Beer Duty
(2 days, 8 hours ago)
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Mr Will Forster (Woking) (LD)
I beg to move,
That this House has considered beer duty.
It is a pleasure to serve under your chairmanship, Dr Murrison. We are here this afternoon to discuss beer. I love beer, and so does Great Britain. I secured this debate to acknowledge calls from constituents, brewers and the pub sector to call on the Government to reduce beer duty by 50p. That call makes economic sense and is backed up by the industry.
My Woking constituency is home to a great little brewery called Thurstons in Horsell and Asahi’s UK headquarters—a huge brand that covers Fuller’s, Peroni and Cornish Orchards, to name just a few. The beer and pub sector in Woking supports over 1,800 jobs and contributes £100 million to our local economy, yet customers and the industry across the whole country are struggling. Pubs are much more than just businesses; they are hubs in our high streets and the centres of community life.
Why 50p? The answer lies with the new extended producer responsibility scheme. In May, MPs were talking at great length in this Chamber about how brewers currently make around 5% on the average bottle of beer. Under EPR, brewers will lose around 3p a bottle, unless they raise prices or the Government step in. The economics simply do not add up. Without action, brewers will barely make a profit on bottled beer. By reducing beer duty by 50p, the Government would offset the cost of EPR for not just producers, but the entire supply chain, and, ultimately, consumers. All the people—from farmers in their fields to brewers in their brew houses, to the people drinking in pubs—are our constituents. It is our duty to reduce beer duty.
Sarah Dyke (Glastonbury and Somerton) (LD)
Glastonbury and Somerton is home to some lovely small breweries. Obviously, we are the natural home of cider and produce some of the world’s best. Fine Tuned Brewery in Somerton is one of our brilliant little breweries. Although I recognise the Government’s intention to make the packaging more sustainable, that cannot come at the expense of our producers. Many are concerned that the EPR will be a killer nail for their businesses, making them responsible for the end-of-life management of packaging that they do not even produce; they have to buy it. Does my hon. Friend agree that the current approach to EPR will create escalating costs for producers, threatening the viability of small rural businesses in particular, such as Fine Tuned Brewery in Somerton?
Mr Forster
I completely agree with my hon. Friend. We were in this Chamber talking about EPR several months back; she is a fine advocate for her whole constituency, and particularly the Somerset cider industry.
I talked about our need to reduce beer duty. The Chancellor announced a 1.7% reduction in alcohol duty on draught beer and cider in the previous Budget—I will give the Government that. However, the standard rate of duty on non-draught products is set to rise by 3.6%. When combined with the cost of EPR, that will seriously threaten the brewing and bottle industry in terms of growth and investment.
The Government are finding catchy headlines to say at the Dispatch Box, but the economic picture painted is this: the Labour Government are giving with one hand and taking with the other. This debate, at its heart, is a political response to that bad economics. The Department for Environment, Food and Rural Affairs seems determined to push ahead with EPR, despite legitimate concerns raised in the Department. Meanwhile, the campaign to reduce beer duty, which has long been led by the Campaign for Real Ale and others, enjoys wide support across the industry.
Ian Roome (North Devon) (LD)
Does my hon. Friend agree that a reduction in beer duty would help hard-working publicans like Simon and Alison from a micropub in Barnstaple called Beer Matters, who have just won the CAMRA award for North Devon, to continue in business? Not only is it a fantastic micropub, but it serves as a good social hub in the community.
Mr Forster
My hon. Friend is right to promote his amazing community hub and pub in Barnstaple. I pass on my best wishes to Beer Matters for its award.
A lot of us have concerns about the EPR rules. Under the current EPR rules, glass packaging used in pubs is wrongly classified as household waste, even though it is collected and recycled via private commercial contractors. EPR is meant to fund the cost of removing packaging from household waste streams—not from businesses that already pay for their recycling. This means that brewers and pubs face duplicate charges for the same glass, despite it never entering the household.
DEFRA has acknowledged that the policy is wrong and that it was never intended to be implemented in this way. It has committed to the industry to find a solution, but no fix has yet been delivered, and it has pressed on with the scheme regardless. Reducing beer duty would mean less tax per pint in principle, but, in practice, it would bring a great benefit.
Wera Hobhouse (Bath) (LD)
Pubs such as The Grapes free house in Bath provide so much more than just being somewhere to drink or meet. They host cultural events and all sorts of things that otherwise could not take place, and that would be a loss to our community and cultural life. Does my hon. Friend agree that the small loss in beer duty would be far exceeded by the benefits we get from having these places open and running?
