Beer Taxation and Pubs

Bob Stewart Excerpts

Thursday 28th March 2019 Commons Chamber

[Ruth Smeeth]

There is a huge opportunity for us to debate the benefits of off-licence versus on-licence, the support that people get when they enter a pub and the responsibilities of the landlord. That is especially the case when we talk about loneliness.

[Bob Stewart (Beckenham) (Con)]

I was stirred to action by the hon. Lady, my good friend, using the words “older gentlemen”—I qualify, but I am not lonely. The way to keep the pubs in our communities alive is for people to visit them. If we get more people going to the pubs, they will live longer. That is very important—and, by the way, that includes me.

[Ruth Smeeth]

I thank my friend for his intervention. I think a pint of Steerage from the Titanic brewery will definitely help him live longer.

Pubs bring everyone together in the community. Whether it is fundraising for local charities, increasing awareness of illnesses or just everyone coming together on a Sunday evening, pubs are at the heart of our communities when other institutions are falling away.

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[Mr Evans]

Yes. At times, there must be immense pressure for pubs that have closed to be turned into a block of flats, because there is a lot of money in housing, but there is an opportunity for them to be turned into a community pub, if the community come together to raise money and keep it going. There are countless examples of those throughout the country, and it means that the community still have a focal point where they can come together. I hope that more publicity will be given to those opportunities.

I have three breweries of different sizes in my patch: InBev, which makes Stella Artois, Thwaites brewery, which was moved from Blackburn into the Ribble Valley, is much smaller but is the famous brewery with the shire horses—there is a lot of corporate responsibility within that company—and Holmes Mill, which brews the great Bowland beers in the heart of the Ribble Valley.

[Bob Stewart]

My hon. Friend speaks with forked tongue. I have been to the pub beside his house with him twice or three times, and it is a wonderful pub, but when we go next door he always leaves behind the lady who lives in his house. She is called Alexa. He has never taken her.

[Mr Evans]

All I can say in reply to that interesting intervention is that my hon. Friend has been to my pub three times and not once has he bought me a drink. That is the sort of friends I have.

[Bob Stewart]

What about Alexa?

[Mr Evans]

I am not mentioning Alexa.

It is a great pub—it was actually the CAMRA pub of the year in 2013—but I have other pubs such as the Freemasons at Wiswell and the Parkers Arms in Newton. A lot of pubs rely on offering food as well. The hon. Member for Ealing Central and Acton (Dr Huq) mentioned that she does not drink, but people do not have to drink alcohol to go to these places because there is so much more on offer.

Mention has been made of taxation on beer, which is huge. At £13 billion, it is massive. Almost 1 million jobs are provided by the industry. We need to look at ways of lowering that taxation. There is something wrong when taxation goes up, people drink less and less money actually goes to the Inland Revenue. There should be a common-sense approach to lower taxation, increase sales and ensure that HMRC gets more money out of that.

Taxation is high if the alcohol by volume rate is high; it drops only at below 2.8%. We need to look at ways of increasing the rate to 3.5%. It would encourage more people to drink lower strength alcohol and have a great time; it would incentivise them to do that. It is worrying when a lot people drink high ABVs—5%-plus. Drinking a pint of beer is good for one’s health, but drinking too much beer with a higher ABV is not.

Tomorrow night, I was due to be in a pub celebrating a big event, but that big event is not happening; it is being deferred. All I can say is that, on 22 May, I hope to be saying, “Cheers, Brexit!”

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[Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)]

I thank the hon. Member for Dudley South (Mike Wood) for bringing this debate before us. As other Members have said, this is light relief compared with the dark place we have been in for far too long—let me put it that way.

Many of the points I would have made have already been made, so I will crave your indulgence, Madam Deputy Speaker, and tell a little anecdote from the past. As some Members know, prior to appearing rather unexpectedly in this place, I was much involved in amateur dramatics and the local pantomime group—I have, indeed, been the dame in my time. On a Thursday night—to go back to the halcyon days of pubs—we would repair to a particularly famous old pub in my home town. At 11 o’clock, the barman, Sandy, would say, “Well, well, boys and girls, I think we will need to lock the door.” He would shut the massive, great door, turn the key and then carry on pulling the pints. One Thursday, I turned to a new member of the cast beside me at the bar and said, “Goodness me, do you think the bobbies might come knocking on the door tonight?” He laughed and said, “Ha, I’m an off-duty police sergeant,” which caused a slight reaction around the bar. Then, a voice further down the bar said, “That’s nothing. I’m an honorary sheriff’s substitute.” They were lax days, but I just wanted to tell Members that anecdote.

