Pub and Hospitality Sector

Peter Bedford Excerpts

Tuesday 22nd October 2024 Westminster Hall

[Mr Peter Bedford (Mid Leicestershire) (Con)]

I beg to move,

That this House has considered support for pubs and the hospitality sector.

It is a pleasure to serve under your chairmanship, Ms Vaz. I apologise for my hoarse voice; I can assure hon. Members that it is not as a result of the overuse of pubs and similar venues in my constituency over the weekend.

Over recent months, I have had the privilege of visiting several hospitality venues in my constituency. I think particularly of the Curzon Arms in Woodhouse Eaves, which I reopened over the summer recess; the Forge Inn in Glenfield; the Stamford Arms in Groby; and the Coach and Horses in Markfield, which I have got to know over many years as the local councillor. I thank the many hon. Members who have turned up this morning; the debate is clearly of great interest.

The pub and hospitality sector has long been at the heart of the British economy. From the small countryside pub to big inner-city restaurants, the sector provides countless social and economic benefits for the United Kingdom. It is essential that we understand the challenges faced by the industry and do our utmost to support it to flourish.

The sector provides countless economic benefits to the UK as a whole. It contributes £140 billion in economic activity and provides £54 billion in tax receipts to the Exchequer. In fact, pubs and breweries contribute a whopping £18 billion in taxes to the UK economy.

[Mr Gregory Campbell (East Londonderry) (DUP)]

Will the hon. Gentleman give way?

[Mr Bedford]

If the hon. Gentleman could give me a few moments, I will carry on. The success of UK plc is intrinsically linked to the success of the leisure and hospitality sector. The hospitality sector is a key employer throughout the UK, employing 3.5 million people, many with flexible working arrangements. It is vital for our younger people. As of this year, 51% of 16 to 24-year-olds are employed in the sector, and that plays a crucial role in developing their careers.

In my maiden speech, I stated that social mobility, particularly through apprenticeships, is key to creating a fairer and more just society. Many businesses in this sector offer apprenticeship schemes. Is it not great that someone can start as a trainee, a pot washer, and end up running an entire business? I think that should be applauded.

The sector also provides many social benefits. Hospitality businesses play a crucial role in encouraging socialising. In a country where many, particularly the elderly, often feel isolated and alone, community pubs often provide a place for people to come and feel part of broader society.

I have spoken with local independent brewers in Leicestershire, in particular Everards, and we should also recognise the significant charitable contributions of community pubs. In Leicestershire, 153 independently-run pubs raise more than £1.5 million locally for local charities, which is reinvested in local communities to make them even greater places to live and work. That is invariably why 72% of British adults believe that pubs have a positive impact on the communities that they serve. I take the opportunity to celebrate the positive impact that the hospitality sector has in my constituency. In Mid Leicestershire, our 41 pubs cumulatively support more than 2,000 jobs and contribute £19 million to the Treasury.

However, as we are all aware, the industry has faced many challenges over recent years. What makes the sector so successful is its incredible resilience. There have been many challenges: the covid-19 pandemic, the conflict in Ukraine and various geopolitical challenges have sent input costs spiralling high. The pandemic saw the hospitality industry suffer the biggest economic decline of all sectors. Economic output in the sector between 2019 and 2020 decreased by 42%, and we lost 10% of hospitality businesses during the pandemic. However, industry experts recognise the support that the last Conservative Government offered the industry through the eat out to help out scheme, a temporary cut to VAT and furloughing more than 2.1 million jobs, which limited the impact of the pandemic.

There have also been significant global challenges. The sector’s resilience has been displayed throughout the ongoing cost of living crisis brought on by world events.

[Wendy Chamberlain (North East Fife) (LD)]

The hon. Gentleman talked about the war in Ukraine and the cost of living. Dean Banks, who runs the Haar restaurant in St Andrews, told me that energy costs are a challenge. One of the problems is that energy companies use direct debits to keep hold of companies’ money, so they cannot manage their cash flow. Does the hon. Gentleman agree that that is a real issue?

[Mr Bedford]

The hon. Lady is absolutely right. That applies to domestic consumers and to businesses that have to manage their cash flow, so I absolutely support her comments on energy providers.

The war on Ukraine, which brought about the increase in energy prices, has caused hospitality profit margins to continue to decline. Office for National Statistics data shows that hospitality businesses are more likely to shut their doors for at least two days a week than any other industry. However, once again the industry has expressed its gratitude to the previous Government for their support, particularly through the retail, hospitality and leisure business rates relief scheme, which saved the average hospitality business £12,000 and prevented many small and medium-sized businesses from going bust. The sector is not immune from the effects of over-regulation, which of course stifles creativity and businesses’ ability to grow.

So where are we heading? I will move on to what may happen under the new Government’s plans. With the Budget just around the corner, I implore the Chancellor to do all she can to support, not hinder, the hospitality sector. The sector is clear that it desperately needs a continued reduction in business rates. Many in the sector have stated that they face a cliff edge on 1 April next year if the Government do not extend business rate relief to them. Two pubs shut every day in the UK, and that number will only increase if the relief is not extended.

[John Cooper (Dumfries and Galloway) (Con)]

The point about closures is significant. In Scotland, the Government have imposed minimum unit pricing, which was introduced at 50p per unit of alcohol and has recently risen to 65p. It was intended to reduce alcohol-related deaths—a laudable aim—but unfortunately they rose to 1,277 in 2023, which is an absolute tragedy. The rate of hospitality business closures in Scotland is twice that of England, so does my hon. Friend agree that minimum unit pricing appears to be a blunt instrument that is not helping at all?