Mr Forster
I agree. There is an economic argument for a small reduction in beer duty per pint, but, as she highlights, there are wider public community benefits as well. I have talked about trying to grow the economy and the fact that less tax per pint has better economic benefits. One of Labour’s key economic election promises was to grow the economy, so why are the Government ignoring calls from the industry to help deliver one of their key missions?
Edward Morello (West Dorset) (LD)
My hon. Friend will know—I have said this several times in this Chamber—that the overwhelming majority of businesses in West Dorset are microbusinesses, many of them in hospitality. Does he agree that EPR represents yet another attack on the hospitality sector, alongside increases in business rates and national insurance contributions?
Mr Forster
My hon. Friend is completely right. If the Government reviewed and cut beer duty, as I am requesting, the hospitality sector would see increased growth. Consumers would enjoy cheaper beer, and the industry would have more capital to invest, growing our economy when we need that most. Most critically, there would likely be an uptick in sales due to lower prices. All of that could lead to overall higher tax receipts, counteracting the flawed economics of the EPR policy.
Beyond the industry numbers, this is about people, communities and our British way of life. As my hon. Friends have highlighted, pubs are vital cultural and social centres. They bring people together, help combat loneliness and support the mental health of the nation. Many of us have personal stories that connect us to our local pubs. They are woven into the fabric of our lives, yet pubs continue to face immense pressures. The British Beer and Pub Association estimates that 378 pubs will close in 2025 alone, risking over 5,600 jobs. That is more than one pub a day.
Mr Jonathan Brash (Hartlepool) (Lab)
The hon. Gentleman is making a persuasive speech about reducing beer duty. One of the other great pressures facing microbreweries—such as the Crafty Monkey Brewing Co. in Hartlepool—is the inability to get their product into tied pubs. That is bad for pubs and microbrewers. Would he support a change to the pub code to allow them to get their produce into more pubs?
Mr Forster
It will be interesting to see what the Government make of my persuasive speech, but I thank the hon. Member for his kind words. I am sure he will not be told off for saying that from his side of the Chamber. I am happy to look into what he said about changing the pub code. One of the things I am highlighting is that we want a thriving independent sector that supports small businesses, and reviewing the code could help.
I am really concerned that, effectively, one pub has closed every day in this country this year. Nationally, hospitality employs 3.5 million people. That is 10% of all UK jobs, and the concentration is even higher in coastal areas, such as those represented by some colleagues who have spoken today. The beer and pub sector contributes £34.3 billion to the UK economy and generates £18 billion in tax. It supports around 1 million jobs from grain to glass.
The UK has the second-highest beer duty in the whole of Europe. The highest is Finland, where alcohol can be bought only in state-owned shops or licensed bars and restaurants. It is one of the two European countries that effectively has an alcohol monopoly. On a European level, Finland’s alcohol prices are considered extreme compared with other countries, but even now, the Finnish Government are aiming to reform their policies to bring them more into line with others in Europe.
Bizarrely, we are more like Finland in regard to our alcohol laws, when we should be more in line with countries such as France and Germany, which have similar drinking traditions to us. So I ask the Minister: when will the UK take the same approach? Higher beer duty has wider consequences, such as increasing prices for consumers, reducing investment, fewer choices on the shelf and making the UK less attractive for international brewers.
Even with some recent reforms, the burden remains far too high and continues to threaten the viability of local pubs and breweries. Reducing beer duty is an economic argument, yet it is also about protecting British culture, supporting local jobs, encouraging investment in communities and helping people with the cost of living. I hope that the Minister will recognise that, as some of his colleagues have, and agree to review beer duty to ensure that the level that is set grows our economy and protects jobs. Let us act before the damage to the British way of life becomes irreversible.
Mike Wood (Kingswinford and South Staffordshire) (Con)
I draw hon. Members’ attention to my entry in the Register of Members’ Financial Interests. I have also received hospitality from CAMRA, the BBPA, UKHospitality and probably the Society of Independent Brewers and Associates. I rise to speak not only as the Member of Parliament for Kingswinford and South Staffordshire, but as someone who had the honour of chairing the all-party parliamentary beer group for more than five years. During that time, I worked with colleagues across the House to ensure that our brewers, pubs and beer lovers had a Government that understood their value to communities, our economy and local culture.
Under the previous Government, real progress was made on duty. We delivered reforms that simplified beer duty, recognising the unique role that pubs and small brewers play in British life. We implemented draught relief, giving pubs a competitive edge and encouraging the sale of lower-strength beer on tap. Crucially, there was a series of freezes and cuts to beer duty year after year, scrapping Gordon Brown’s damaging beer duty escalator and meaning that, by the time of the last election, the duty paid on a pint of real ale in a pub was lower than it had been 12 years earlier.
