changes but want them to go much further. I also support relief for small breweries and hope to see the cliff edge removed. That cliff edge particularly affects Consett Ale Works, a brewery in my constituency located behind The Grey Horse. I look forward to getting its beer behind the bar at the Strangers’ before the summer recess.
As an MP, I personally back all local pubs in my constituency, including by holding meetings and surgeries in them. However, I was recently attacked by some local Labour activists for holding surgeries in licensed premises in my constituency. It has come to something in our country when Labour activists are attacking the Tory MP for North West Durham for holding surgeries in the Steel Club in Consett. I continue to support the Long Live the Local campaign, and urge colleagues on both sides of the Chamber to ignore the woke, new-age temperance movement and back their local pubs. I hope that the Minister will pass on our collective pleas regarding the Budget to the Chancellor of the Exchequer.
Jane Hunt (Loughborough) (Con)
Loughborough has 80 pubs and two breweries—I declare an interest, because my son works in one of them. In my maiden speech I referred to reducing business rates for pubs, which I am very keen to do. I am also keen to support the campaigns to cut duty on draught beer. There is an old-fashioned premise that a pub should be a cash cow for the Treasury, but the choice of cheap alternatives is now vast, and the impact of the loss of a pub on the local community is huge. That pub is often a community centre, a club headquarters, a friendly society or a meeting place that also just happens to sell beer. We need to save those local facilities.
I welcome the Government’s review of small breweries relief. My constituent Andrew Reed, who founded the Charnwood Brewery, emailed to inform me that the brewery is a small family business that supplies pubs and restaurants in a 15-mile radius. Although it does not enjoy the economy of scale of other brewers in the area, and its annual turnover is below £1 million, it still contributes £300,000 to the Exchequer. He says that losing the relief would have an impact: how could the brewery compete in the local market against national and international brewers?
Stephen Flynn (Aberdeen South) (SNP)
I thank the hon. Member for Dudley South (Mike Wood) for securing the debate. This is my first experience of a Westminster Hall debate, and it is fantastic that so many hon. Members are interested in beer—more than are interesting in sitting in the main Chamber most of the time. That is the state of play in politics.
We have heard some interesting contributions, not least from the hon. Member for Clacton (Giles Watling), who highlighted the fact that he is well kent in many pubs. I invite him to come to Aberdeen South any time he wants to go for a beer, but the pint is on him.
I actually have shares in a brewery company, but I do not need to declare them because I have only two. I am sure that many hon. Members are aware of the company, BrewDog, which is one of the huge success stories of north-east Scotland. We have many brilliant local craft breweries in north-east Scotland that must be celebrated, such as Park Brew in Angus and Eden Mill in the constituency of the hon. Member for North East Fife (Wendy Chamberlain), who I saw earlier. We have to celebrate the number of breweries in Scotland and across the UK.
Joanna Cherry (Edinburgh South West) (SNP)
The brewing industry is important to the Scottish economy across the nation. In my constituency alone there is the Caledonian Brewery, the headquarters of Heineken UK, the award-winning Edinburgh Beer Factory and the International Centre for Brewing and Distilling at Heriot-Watt University. Does my hon. Friend agree that if the Chancellor wants to help the Scottish economy, he will cut beer duty?
Stephen Flynn
It is an important discussion and I will come on to that point. I have been an elected Member in Scotland for a considerable period of time, and what I hear from Conservatives there is that the business rates in Scotland are a complete and utter mess. Having listened to this debate, it appears that they are an even bigger mess in England, if the contributions from Conservative Members are anything to go by.
The important point in the Scottish context, as my hon. Friend the Member for Angus (Dave Doogan) noted, is that Scotland has the most competitive business rates in the entire Isles. Indeed, more than 100,000 businesses, many of them local pubs, are in receipt of the small business bonus, without which they would not survive. In the Scottish Parliament the Conservatives have put that at risk in the last few days. It was only after a dramatic U-turn that they decided to side with the Scottish Government to ensure that the small business bonus was kept in place. That was right, but it should never have been in doubt. With regard to business rates, we in Scotland are well placed to say that we support local pubs and local industry, but there is certainly more that can be done.
One aspect that has not been touched on in enough detail when it comes to taxation is the public health impact.