There are two points I want to pick up on in my brief contribution. The hon. Member for Stoke-on-Trent North (Ruth Smeeth) made the point that publicans and their staff are trained, and they know the danger signs when somebody is drinking too much. As often as not, they will refuse to serve them, or they will get them into a taxi and get them out of the place. How much better is that, as she said, than having some lonely bloke drinking himself into a stupor at home on cheap White Lightning or cheap wine? We all know that far too many household fires are caused by somebody being blootered in their seat and dropping a fag down the back of the settee or whatever. There is therefore a safety aspect to this.

If someone goes on holiday to Spain, Italy, or wherever, if they are like me, fairly quickly they think, “I’ll pop down the village”. It is a hot day, there is a place with nice wee tables outside, and they have a pint of lager. Let us switch that the other way round. Visitors come to the highlands of Scotland and find no pubs—are you kidding? Tourism is crucial to the highlands, and the one industry that is fundamentally sustainable in the long term. If there are no pubs, the visitor experience will be much impoverished, to say the least, and the bad news is that the next year, people will think, “Perhaps I’ll not go there again”. Pubs have a far wider role than has yet been touched on in this debate, and I echo all that has been said about pubs being part of the social fabric of our communities.

[Bob Stewart]

The Jolly Woodman in Chancery Lane in my constituency is the nearest pub to my house, and it provides quality real ale. People come from miles around to visit that pub, and that is the sort of reaction we want to pubs in our areas.

[Jamie Stone]

I could not agree more, and I hope that one day the hon. Gentleman will take me to that splendid place and introduce me to the delights of that nectar.

I have said enough. As soon as I have the opportunity, I shall invite the hon. Member for Clacton (Giles Watling)—he is not in his place at the moment—to my constituency, and introduce him to its local delights, of which there are many. I hope there will carry on being many, because if we lost them it would be a tragedy.

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[Robert Jenrick]

It certainly is, and I will talk shortly about the relief the hon. Gentleman mentions, which has played a significant part in that flowering and which I believe we can make better and fit for purpose for the future.

The value of beer exports has risen now to £500 million a year, and we heard earlier about the tremendous results also with respect to Scotch whisky and other spirits.

Small brewer’s relief gives the smallest brewers across the country a 50% reduction in duty and, as we have heard, it has helped fuel the explosion in the number of local breweries; we now have over 2,000 breweries across the country. At the autumn Budget we announced a review of this relief to give brewers the opportunity to share their thoughts on a relief that is now 17 years old and which has not been reviewed systematically over the course of that period. We have opened the review and had over 500 responses which we will carefully consider and report back on in due course.

Our motives at the Treasury have not been to extract more revenue from the sector, and certainly not to end the relief. However, for some of the reasons that the hon. Member for Keighley (John Grogan) and others mentioned, there is some evidence that although the relief has been hugely positive in some respects, it has limited the growth of some businesses that would like to expand and employ more people and that are concerned about the cliff edge that the relief creates. I hope that we will be able to work with breweries and organisations such as the Society of Independent Brewers to work through that and to do something positive for the industry.

With respect to beer duty, we have taken a number of steps over the past nine years to improve the situation in a country that has been widely acknowledged to have high levels of alcohol taxation. We removed the beer escalator, and we have either cut or frozen beer duty in six of the last seven fiscal events, so that the duty on a pint is lower now than it was in 2012. In real terms, this long-term and significant action by the Government has kept prices low for everyone, in contrast to the period from 1997 to 2010, during which beer duty increased by 60%. This was underlined at the most recent Budget with another freeze on beer duty, meaning that the price of a typical pint of beer is now 2p lower than if prices had risen with inflation. I appreciate that there is always more that we could do this respect.