We embraced the freedoms afforded to us post Brexit to create a more proportionate, strength-based alcohol duty system, designed to support responsible consumption and encourage the production of lower-strength drinks, while putting pubs and licensed premises on a fairer footing compared with supermarkets and off-licences.
Wera Hobhouse
Does the hon. Gentleman agree that, although beer duty seems to target large brewers, it quickly trickles down and hits the much smaller venues and brewers disproportionately hard?
Mike Wood
The hon. Lady is completely right because of the margins that such brewers operate on. The concern now is that, if reports are correct and the Government are considering beer duty as a revenue raiser to fill the gap in the Chancellor’s budget, so much of the progress will be put at risk.
Since the Government took office last July, almost every decision that the Chancellor has taken seems to have gone in the wrong direction when it comes to supporting pubs, hospitality and brewing. Just months into office, the Chancellor confirmed that beer duty would rise in line with the retail prices index from February this year—a sharp and sudden shift, which wiped out so many of the gains. That really needs to be a one-off because the return of automatic uprating every year would be a real betrayal of both the brewing industry and consumers. It would mean higher prices at the local, more pressure on struggling pubs and reduced confidence for independent brewers. That would be not just bad policy but economically incoherent. While costs are high across the supply chain and the Government are piling further costs on to pubs and brewers through wage costs, the Government have decided to add further instability and more tax, rather than consolidating reforms that were already delivering value.
Under the last Government the draft relief was introduced to give pubs a much needed lifeline, cutting duty on beer from draft containers over 20 litres and reinforcing the social and economic value of the on trade. I campaigned hard for that. I was delighted when my right hon. Friend the Member for Richmond and Northallerton (Rishi Sunak), as Chancellor, agreed to a differential duty for draft beer. Then the Leader of the Opposition, as Exchequer Secretary, introduced it as part of the alcohol duty review.
I know that the Minister harbours some ambitions; I hope that the subsequent elevation of predecessors who moved to support pubs through duty reform will offer him some inspiration. Reports of a potential review that could scale back the benefits of that draft beer duty rate are deeply concerning. Small producer relief, launched under the last Government and building on the success of Gordon Brown’s small breweries relief, was a significant step forward. I pay tribute to Gordon Brown for that measure, if nothing else: small breweries relief played an important part in encouraging the emergence of a thriving small brewing community, from hobbyists through to established local brewers, in every part of the country. We are seeing the long-term benefits, both economic and cultural.
Mr Brash
The hon. Gentleman has argued eloquently in favour of the record of the last Government, but ahead of the last general election the British Beer and Pub Association reported that more than 10 pubs a week were closing under the last Government. That does not seem a record to be particularly proud of.
Mike Wood
The hon. Gentleman is right to say that 10 pubs a week were closing; a number of those, I think, had been artificially sustained through covid by support, but there has been a long-term trend, going back to the turn of the century, of far too many pubs closing. The difference was that the last Government were taking action to try to address that trend. We are waiting to see whether this Government will match that action.
British beer is not just an industry but a cultural institution. The evidence of a link between price and alcohol consumption is tenuous at best, but we do know that as prices rise, habits change. When they rise sharply, consumers switch how and what they drink: they go from drinking low-strength beers and ciders to higher-strength wines and spirits. They go from drinking in well-regulated pubs and bars to drinking more at home, without that monitoring and oversight. Publicans tell us that the support that they once felt is now gone. Brewers, especially in rural and coastal areas, are seeing margins tighten and options shrink, and it is drinkers who are paying more for less.
We are looking to the Government to reverse the automatic RPI uprating and freeze duty for the remainder of this Parliament; to expand draught relief, to ensure that packaged beer sold in pubs pays a significantly lower duty rate than that sold mainly in supermarkets; to raise the small producer threshold, allowing businesses, including family brewers, to grow without fear of penalty; and to commit to a long-term transparent policy that supports investment and sustainability in the brewing industry.
Neither our brewers nor our community pubs can afford to take the hit now by being seen as cash cows for the Chancellor’s need to raise revenue. Real ale deserves real support. Labour’s national insurance rises and slashing of business rate relief has hammered pubs, while its cap on business property relief is a real threat to family brewers. The least that the Government can do is offer some comfort by reducing the pressures caused by high beer duty rates. Consumers, publicans and brewers alike will be watching carefully to see whether the Minister is truly on their side.
Bobby Dean (Carshalton and Wallington) (LD)
It is a pleasure to serve under your chairmanship, Dr Murrison. I thank my hon. Friend the Member for Woking (Mr Forster) for securing the debate. Given all the Liberal Democrat interventions, it seems that we are firmly the party of beer and pubs.
Bobby Dean
My hon. Friends all made their contributions and they are all on the record; there is no disputing that we have won today—one-nil to us.