Jim Shannon (Strangford) (DUP)
The cost to the NHS of excessive drinking is clear. Does the hon. Member agree with the sentiments put forward by me and other hon. Members that pubs offer a secure method of drinking? The key is moderation. A landlord can give drivers free soft drinks all night or remove keys from someone who is still standing and talking yet unable to drive. When it comes to the message of drinking sensibly, that is the way to do it.
Stephen Flynn
The hon. Member makes an important point, which many hon. Members have also made. That is why we have to take a holistic view. We cannot simply say that taxes need to be cut without looking at the public health impact. Notwithstanding that, a pub is a much safer place to drink than the pre-loading we heard about earlier.
It is important to note that about 22 individuals die every week in Scotland due to alcohol abuse. That is a shocking figure that none of us can be happy about. There has been action on that in Scotland, through the introduction of minimum unit pricing, which is expected to save 392 lives over just five years. We certainly support the reform of beer excise duty, but we need to look at taxation holistically and in terms of public health.
The elephant in the room is the fact that great swathes of our hospitality sector rely primarily on the work of EU nationals. In Scotland, roughly 11% of EU nationals work in the hospitality sector. They are crucial to the success of our pubs, hotels and the entire hospitality industry. That is why Scotland needs freedom of movement, and why it is incumbent on Conservative Members to ensure that when the Brexit deal goes through, free movement of people from the European nations to Scotland continues.
James Gray (in the Chair)
The hon. Member for Norwich South (Clive Lewis), who was supposed to wind up for Her Majesty’s loyal Opposition, apologises for being unavoidably detained elsewhere. I am grateful to Stephanie Peacock for standing in.
Stephanie Peacock (Barnsley East) (Lab)
It is an unexpected pleasure to serve under your chairmanship, Mr Gray. I congratulate the hon. Member for Dudley South (Mike Wood) on securing this important debate and on his work with the all-party parliamentary group, of which I am proud to be a member. The fact that the debate is so well attended by hon. Members from both sides of the House shows how important pubs are to our constituents. Indeed, this month, I have had more emails about this debate than about Brexit, so that is some progress.
Several important issues were raised by hon. Members on both sides, including how important local pubs are. They are a world-renowned institution that dates back to the 11th century. In Barnsley, we sadly lost the Black Bull pub a couple of years ago, which was 250 years old. That is just one example, but pubs often have an historical and cultural significance. Through the generations, people have gone to sit in the pub and talk about their everyday lives.
Supporting our pubs makes economic and social sense. The statistics have been rehearsed today. Pubs provide more than 600 jobs in my local economy in Barnsley. The Acorn Brewery is one example. Across the country, they provide 900,000 jobs, £23 billion of economic value and £13 billion of taxation.
A number of issues have been raised, and the Minister has a number of questions to respond to. Labour has called for a radical overhaul of business rates to help local pubs, and a review of the pubs code and pub closures. As CAMRA has pointed out, 18 pubs close a week, which is a tragedy. Once we let them go, we will find it much harder to get them back.
I have a couple of questions for the Minister. What assessment have the Government made of the impact of closures on high streets? I represent a town. I am not saying that pubs are not important to cities, but in small villages and towns, they are the hub of the community, so it is important to look at the impact. That also feeds into the Government’s loneliness strategy, in which pubs were cited. What assessment has been made in relation to that?
The crucial issue for this debate is the impact of high taxation. For every £3 made in a pub, £1 is sent to the Treasury, so surely we need to reconsider beer tax. On average, pubs in the UK pay £140,000 in tax, which is disproportionately high. We need to look at that. There are also important issues about public health. While there is a public health impact, they do provide a safe, secure and perhaps moderate area in which to drink and socialise.
I thank and congratulate all hon. Members who contributed to the debate. I look forward to listening to the Minister.
The Exchequer Secretary to the Treasury (Mr Simon Clarke)
I join hon. Members in paying tribute to my hon. Friend the Member for Dudley South (Mike Wood). He has done the unusual thing of bringing half of Parliament along to a Westminster Hall debate, which is not only a great tribute to his popularity as chairman of the all-party parliamentary group, but a reflection of the importance that we all ascribe to this issue, which affects our communities.
