Taxation: Beer and Pubs

Debate between Mike Wood and Baroness Anderson of Stoke-on-Trent

Tuesday 31st October 2017 Westminster Hall

[Mike Wood]

I think that is exactly what the Government have done over the past 12 months in changing the rules on permitted development in particular. Obviously, now we have to go through planning processes before pubs can be converted.

The licensees and customers at many of our pubs contribute in both a financial and practical manner to their communities, by funding and running sporting and other activities, such as football, darts, dominoes and cribbage, but also through community activities, a large number of which are run through our pubs. Of course, because pub customers are extremely generous people, initiatives such as PubAid are able to generate about £100 million each and every year for good causes in communities in all of our constituencies.

For all these pubs to flourish and remain at the beating heart of their communities, they need a transfusion of investment and custom that will come with a freeze in beer duty and a reduction in their business rate burden. I have set out why our beer and pub industry is so important economically and socially, but it faces the twin threats that I referred to earlier: the increases in business rates and in beer duty. The three duty cuts, last year’s freeze and the ending of the escalator secured about 20,000 jobs, boosted confidence in our brewing and pub businesses and meant that more beer was sold than would otherwise have been the case, boosting the Treasury’s total tax take, if we include both direct and indirect taxation. On business rates, the Chancellor has already recognised the pain caused to pubs by the disproportionate burden caused by valuation based on turnover; about half of that turnover may be beer duty and VAT that the pub is collecting on behalf of the Government.

The £1,000 pub relief announced in the March Budget is extremely welcome, particularly for smaller and medium-sized pubs. However, it is particularly important that that relief is now expanded and extended, because our pub sector pays nearly 3% of all business rates despite making up just under 0.5% of business turnover. It is hugely, disproportionately overtaxed through business rates.

[Ruth Smeeth (Stoke-on-Trent North) (Lab)]

Does the hon. Gentleman agree that it is ludicrous that pubs in Stoke-on-Trent pay more in business rates—in fact, more in total—to the Exchequer than Amazon does in its entirety? Stoke is paying more than Amazon.

[Mike Wood]

I could not agree more. The revaluation of business rates was often seen as an issue that affected only businesses in London or the south-east. As for everyone else, it was thought that some gained and some lost out, but that is completely untrue when it comes to pubs, which have experienced huge increases in every part of the country. The 27 pubs run by Black Country Ales across the west midlands and neighbouring counties will have experienced an increase in their rateable value of, on average, 40% by the time the transitional period is over.