Beer Taxation and Pubs

Jim Cunningham Excerpts

Thursday 28th March 2019 Commons Chamber

[Mrs Anne Main (St Albans) (Con)]

It is a pleasure to follow the hon. Member for Heywood and Middleton (Liz McInnes). This debate has been very good humoured, and it is a pleasure to take part—I’m fed up with this place at the moment! Beer duty has been mentioned, and I should declare an interest: the headquarters of the Campaign for Real Ale, which is in the forefront of the campaign on beer duty, is in my constituency. However, I want to focus on pub business rates.

Generally speaking, people do not go to the pub to get drunk these days. There are so many other things: some pubs run mini-libraries or toy libraries, while others run campaigns to support local people in need or help charities. Some hold darts matches. They are a focal point for many people who have nowhere else to go to meet friends and can be a place for celebrations with relatives as well. A pub is so much more than just the price of the liquid in the glass, and we really have to get that over. That is why I want to focus on the premises in which the liquid is served. A reduction in beer duty would be good, but as a wine drinker I want to focus on how we keep pubs in business so that we all have somewhere to go.

I took part in the previous, very well attended, debate on this issue in Westminster Hall. I am trying to get a meeting with the Financial Secretary to the Treasury to raise this important issue and some of my constituency’s pubs and landlords have come to meet my hon. Friend the Exchequer Secretary to the Treasury, who is on the Front Bench now. But the reality is that those people do not feel that there is a real awareness that the much welcomed reduction in business rates will not reach all the parts that other beers cannot reach. In my constituency, the reduction reaches a mere 50% of the pubs, on average. Many of the pubs have contacted me about a massive hike in business rates; they have to cut staff or close their businesses altogether. That cannot be the message that the Government intended to send out.

[Mr Jim Cunningham (Coventry South) (Lab)]

This, of course, is not the first time we have had a debate about pubs; we have had them for years, although we never seem to make much progress when it comes to their taxation. The other affected area is the working men’s clubs, a lot of which are now dying out. It is important that the Treasury has a good look at the situation to see whether it can help pubs. At the end of the day, pubs are a catalyst for the community. The hon. Lady is on the right track.

[Mrs Main]

I am pleased that the hon. Gentleman mentioned the community aspect in his valuable intervention. Some pubs threatened with closure are taken on as community assets, but it is incredibly hard to make the business case, given how business rates are. No matter how willing the community is, there are only so many pints of beer that anyone can drink to help provide the income it needs, unless we want to encourage people to be blotto night and day. We have to ask whether the business model is workable, and for many pubs it just is not.

The cut of 33% in rates for businesses with a rateable value of under £51,000 was a major step, but in areas such as St Albans it is not having an impact. Areas with high property values such as St Albans are almost totally overlooked. Many people have mentioned heritage and beautiful buildings: pubs in my area are under a huge threat of being turned into domestic properties. That is a real worry. They are struggling at the cliff edge, and we have to address the issue now.

The 2017 business rates formula for pubs uses a methodology for setting the rateable value based on fair maintainable trade. Nobody seems to understand how that works. The rateable value is driven mainly by the pub’s turnover and it takes into account property valuations. That means that even small pubs in St Albans are having huge hikes in business rates because they happen to be settled among much higher-value domestic properties. The formula does not take that into account, so it penalises small business operators.

The hon. Member for Keighley (John Grogan) mentioned micro-breweries: the formula also penalises the independents, which is a real problem. We may lose some of the quirky pubs on our high streets that offer that level of interest and difference and prove a huge pull for tourists who come into areas such as St Albans and appreciate pubs such as The Boot and Ye Olde Fighting Cocks, many of which have historic backgrounds and architecture to match. That means that it is difficult to expand or increase footfall, because they are extremely small.

Save UK Pubs has compiled a useful document outlining the increases that pubs face. I have given it to the Minister before, but I will send it to him again in case he has lost it. The Boot, which I have just mentioned, is an absolutely tiny heritage pub—some people have bigger sitting rooms. People there reckon they would have to sell an additional 22,000 pints to cover the additional £51,000 in business rates that they now have to pay—a 280% increase. That is unsustainable.

If the Chancellor came up with the model, he certainly was not looking at St Albans when he did. Christo Tofalli of Ye Olde Fighting Cocks told me that unless there is proper reform of the relevant taxes, licensing laws and duty costs, his pub will be finished. He bought this beautiful, historic pub; people can work out from its name that it goes back a long time. Bringing it back to life has cost him a huge amount of personal investment. Having pulled it back from despair, he expects people in this House to get how important a pub is. It is not necessarily a drinking outlet—there are plenty of those. A pub is family to some people and part of the community to many people. Once it has been turned into a posh house, as happens in my constituency, it will never come back. I put in a plea for the Minister not to hide behind all the different things that have been done. It is not enough, and we need to look at the situation again.