I thank all hon. Members who have contributed to the debate. As has been said, there has been a tone of great unity on the issues. There is a clear consensus about the centrality of pubs and the beer industry, and about the solutions that exist in terms of making sure we help the sector to thrive long into the future. It must be said that asking elected representatives to talk about lowering the burden of tax on beer and pubs may be the nearest thing we ever get to motherhood and apple pie in this place, but it is a serious issue that goes to the heart of community life, as the hon. Member for Barnsley East (Stephanie Peacock) said. Pubs are places to meet and socialise, and breweries are important regional employers.
In his delightful speech, my hon. Friend the Member for Clacton (Giles Watling) reminisced about his trips to Stratford. As we know, Shakespeare has a line for everything, including the following from “A Winter’s Tale”:
“a quart of ale is a dish for a king.”
He was, of course, right—we can surely all agree on that. With that in mind, it is a great tribute to the United Kingdom that we have over 2,000 small breweries, and beer exports accounted for almost £500 million-worth of sales last year.
Alex Chalk (Cheltenham) (Con)
Does the Minister agree that, with a benign tax regime, independent British brewers can be an even greater exporting strength? The DEYA brewery in my constituency has achieved extraordinary international strength over the past five years. Has the time not come to back independent British brewers to go global?
Mr Clarke
I could not agree more, and that is the spirit of Brexit. We need to take advantage of opportunities to drive exports. It is something that we want to do across the piece to ensure that we deliver a successful economy, have a competitive business tax regime and support businesses large and small. That is what the Government have been intent on doing. Our employment allowance changes reduced national insurance contributions by up to £3,000 for over 1 million employers. We have cut corporation tax and frozen or cut beer duty in six of the last seven Budgets, which means that beer duty is now at its lowest level in real terms for over 30 years, and we have repeatedly given support to pubs through the business rates system.
Jim Shannon
UKHospitality has said that these businesses represent 10% of UK employment and generate £39 billion of tax for the Exchequer. Does the Minister agree that engaging with the sector would help businesses to survive and to grow?
Mr Clarke
The hon. Member is an assiduous attender of Westminster Hall debates, and I am absolutely delighted to say that his persistence will be rewarded. My officials and I will always be glad to engage with the sector.
One of the most important issues that came up in the debate was raised by the hon. Member for St Albans (Daisy Cooper) and my hon. Friends the Members for Devizes (Danny Kruger) and for North West Durham (Mr Holden): the impact of business rates and the associated challenges. Since 1 April 2019, eligible pubs with a rateable value below £51,000 have received a one-third discount on their business rates bills. As my hon. Friend the Member for Totnes (Anthony Mangnall) rightly pointed out in his excellent speech, they will receive even greater support from 1 April as we increase the discount from one third to 50% and introduce a new £1,000-worth of relief for pubs with a rateable value below £100,000. Eligible pubs will be able to claim both reliefs.
Robert Largan (High Peak) (Con)
I am pleased about the support the Government are putting into pubs. As hon. Members have mentioned, they are the centre of our communities. I want to highlight a pub in my constituency, The Pride of the Peaks in New Mills, which this Christmas gave 50 hampers and Christmas meals to elderly people to help combat loneliness. Does the Minister agree that pubs are the absolute heart of our communities?
Mr Clarke
My hon. Friend’s intervention draws attention to precisely the social value that pubs add. His constituency is a rural one in Derbyshire, and many small pubs currently benefit from 100% rural rate relief, as well as small business rate relief. Those are the kinds of reliefs that we want to encourage in order to ensure that we support businesses in all areas of the country, not just in our big towns and cities.
All pubs will continue to benefit from wider reforms to business rates, most notably the switch from RPI indexation to CPI indexation, which took place in April 2018. That change alone is saving business rate payers over £6 billion over the next five years. More widely, the Government are committed to carrying out a fundamental review of the business rates system, and further details will be announced in due course.
The hon. Member for Barnsley East mentioned the impact of pub closures on the high street, which is something the Government take into account. We have initiated the future high streets fund, which is designed to mitigate the pressures on the high street due to changing retail patterns.
James Daly (Bury North) (Con)
One of the main burdens on pubs in my area is the disgraceful expulsion of Bury football club from the Football League. Anything that can be done to assist pubs in my area and the rebirth of Bury football club would be an eminently good thing.
Mr Clarke
I was genuinely saddened by the expulsion of Bury. I am a football fan myself, and Middlesbrough came very close to expulsion from the Football League in 1986. I know the damage that it does to a community and the fear that it strikes. We will do everything we can to support pubs in Bury and elsewhere in the March Budget.