Pubs are central to communities, as we have heard from others, and Carshalton and Wallington is no different. One of my favourite things about living in the Carshalton area is that we have some great pubs. I tried to list them all on the Floor of the House one time, but I was two short; I will not repeat that mistake here today. People make artwork about our pubs and there is a defined pub crawl that people come to our area to do. People come from all over the region because for six out of the past 12 years one pub, The Hope, has been CAMRA’s Greater London pub of the year. Pubs are super-important to where I live.
In a world with declining physical spaces, pubs are some of the last refuges for interaction with others. We have less footfall on the high street, fewer people going into offices and, let us be honest, it is getting quite pricey to go out for a meal. The pub is one of the last places we have to get together with our mates, or maybe even turn up on our own to be around other people, so it is important that we protect the industry.
The industry is under threat, and hon. Members have spoken about the number of pub closures in recent years. It is getting tough for the hospitality industry in general. People talk to me about a staffing crisis and say that they are struggling to make ends meet. A number of smaller pubs, which used to be at the heart of communities, have been bought up by bigger pub chains, losing their sense of community. That is also an issue. Whenever policy looks as if it is going to have an impact, we should not look at pubs as we do other businesses, but as an important part of the community to protect.
The EPR has had an impact on the cost of selling beer. It has been acknowledged that that was an unintended consequence that needs to be fixed, and campaigners are putting forward suggestions about how we can fix that. They posit that this would be a Treasury winner, although we might hear differently from the Minister. Will the Minister model the figures, so that we can see what the numbers look like and what the net outcome of such a change would be, taking into account the expected increase in sales? If those figures do not show a net income for the Treasury and instead show only a marginal loss, will the Minister consider the wider benefits to the community, as well as the possible multiplier effect? That could boost the industry more generally.
My point is that a policy was introduced with good intentions but is perhaps having unintended consequences, and the centrality of pubs to our communities means that we ought to be addressing all asks by campaigners and making sure that we get this right.
Jim Shannon (Strangford) (DUP)
It is a pleasure to serve under your chairship, Dr Murrison, and it was a pleasure to hear the hon. Member for Woking (Mr Forster) set the scene so well. I was intrigued by the hon. Member for Carshalton and Wallington (Bobby Dean) referring to the fact that Lib Dems were here. It made me wonder what that means about the Lib Dems—I say that in jest, of course.
I am thankful that beer has become more than the mainstays of Harp, Carling and Guinness, which are all wonderful beers and stouts but increasingly being challenged by small independent brewers. There is only one small independent brewer in my constituency, but they are good guys; they have a good company, and I wish to mention them. Grant in my office tells me that Bullhouse East craft beer, which began in Newtownards, is top class and, for any of the big brands, hard to beat. I have tried it myself and I also think it features up there, but that is just my opinion.
Hon. Members may not be aware that, in Northern Ireland, small independent breweries are severely restricted from offering the choice and variety of local products that consumers demand, because of the liquor licensing laws. That limits Northern Ireland’s economic, hospitality and tourism opportunities and means that 99% of beers sold in Northern Ireland are imported. This year, Northern Ireland lost 20% of its breweries because of the limits. The current review of the licensing system, including the surrender principle, is the opportunity to introduce much-needed reforms. I will ask a question of the Minister at the end of my speech and I will be happy for him to get back to me in written form if that makes it easier, because of the particular question that I intend to ask.
Granting Northern Ireland’s independent breweries the ability to properly open taprooms, as happens in England, Scotland and Wales, would enable small businesses to reach their potential, meet consumer choice and increase tourism. I believe that is what we should be considering for Northern Ireland, so that is my wish and my request to the Minister. The Licensing (Northern Ireland) Order 1996 limits the number of alcohol licences available. Under the surrender principle, an existing licence must be surrendered before the granting of a new one. It is a quirk in the law, but it means that someone has to hand one in so that someone else can buy one, and the premium is exorbitant.
Obtaining a new licence costs well over £100,000, which is unaffordable for most small businesses. In some areas of Northern Ireland, it is impossible to get a new licence. The Licensing and Registration of Clubs (Amendment) Act (Northern Ireland) 2021 introduced a new but extremely limited local producer’s licence, but its cost of £10,000 or more outweighed its limited benefits. It was very limited, restricting a brewery to opening twice a week for 12 hours and selling only its own products.
Northern Ireland’s 23 small breweries struggle to sell their products in local pubs, as the vast majority are locked into sole-supply contracts with globally owned breweries. That is another negative for those people who want to be more independent, to have more choice and to give their customers more choice. Many of those globally owned breweries do not allow local draught beer to be sold. Currently, the only realistic option for Northern Ireland’s small independent breweries is to export their beer to the rest of the UK or to the Republic of Ireland. In England, Wales and Scotland, small independent breweries are permitted to apply for a licence to properly open taprooms, which helps to create jobs, regenerate the community and grow tourism.
