Beer and Pub Taxation

Debate between James Gray and Mike Wood

Wednesday 5th February 2020 Westminster Hall

[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.