Beer and Pub Taxation

James Gray Excerpts

Wednesday 5th February 2020 Westminster Hall

[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.

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[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.

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[Ms Marie Rimmer (St Helens South and Whiston) (Lab)]

It is a pleasure to speak under your chairmanship, Mr Gray.

[James Gray (in the Chair)]

Let us save time and not say that.

[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.

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[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.