Pubs: Business Rates

Mel Stride Excerpts

Tuesday 15th January 2019 Westminster Hall

[The Financial Secretary to the Treasury (Mel Stride)]

It is a pleasure to serve under your chairmanship, Mr Bailey. I thank my hon. Friend the Member for St Albans (Mrs Main) for securing the debate, and I do so for two reasons. First, this is an important matter; pubs lie at the heart of our local communities and the Government’s view is that we should do whatever we can to assist and support them, although, as my hon. Friend the Member for Henley (John Howell) pointed out, there are issues other than rates at play when one looks at the pressures that pubs are under. Secondly, I know that my hon. Friend is a strong campaigner on these matters, and this debate is yet another reflection upon the assiduous approach she takes to her duties as a Member of Parliament.

Undoubtedly there are great pressures on pubs, as we have heard. At the same time we should recognise that there are some rays of light in the overall story. The Office for National Statistics has published data showing that the number of larger pubs—those that employ 10 or more—has grown since 2011. In fact, we now have the largest number since 2011. If we look at the pub and bar sector in total, we see that employment has grown by some 6% since 2008, to 450,000 employees. That does not mean that pubs are not under pressure, as my hon. Friend set out at length and in detail, so the Government have taken action, and she has recognised the things that we have done.

For example, in the Budget last year we introduced a discount of one third to the business rates for retailers, including pubs and bars that have a rateable value below £51,000. I know that my hon. Friend’s constituency is in a relatively high-value property area and that the discount will not have had the same impact as it has had on the estimated 90% of all pubs and bars across the country. The figure for her constituency is 63%, so it is certainly the case that the majority of the pubs in her constituency are at least entitled to the discount of one third that we announced.

[Mrs Main]

I encourage the Minister to come and see my pubs. Many of them are in historic listed buildings within a conservation area. They have small square footage and it is difficult to grow a business beyond the growth it has already seen. They are in areas where the house prices drive up their rates to an unsustainable level. I appreciate that some of the bigger ones—not the independent ones—have been helped, but I want to help all the pubs, and particularly the ones I have referred to.

[Mel Stride]

As I said, 63% of pubs and bars in my hon. Friend’s constituency—typically those with lower rateable values, which probably correlates to the kind of pub she describes—will benefit from the one-third reduction that we announced in the Budget. That reduction will be worth about £900 million to the sector over the next two years. She also rightly referred to what we have done in freezing beer duty and spirit duty. In 2013 we withdrew the beer duty escalator, so the price of a pint is now some 14p less than it would have been otherwise, and we froze beer duty yet again in the last Budget. Across the country, around half of the income of pubs is driven by beer sales alone, so those are important measures. The further reliefs that we have been introducing come on the back of a great deal of activity, particularly since 2016. We have introduced a total of about £13 billion-worth of reliefs across the business rates terrain. That includes making 100% small business rates relief permanent, and doubling the threshold for small business rates relief in 2017.

My hon. Friend asked what we are doing for all the pubs in her constituency. That is a valid point. We have changed the uprating from the retail prices index to the consumer prices index. We initially announced that that would come in from 2020, but in the recent Budget it was brought forward by two years. That will lower the level of business rates right across the pub sector, irrespective of the size of the particular establishment. That is worth about £5 billion in additional relief over the next five years. We have doubled the level of rural rate relief to 100% from 2017.

My hon. Friend referred to specific examples of where there have been very large increases in rateable value—I think she quoted a figure in excess of 60% in one case. In 2017, at the time of the revaluation, we introduced the transitional relief scheme, which was worth some £3.6 billion of relief, to ensure that we smoothed out some of those increases. I would be happy to meet her at some point to look in detail at one or two of the examples she raised, which might be useful for us both. An increase in one year of more than 60%, given the transitional relief that would be available, would be on the high side, but I would be very interested to look at that with her in detail.

[Dr Cameron]

I thank the Minister for all the work that he is doing for the sector, which needs as much support as possible. Does he agree that it cannot be right that the rateable value of our Glassford Inn, for instance, is so high that even if it sold beer every night of the week to every single person in the village, it still could not pay the rates that have been set? Will he agree to look at that issue for me?