The one thing that we have in Northern Ireland and have tried to encourage—this applies in particular to my council, Ards and North Down borough council—is tourism. We are very keen to ensure that tourism can produce economic advantages, jobs, money and opportunities for small businesses to grow as well. Northern Ireland’s independent breweries need the same opportunities to grow and thrive. Any discussion on Northern Ireland’s top-class beer industry must come with us urging Government to support our local breweries and, obviously, to liaise with the Northern Ireland Assembly to press for reform. That is what I look to the Minister for today. As I said, I will be very happy if the Minister wishes to come back to me on this issue in a letter to indicate what can or cannot be done.
The one thing I do know is that we in Northern Ireland want to play our part. We do not have a large number of breweries; we have 23 across Northern Ireland, with one of them being in my constituency, but I am very keen to see the opportunities presented by the proposal from the hon. Member for Woking, who as I said set the scene very well, and for us to be able to be part of that. I am ever mindful—others have referred to the news in the paper in the last two weeks about the number of pubs that will close in the United Kingdom over the next period of time; I think one per week was the figure referred to—that there is pressure on the hospitality sector and, in particular, on pubs. They are part of the community. Whether people are going for a drink, to socialise, to have fun, to meet people or for a meal, pubs are integral. Let us do our best to ensure that we keep all the ones that are there, so that in the future they can still be parts of the communities that we live in.
Clive Jones (Wokingham) (LD)
It is a pleasure to serve under your chairship, Dr Murrison. I thank my hon. Friend the Member for Woking (Mr Forster) for securing this debate. I agree with him; I, too, love beer, and I have for some time—we will not go into how many years—been drinking it and thoroughly enjoying it.
As my hon. Friend will know, back in February our party supported the beer duty cut to support our pubs. The Liberal Democrats have always supported the local pub, perhaps because of our heritage as a party grounded in community politics. Across our country, pubs and other hospitality businesses are the lifeblood of our communities. That is true of my constituency of Wokingham, where we are blessed with many excellent pubs, and I know that it is true of my hon. Friend’s constituency as well.
Wokingham is not just a place where beer is consumed, although I know my constituency team do their best in that department whenever they get the chance, but a place where beer is produced. I have spoken in the House before about some of the breweries that operate in Wokingham. Siren Craft Brew has grown from a small local producer to a significant competitor in the market, with beers such as Lumina being found in pubs across the country. Just across the road, Elusive Brewing produces Oregon Trail, which won best IPA at this year’s champion beer of Britain awards. There are also countless smaller producers across Wokingham and the Reading area, as there have been for many centuries.
Like most MPs, I am happy to stand in this House and make the case for businesses local to me, but I am not just here to plug the record of Outhouse Brewery in Wokingham town centre, whose taproom is open five days a week, including Sundays, selling the feline-themed Apocalypse Meow pale ale.
Brewers and publicans regularly tell me of the challenges that the industry is facing. We need to address those challenges head-on. When the previous Government tried to make hay out of a draught discount in 2023, they managed to apply it only to containers of over 40 litres. That excluded many producers of real cider or craft beer, like those produced by the companies in Wokingham that I have mentioned, who often ship product in smaller containers. As so often with the Conservatives, it was a break for big business, not for local businesses that really needed the support.
Clive Jones
I will carry on, if the hon. Gentleman does not mind.
To add insult to injury, the Prime Minister at the time managed to launch the policy with a photo opportunity in which he lifted up a beer keg for all to see. The keg was a 30-litre container, which did not qualify for the discount he was launching. If I were him, I might have drowned my sorrows in a couple of pints of Apocalypse Meow after that one. The industry knows which parties in this place have its back. After pressure from the Liberal Democrats, the Government applied the draught discount to containers of 20 litres or more. I do not believe that the former Prime Minister returned to lift more kegs to mark his U-turn.
A key challenge that comes up time and again, especially when I talk to local independent pubs, is the crushing impact of the broken business rates system. The Liberal Democrats have been calling for years for it to be reformed and replaced with a commercial landowner levy based on the value of landlords’ land, which would remove the responsibility for this tax from local businesses. This fair reform has one core goal: supporting our local economies to thrive and grow. I am led to believe that the Government place a very high value on growth. They are right to do so, but they will not get it while small local businesses choke under the weight of the outdated business system and increases in employer national insurance contributions.