As hon. Members will know, recent data from the Official for National Statistics are more encouraging, showing that the number of pubs in the country has increased for the first time in a decade. The number of pubs employing fewer than 10 people also grew, showing that the revival extends beyond the big chains. I appreciate that it is early days, and we are certainly not claiming that we have reversed all the challenges facing the pub trade, but it is good to see data showing that the cumulative impact of the changes we are making is positive. In fact, pub revenue is at its highest level since 2010, and employment is at a high not reached since 2001. Those are fantastic results for the sector and show that the pub remains a vital part of modern Britain.
I now turn to future possibilities. The Conservative manifesto committed the Government to review the structures of our alcohol duties now that we are free to determine our own priorities outside the European Union, and the Chancellor will make announcements about this in due course. The hon. Member for Mitcham and Morden (Siobhain McDonagh) referred to our review of small brewers relief, which is obviously really important—indeed, the hangover has persisted for too long.
Sarah Atherton (Wrexham) (Con)
A few years ago, I owned and ran a microbrewery, so I know some of the difficulties facing breweries, including the fledgling Magic Dragon brewery in Wrexham. I urge the Minister to support the cut in beer duty and increase small brewers relief.
Mr Clarke
We absolutely want the Welsh dragon to be roaring, so I take my hon. Friend’s point. As a serial entrepreneur, she has a lot of experience in this area. We want to ensure that the operation of small brewers relief helps to drive innovation and growth, and we will shortly make further announcements about that through the Budget process. I want to reassure the hon. Member for Pontypridd (Alex Davies-Jones) that the review is not about whether to abolish small brewers relief; it is about its operation and ensuring that it is working effectively.
My hon. Friend the Member for St Austell and Newquay (Steve Double) referred to the 85 pubs in his constituency, which I look forward to going round when I come down to Cornwall in due course. He referred to the burden of taxation. Obviously, when we are doing these things as part of the Budget process, a cut to alcohol duties represents a significant loss in revenue for the Exchequer. The effect of inflation means that, in real terms, beer duty has been cut every time that we have frozen it over the past several years. Even in nominal terms, beer duty is now lower than it was in 2012, but we will continue to review all taxes.
Grahame Morris
Can the Minister clarify his thoughts about the cliff edge after the production of 5,000 hectolitres, to which several hon. Members have referred? Will there be a taper?
Mr Clarke
I am a big fan of the Castle Eden brewery. As a fellow north-easterner, I used to pass it regularly. Treasury policy is to avoid precipitate cliff edges that distort behaviour. Clearly, I cannot pre-announce any of the findings of the review. There are a range of factors and representations that need to be borne in mind, but we will issue clarity to the sector in the next few weeks.
Dave Doogan
I appreciate what the Minister says about prior notice, but will he take a look at the disproportionate effect of tax on on-sales compared with off-sales? It is unsustainable, notwithstanding the issues of public health, public nuisance and community support.
Mr Clarke
I take the hon. Member’s point. Clearly, we want to support drinking in social settings such as the pub. It has clear societal benefits as well as business benefits, and the Treasury takes that into account.
The Treasury keeps all taxes under review and is deeply sensitive to the range of challenges facing the pub sector and brewery sector, which we are keen to support. The support of all hon. Members present is powerful, and it speaks to the fact that this is a decision we need to get right. I know that all hon. Members will keep us under close scrutiny about the decisions we make.
I thank my hon. Friend the Member for Dudley South for securing the debate. What has happened today is a great tribute to his leadership on these issues, and he deserves our thanks.
Mike Wood
I thank all hon. Members who have contributed to the debate. We have had many contributions from six different political parties representing all four nations of the United Kingdom. They have displayed a rather rare unity of opinion, purpose and passion: beer and pubs are a force for good, and they should be supported through our taxation system.
I thank CAMRA, the Society of Independent Brewers, the British Beer and Pub Association, Long Live the Local and the quarter of a million people who have signed up to the Long Live the Local campaign for highlighting the importance of this issue. We have the opportunity of two Budgets this year, and I hope we will have support on beer duty in March. At the end of the year, we can have the announcements on a new system of beer duty for a post-Brexit Britain.
Question put and agreed to.
Resolved,
That this House has considered taxation on beer and pubs.