Beer Taxation and Pubs

Jim Shannon Excerpts

Thursday 28th March 2019 Commons Chamber

[Jim Shannon (Strangford) (DUP)]

I did not expect the last two speeches to finish that quickly, but I am sure I do not qualify for the extra time. If I could I would use that time, Madam Deputy Speaker, but I accept that you would not let me under your rules.

I commend the hon. Member for Dudley South (Mike Wood) for so ably setting the scene and being generous with interventions, and I thank the Backbench Business Committee for selecting this debate. From the fore I wish to be clear that I am aware of this House’s duty to encourage people to drink sensibly, and our policies, taxation, and legislation must carry a message that a sensible balance must be achieved by those who choose to drink alcohol. For that reason I, along with other Members, oppose supermarket cheap deals on alcohol—the hon. Member for North Tyneside (Mary Glindon) referred to that, as have others—because that is clearly a contributory factor to those who have problems with alcohol. Some people buy too much and then imbibe too much. They end up in A&E, and with broken families due to their abuse of alcohol.

I fully support my local pubs, and I want to ensure they have that support in every corner. They have contributed a lot to the local economy in Northern Ireland. With local pubs it is clear—either use it, or lose it—and we cannot continue with the losses that we have unfortunately experienced over the years. I also understand the benefits of drinking in a pub that is a safe, local environment. As others have said, that might include someone who is able to reach over, take someone’s keys and call them a taxi, or an Uber, which is what young people use today, or someone who says, “Okay Billy, or Pat, that’s enough for tonight”, as opposed to them drinking in the home where there is no limit to what can be consumed. I believe that most pubs encourage responsible drinking, which is why I am in favour of this motion.

When we consider the pub industry in Northern Ireland, the figures are clear. We have around 1,216 pubs in Northern Ireland, and the pub and beer sector alone contributes £390 million in gross value added to the economy. It sustains more than 16,000 jobs and £200 million in wages, and the total tax contribution is around £260 million annually—that is some contribution.

There is little doubt that the industry makes a key contribution to the supply chain in Northern Ireland, generating additional value, jobs and wages for the economy. The sector has been in a precarious trading position over the past few years, as demonstrated by the instability of its gross value added performance over time. That is also reflected in the fact that Northern Ireland’s pub sector is the only one in the 12 UK regions to have experienced negative capital expenditure in 2016. That cannot be ignored. It contributes three times more in business rates than its profitability in the economy. The business rating approach to pubs in Northern Ireland is based on old case law that determined that pubs were more profitable than other businesses. Valuation is therefore based on an archaic law that no longer has any basis.

I can well understand the argument that, as things stand, the sector is paying too much relative to its contribution to the economy. We can demonstrate clearly that it is certainly not more profitable than other businesses. The difference between Northern Ireland and the rest of the mainland is clear. The sector contributes 2% to non-public rates in Northern Ireland, but accounts for just 0.7% of the profitability of the local business economy. Northern Irish pubs account for just 1.6% of UK pub sector GVA, but pubs contribute 2.5% to UK business rates and 2.5% to the overall direct tax burden for the sector across the UK. It would seem to me that this is an overtaxed business area as it is, and that does not take into account the fact that, with people finding it more and more difficult to make ends meet, pub beer can be swapped for home beer. The mentality of “I can drink more if I drink at home” is not what we seek to endorse. We are trying to make sure that people stay in the pub.

I am not in favour of a cut to alcohol taxes per se, but I do believe that a cut targeted specifically at our pubs, bars, hotels and restaurants should be considered, as the social benefit would surely outstrip the initial duty cut cost. The industry is struggling, and my fear is that more local pubs will close. It is important that we do not encourage youngsters to chance their arm at supermarket self-service so that they never experience the safety measures that come with drinking in a local pub, where the tap stops, the keys are removed and there is no trouble. I fear for a generation who will only experience alcohol as a means to get wasted and not as a social event. I believe that pubs have a role to play, and we need to ensure that they can continue to trade and to step into people’s lives—and possibly even save lives. This is about social interaction and drinking sensibly. It is about having pubs in our areas.