My hon. Friend the Member for Woking spoke eloquently about the impact of extended producer responsibility on the industry. He is not wrong. It is a cause for huge concern among those I talk to across the drinks and hospitality sector. Our party welcomes the Government’s intention to make packaging more sustainable, but it cannot be at the expense of uncertainty and financial turmoil for local businesses, with all the economic consequences that that brings.
The assumption that local authorities will recycle the packaging from drinks bought in the pub is flawed, and the proposal means that pubs may pay for waste disposal twice: once for private recycling, and then again through EPR-related charges from producers. I urge the Minister to consider our call to exempt pubs from EPR, and to review the scope and timeline of that policy to avoid further harm to our hospitality sector. Will he today commit to a review of how successful the extended draught duty cut has been in supporting hospitality? If he finds that it has been successful, with all the economic benefits that that will bring, will he consider reducing it further to help our struggling pubs across the country?
James Wild (North West Norfolk) (Con)
I congratulate the hon. Member for Woking (Mr Forster) on bringing this important debate to Westminster Hall and uniting us behind support for beer—although his colleague the hon. Member for Wokingham (Clive Jones) slightly broke that consensus with my hon. Friend the Member for Kingswinford and South Staffordshire (Mike Wood) on a couple of points.
Beer and pub businesses support 1 million jobs across the UK and contribute £34.4 billion to the economy. In my own North West Norfolk constituency, there are more than 70 pubs and four breweries, which support 2,300 jobs and generate £53 million for the local economy. Those brewers are Brancaster, Fox, Lynn and Duration in West Acre—I strongly recommend Duration’s Turtles All the Way Down IPA. This has been a good debate with a long list of excellent-sounding pubs and breweries.
The previous Conservative Government introduced a new duty system in 2023, which has been referred to. That was the biggest reform of duties for more than 140 years and was based on the common-sense principle of applying duty based on the strength of alcohol to modernise existing duties, support businesses and meet public health objectives. New reliefs were also introduced: draught relief, which we have heard about, to cut the burden on draught products; and small producer relief. The British Beer and Pub Association, as quoted by the hon. Member for Hartlepool (Mr Brash), said that those reforms were very welcome for the beer industry, and I am sure everyone would agree with that. Conservative support for the sector went further; at autumn statement 2023, we froze alcohol duty, and the freeze was extended at the spring Budget a year ago.
By contrast, at the tax-raising autumn Budget, the Chancellor increased the headline rate of alcohol duty by inflation, although she did continue our policy with a reduction in the rates for qualifying draught products and under small producer relief. While I recognise and welcome those steps, the changes to draught relief will mean that beer duty on an average 4.5% strength pint of beer reduces from 54p to 53p—a paltry one penny saving. With the average pint now breaking the £5 barrier to mitigate new costs, many are left wondering if the Government really get the challenges facing the pub and brewing sector. One in every £3 spent in the pub goes straight to the Treasury, and beer duty rates are now up to 12 times higher than in other European nations. The Government’s fiscal approach risks squeezing the life out of those vital sectors.
A lot has been said about the role of pubs, and I also want to reflect on the role of breweries. The brewing subsector sustains 85,000 jobs and contributes £5 billion to tax revenues. Breweries are clearly fundamental to the success of pubs and the hospitality sector. More than 80% of beer sold in the UK is produced domestically in 1,800 breweries, which have strong domestic supply chains and a strong economic multiplier effect. The economic value that they generate largely stays in the UK, and the Government should support that in the policy approach that they take.
Beyond the increase in alcohol duty, which is the primary focus of this debate, we have also heard a lot about EPR and the extra costs that producers are facing. The BBPA has calculated that EPR fees and Budget costs will add more than £800 million of extra burden on to the sector. The Government’s impact assessment failed to make any distinction between sectors, so will the Minister commit to properly assessing the impact of fees on pub closures and the brewing sector? In the current climate, how can he think that those sectors can afford these huge additional costs?
All Members know from talking to pubs and breweries in their constituencies just how worried they are about increased costs. On Friday, I was at the Rose and Crown in Harpley in my constituency, which was one of my favourite pubs under its previous management and has just reopened. From talking to the new team, who have pubs across Norfolk, it is clear that the national insurance increase—in particular, almost halving the threshold at which it is paid—has been challenging and is leading to job losses across the sector.
Pubs make an important contribution to our economy and our communities. When in government, we introduced measures to protect the nation’s beer producers and hospitality venues. I pay tribute to my hon. Friend the Member for Kingswinford and South Staffordshire, who was a doughty campaigner throughout the last Parliament to achieve that. Time and again, however, I hear that choices made by this Government are placing unsustainable pressures on businesses. UKHospitality has just published figures showing that since the autumn Budget, 69,000 jobs have been lost in the hospitality sector, compared with the previous period where 18,000 jobs were added. It is little wonder that UKHospitality said that the decisions made by this Chancellor and this Government deliver a hammer blow to the sector.