We are also focusing on other alcohol, such as cider and spirits. My hon. Friend the Member for Ayr, Carrick and Cumnock (Bill Grant) talked about the importance of spirits to his constituency and to many others across Scotland. The hon. Member for Aberdeen North (Kirsty Blackman) talked about their importance to the wider Scottish economy. She also asked me a question about post-duty point dilution. We have given this matter considerable thought for some time, and we announced at the Budget that we will be bringing this practice to an end from April 2020. She also asked, as did the hon. Member for Oxford East, about a wider review of alcohol duty more generally. This is a complex area, and there are clearly no easy answers. There are certainly few answers that are fiscally neutral and that would create no losers, which would be important to many who work or own businesses in the sector. It is perhaps premature to conduct a review at this moment, because the greatest flexibility will be available to us after we leave the European Union. A future Chancellor might then have the choice to take action.

We heard from the hon. Member for Strangford (Jim Shannon) and my hon. Friend the Member for Faversham and Mid Kent (Helen Whately) about responsible drinking, and they asked whether we could lower the duty on low-alcohol beers. We are somewhat constrained in that respect by EU law. The EU alcohol structures directive sets the maximum threshold for reduced duty on low-alcohol beer at 2.8%. Her Majesty’s Government charge a reduced duty of 6p a pint on beers with a strength between 1.2% and 2.8%. Until we leave the EU, we cannot raise the threshold for low-alcohol beer above 2.8%, but this is something that we will work on with our partners across Europe, and we could have further flexibility in the years ahead. The Government have taken action in some specific circumstances—with respect to white cider, for example—and our approach is that we will continue to take action as necessary where there is clear evidence that certain alcohol duty rates are causing difficulties for society.

We have heard a great deal about pubs, which are, as we heard from numerous colleagues, the bedrock of many rural and urban communities. As the hon. Member for Chesterfield (Toby Perkins) rightly highlighted, they boost the economy, create jobs and, crucially, act as hubs for our communities. We have heard about their importance in tackling loneliness, and about the issues for older people, whether older gentlemen or others. They are great places for people to work and start their careers in. The pub industry currently employs about 450,000 people, many of whom are younger people, as has been said.

[Bob Stewart]

I rise, again, as an older gentleman. We have been talking about what pubs do. Let us imagine people who live in pretty awful accommodation—a bedsit or something like that. The local pub can provide a really nice, friendly, warm environment. That is the sort of place that those people can go to, and in my view that is the real advantage of local pubs.

[Robert Jenrick]

I agree with everything that my hon. Friend just said.

I will talk briefly about business rates in the short amount of time available to me because they have been an important element of this debate. My hon. Friend the Member for St Albans (Mrs Main) brought some of her publicans to see me at the Treasury to discuss the matter. We have taken several actions to support pubs by lowering their tax burden. The most important of them—this comes into effect on 1 April—is the Chancellor’s Budget announcement that the business rates bills of small and medium-sized retailers, including pubs, will be cut by a third. The policy has been set for maximum impact among retailers and pubs with a rateable value of £51,000 or below. I appreciate that that will have less impact in communities such as my hon. Friend’s, where rateable values are high, but 90% of retailers and between 70% and 85% of pubs across the United Kingdom will benefit, with pubs seeing a tax saving of up to £8,000. We also previously had the £1,000 discount for small and medium-sized pubs, and many pubs will also benefit from up to 100% small business rates relief or the 100% rural rate relief. Of course, all ratepayers are benefiting from the switch from RPI to CPI.

The hon. Member for North Tyneside (Mary Glindon) mentioned the request of many, including the industry, to create a rate of beer duty that differentiates between people drinking in a pub and people purchasing beer in a supermarket or convenience store. I can see the strong argument for that, but it is unfortunately not possible under EU law. Duty is levied on production, not on the place of consumption. However, we might be able to turn to that should we have sufficient flexibility.

I conclude by thanking the Backbench Business Committee and my hon. Friend the Member for Dudley South and the hon. Member for Stoke-on-Trent North, both of whom gave superb speeches. This debate unified the House and demonstrated the important role that pubs can play in our communities. I will certainly relay the strong feelings from across the House to my right hon. Friend the Chancellor with respect to the next Budget and the future of beer duty. The House’s voice is clear that it wants, like people the length and breadth of the country, further and continued support for beer, breweries and our important pubs.