[Mel Stride]

I thank the hon. Lady for her intervention. Of course, I am not familiar with that particular establishment—although I would probably like to be—or with its current trading conditions. My point is that a pub, or any business for that matter, will be under pressure for a variety of reasons—my hon. Friend the Member for Henley raised, for example, the change in drinking habits as one factor. Importantly, the Government have a responsibility on the tax front to ensure that we ease those pressures to the greatest extent that we can, while taking a balanced and responsible approach to the economy.

[Tonia Antoniazzi (Gower) (Lab)]

I want to raise the plight of some of the Gower pubs. Owing to the rural nature on the peninsula, many are closing and have great challenges ahead. As the Minister mentioned, those challenges are for a range of reasons, but several members of the community and I have set up a working party to address that. I look forward to informing the Minister of the good work that we will do.

[Mel Stride]

I thank the hon. Lady for that intervention. I would be very interested in hearing from her and her working group when she is ready.

It is important to say that pubs are typically central to high streets. It is an issue not only of providing whatever support we can in terms of reliefs, many of which I have outlined, but of assisting high streets, and pubs as part of high streets, to evolve and transition. The high street is under a huge amount of pressure, not least through the online retail marketplace, which takes around 18% of all retail sales. A decade ago, it would have been a fraction of that.

The high street, and pubs at the heart of it, will therefore have to transition. That is why we made an important announcement in the Budget about the future high streets fund—£675 million to assist local areas to develop plans to ensure that they transition their high streets into a format that works more effectively. That includes the review being conducted at the moment into the change-of-use regime, and how it operates to allow certain businesses to change to different businesses, or to retail premises.

[Mrs Main]

May I ask the Minister in the few minutes that are left specifically to discuss anomalies such as fair maintainable trade—where the rates of one pub are hugely increased and those of another, which is not making so much investment and effort in the community, are cut? It cannot be right that businesses that are trying their best are penalised. Fair maintainable trade is an undeliverable anomaly, as is the fact that it takes three years to challenge the rates.

[Mel Stride]

My hon. Friend has astutely pre-empted my very next set of remarks, which relate to the fair maintainable trade approach to valuations. The British Beer and Pub Association has looked at that approach with us and is broadly comfortable with it. We recognised the importance of revaluations in the Budget. We have talked about bringing forward the next revaluation, and having more frequent revaluations so that we have fewer changes of a more dramatic nature.

On the way in which the system works, I think it is broadly a fair approach, because it does not take into account the actual value of the property; it recognises, however, the turnover that a pub can achieve if run appropriately. If a pub is extremely well run and is a very successful business, the Valuation Office Agency is not out to penalise the owners or tenants of that particular establishment in its valuations. There is an established check challenge appeal process through the VOA that can ultimately lead to an independent assessment of the VOA’s decision.

I would like to discuss the three-year point that my hon. Friend raised with her after the debate. If there are cases where it is the fault of the VOA that we are not responding across that period of time—of course, there are many reasons for delays that may come from either party—that would be of concern to me. With the VOA, we are in a position where the backlog of valuations, from when we had speculative valuations, before we changed the process, should all be cleared by September this year—and 1 million had to be gone through.

[Mrs Main]

I thank the Minister for making various offers to talk outside the debate. Of course, the debate is being watched hotly by people in my constituency and outside it. I ask that the Minister commits to coming to St Albans, because those conversations need to take place with the people who are running the businesses. They are beginning to think that whatever they say is not listened to. I would like him to come and put to them the same arguments that he might put to me. I am not that closely involved, and would be unable to reply in the way that they could, so please will he come to St Albans?

[Mel Stride]

The commitment that I will give my hon. Friend is that I would certainly be very happy to meet with publicans from her constituency, if she would like to arrange such a meeting. I have some very fond memories from many years ago of having many a very satisfying pint in Ye Olde Fighting Cocks. Perhaps we could discuss it afterwards. Whether I go on a pub crawl with her in her constituency is another matter, but I am certainly happy to meet her and the constituents to whom she refers.

Once again, I thank my hon. Friend for introducing this extremely important debate. She has once again ensured that it is very much at the forefront of the Government’s agenda. I hope that she will accept that we have done a great deal in this area to do what we can. Of course, we keep all taxes under constant review, and I will certainly bear in mind her representations at future fiscal events.

Motion lapsed (Standing Order No. 10(6)).