Businesses are extremely concerned about what will come in the autumn Budget, given the black hole that has emerged in the Chancellor’s spending plans. Treasury Ministers keep saying that business confidence is at a record high, and they sometimes manage that without a smile on their face. But if the Minister makes his way to the Dog and Duck, he will get a reality check, and he will hear loud and clear how tough things are for pubs and brewers; how the Government’s increases in national insurance, wage costs and business rates mean a third of venues are running at a loss; and the need for the Government to change course. Otherwise, spiralling costs risk undermining the Great British institution of the pub, which is at the heart of our constituencies and communities. Rather than loading on more costs, the Government should be supporting pubs and brewers. If the Minister does that, we will all buy him a pint.
The Parliamentary Secretary to the Treasury (Torsten Bell)
I always look forward to seeing you in the Chair, Dr Murrison—nearly as much as I am looking forward to that pint. I am grateful to the hon. Member for Woking (Mr Forster) for securing and opening the debate. I thank all the colleagues who have spoken—perhaps unsurprisingly, given the subject—with great enthusiasm. I am shocked that there is in fact cross-party support for beer; that is the kind of bold politics that has got everybody in this room where they are today.
Nobody in this place needs persuading of the cultural, social and economic value of the Great British pint, nor of the pubs that serve pints and the breweries that produce them. Pubs are places of consumption but, more importantly, they are places of friendship, community and employment. I have learned a lot in a year as a new MP, but not as much as I learned about life when I started my first job in a pub at 16. I learned a lot about the price of beer, even if not about the ins and outs of alcohol duty, or indeed, drinking alcohol—obviously.
Last autumn, the Chancellor cut alcohol duty on qualifying draught products, affecting 60% of the alcoholic drinks sold in pubs. The cut reduced bills by over £85 million a year. People now pay 13.9% less in tax for draught beer and cider than their packaged equivalents—a discount up by more than 50% since the previous Government’s introduction of the policy, as mentioned in the debate. The cut recognised the roles of pubs and other hospitality venues in supporting responsible drinking in social settings.
The Chancellor also recognised the UK’s 1,600 or so small breweries by making more generous small producer relief, which, as the hon. Member for Kingswinford and South Staffordshire (Mike Wood) was kind enough to mention, was introduced by Gordon Brown under the last Labour Government, and continued by the previous Conservative Government.
To respond directly to the question put by the hon. Member for Strangford (Jim Shannon), small producer relief is available in Northern Ireland, even though licensing is a devolved policy matter. I am happy to exchange letters with him on the wider points he made.
The Budget also committed to a review of small brewers’ access to UK pubs, including through the provision of guest beers, as mentioned by my hon. Friend the Member for Hartlepool (Mr Brash). I know that Members with breweries in their constituencies will contact the Under-Secretary of State for Business and Trade, my hon. Friend the Member for Ellesmere Port and Bromborough (Justin Madders), given his responsibility for that review.
Of course, alcohol duty does not exist in a vacuum. It relates to the real challenges that we face as a country on public health and the public finances. I understand the wish to call for lower duties, as the hon. Member for Woking did, but the implications for the Exchequer are real. I will dwell on a few related points, given that that call was the basis of the hon. Gentleman’s speech. I am not sure that the 50p call has been entirely thought through: the duty on a typical draught pint of 4.5% beer is currently 48p, so the hon. Gentleman has called for the whole duty to be abolished. He might want to reflect on that.
Questions were asked about the relationship of what is technically called the elasticity of beer consumption to the changes in duties. The Office for Budget Responsibility publishes its own view on the elasticity, which hon. Members can go and find. Suffice it to say that the implications of any large change in alcohol duty for the Exchequer are real. Obviously, the context is that alcohol duty on beer is down by 10% in real terms since 2019.
Questions were also asked about the international comparisons. The proportion of the price of beer that is made up of tax here is similar to that in Ireland. As Finland was raised, I should point out that the proportion there is less than that in Sweden, where members of my family are consuming beer today at higher prices.
At the autumn Budget, the Chancellor increased the main duty rate in line with the retail price index, but she kept the tax burden on packaged products flat overall in real terms, as has been the long-established policy under all three main parties. Along with the increase to draft relief, that balanced the need to fund public services, reduce harmful alcohol consumption, and support moderate responsible drinkers with the cost of living. We have to weigh all those factors together.
Alcohol harm costs this country an estimated £27.4 billion a year. Regrettably, deaths from alcohol are at record highs—admittedly, that is mainly among a concentrated part of the population, but that is still something we all need to wrestle with. That is why the Government will introduce new standards for alcohol labelling.
But we want to address the health challenges while supporting valued producers and communal settings. That is the grounds for the balanced approach we have taken on duty, valuing the pubs that are at the centre of all our communities, as we have heard this afternoon. There is also good reason to be optimistic about the future of the brewing industry, although I recognise the wider challenges that brewers face. I thank hon. Members for their clear representations on those challenges.
Some Members, including the hon. Member for Woking in particular, raised the issue of the extended producer responsibility for packaging and the forthcoming deposit return scheme. I gently point out that the Liberal Democrats regularly call for a fast move to a circular economy, but when anything actually turns up, they oppose it in practice. I gently note that that is not a politics that will get any of us very far in the long term.
The reforms are designed to increase recycling and reduce litter and landfill. Critically, local authorities will receive every penny of the EPR fees, thereby bringing much-needed investment into our recycling infrastructure. The EPR scheme administrator has already published the 2025 base fees, with those for most materials, including glass, down on earlier illustrations. In the case of glass, the base fee is down by 20%.
DEFRA continues to work with the industry on the dual-use packaging that several hon. Members mentioned. The Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for Coventry East (Mary Creagh) recently held a roundtable on the issue, and I think she intends to hold more.
I acknowledge, as many Members have, that alcohol duty is but one small part of the business equation for pubs and hospitality venues, which is why the Government have made concrete interventions to support the sector, including a £1.5 million hospitality support scheme. I also recognise the points raised, not least by the hon. Member for Wokingham (Clive Jones), about business rates. We have frozen the small business multiplier for the current tax year and are providing 40% relief to retail, hospitality and leisure properties. As I say, I recognise the points made, but the package is worth more than £1.6 billion this year, and the previous Government left us with the relief due to end entirely in April 2025.
We are introducing high street rental auctions to bring vacant properties back into productive use, thereby offering smaller brewers and taprooms more affordable sites. Although there is bad news about pubs shutting across the country, and we are all sad when we see it in our constituencies, we also see some opening up on some high streets, and that is to be welcomed.
On 4 April 2025, we announced the licensing policy taskforce, co-chaired by Nick Mackenzie, the chief executive of Greene King. It is working intensively with the industry to ensure that the licensing conditions for businesses such as pubs, restaurants and music venues are proportional.
I began by acknowledging the unique place that beer and pubs hold in our national life. They deserve and have the steadfast attention of this Government and, it is clear, every hon. Member in this room. My local pubs in Swansea, from the Brunswick to the Deer’s Leap, certainly have my attention, and—I promise—my consumption. Through draught relief, small producer relief and tailored interventions for high streets, we are helping the sector to thrive.
I close with two brief invitations. First, I urge Members to please continue to bring to the Treasury their stories, spreadsheets, and suggestions from pubs and brewers, as they have done this afternoon. Secondly, I invite the industry to continue talking to us and demonstrating, year in and year out, that the British brewing scene is second to none.
Mr Forster
I thank all hon. Members for contributing to the debate. I welcome the cross-party support for the change to and a review of beer duty.
I thank my hon. Friends the Members for Bath (Wera Hobhouse) and for Carshalton and Wallington (Bobby Dean), the hon. Member for Kingswinford and South Staffordshire (Mike Wood), my hon. Friend the Member for Glastonbury and Somerton (Sarah Dyke), the hon. Member for Hartlepool (Mr Brash), my hon. Friend the Member for North Devon (Ian Roome), the hon. Members for North West Norfolk (James Wild) and for Strangford (Jim Shannon), and my hon. Friends the Members for West Dorset (Edward Morello) and for Wokingham (Clive Jones) for their contributions.
Overall, the debate was relatively good-spirited and cross-party, with the occasional breakout of political disagreement. From hearing colleagues’ contributions, it is clear that communities across the country would benefit from a review of, and hopefully a cut in, beer duty. There is appetite—quite frankly, thirst—for the Government to look at this.
Growth in the economy is vital, and we are offering a solution to try to grow the economy and support local communities. I hope the Minister asks his officials in the Treasury to redouble their efforts to work with the industry, improve EPR, and ensure that we have a thriving hospitality sector.
I do have some sympathy for the Minister, who was wheeled out to outline the winter fuel allowance U-turn and now again to try to defend taxing pubs more than we should. He talks about the financial impact, but when he goes back to a pub in Swansea, I hope he considers the benefits of a review. I know he has not committed to a review today, but were the Government to review beer duty in advance of the next Budget, it could have both financial and community benefits that I hope he will ponder over his next pint.
Question put and agreed to.
Resolved,
That this House has considered beer duty.