[Mr Bedford]

My hon. Friend is absolutely right: minimum unit pricing in Scotland has had adverse consequences and has not benefited his constituents.

The Budget could not only include an increase in business rates for the sector; it is looking more and more likely that the Government are reviewing employers’ national insurance contributions. UKHospitality is clear that an increase in national insurance would be particularly damaging for the sector—that tax on jobs could finish off many businesses that are already on the edge.

The previous Government supported hospitality businesses by freezing alcohol duty for three years and introducing the Brexit pub guarantee. But with the “nightmare before Halloween” Budget on its way, it looks as though the new Government are looking to increase alcohol duty, and that would not be good news.

[Gregory Stafford (Farnham and Bordon) (Con)]

My hon. Friend is making a powerful point about taxes on alcohol. Many pubs are shifting away from being wet pubs and are becoming dry pubs. David Lee, who runs the Holly Bush in Frensham, told me that he wants to be able to serve good quality fresh food, but the VAT on it is really hitting his margins. Does my hon. Friend agree that the Chancellor should look at reducing VAT on fresh food for the hospitality industry?

[Mr Bedford]

My hon. Friend is absolutely right: we should do all we can to support the industry as it recovers from the pandemic, and I hope the Chancellor takes on board his sensible suggestion.

For the hospitality sector, the most concerning part of the Employment Rights Bill, which had its Second Reading yesterday, relates to so-called equality laws, which are being updated to make employers liable for staff being “offended” by third parties. That would in effect turn hospitality managers into banter cops, who will feel duty-bound to step in every time someone makes an off-colour remark or joke. How on earth can we be entering a world in which someone can be deplatformed in their local pub? It is absolute madness.

I move on to another piece of Orwellian legislation. The ban on smoking in beer gardens and outdoor spaces is frankly ludicrous. The nanny state is causing outright economic harm to the industry, and I implore the Government to rethink their proposals.

Finally, I shall mention gambling regulation. There have been reports that taxes on the gambling sector will rise in line with the recommendations of the Institute for Public Policy Research commission on health and prosperity. The increase, worth £46 million, will wipe out the profit of the bingo industry and is likely to cost 8,000 jobs across our local communities. The bingo industry has made it clear that if speculation around the Budget comes to fruition, it will be even more damaging than covid and the energy crisis.

What could we do instead? We could look at cutting beer duty or bringing in 20% draught relief. The UK has one of the highest alcohol duties in Europe. Duty on a pint of 5% beer is 54p, compared with 5p in Germany. A pint of beer is four or five times more expensive in a pub than purchased in a supermarket. The brewery industry is the most taxed sector in the UK, at 40% of its turnover. That is a regressive tax and hits people on the lowest incomes the hardest.

[Mr Richard Holden (Basildon and Billericay) (Con)]

My hon. Friend is making a fantastic speech, covering all aspects of the hospitality sector. An extra benefit of draught beer relief is that 97% of the input into draught beer is made in the UK. That has a big knock-on effect across our agricultural sector. It is a win-win for UK farmers, the UK Exchequer and the hospitality sector. I urge him to continue to press the Government to push for greater relief in that space.

[Mr Bedford]

I thank my right hon. Friend for his intervention. More specifically to help the hospitality business, the draught relief of 20% that has been mentioned—a campaign led by my hon. Friend the Member for Mid Buckinghamshire (Greg Smith)— could see an extra 20 million pints sold a year and create 2,500 jobs, with a boost to the economy of more than £70 million.

We could protect hospitality businesses from the business rate relief changes. Pubs are taxed in a different way from most businesses—not on rateable value based on their rent, but as a calculation of their expected turnover. The ending of the retail hospitality relief would be deeply damaging for the sector, with businesses seeing a quadrupling of their business rates. I agree with the representations made by the British Beer and Pub Association that the relief should be kept until a new business rates framework is introduced.

We could also allow reform in the planning and licensing space. UKHospitality has advocated a more mainstream approach to the application of the planning and licensing framework. That would put pubs at the heart of the village and town centre. Kate Nicholls, CEO of UKHospitality, says:

“Too many hospitality businesses with ambitions to expand and grow are held back and frustrated by the current system.”

I also support the idea that there should be more flexibility for businesses to open later for special occasions, such as the women’s football World cup, to allow punters more time to enjoy the festivities. We could cut national insurance contributions for lower-paid earners and promote apprenticeships more.

The potential increase in employer national insurance contributions will have a massive impact on the UK hospitality sector. Industry experts have strongly criticised any move to make such an increase. They believe there should not be an increase—indeed, that there should be a lower level for lower-paid earners. Furthermore, the apprenticeship system is failing around the country. There needs to be a rethink in reforming the apprenticeship levy to incentivise businesses, particularly in this sector, to invest more and be more agile in how they offer apprenticeships.

In conclusion, I hope the Government take note of today’s debate and introduce measures that will enable our pub and hospitality sector to thrive and grow for the future.

[Several hon. Members rose—]

--- Later in debate ---

[Mr Bedford]

I thank the many hon. Members who contributed to today’s debate. We certainly had lots of recommendations for pubs and hospitality venues across the United Kingdom.

Members who have heard the Minister’s response may be a little frustrated that we have not quite got the answers we wanted, particularly in respect of reforms to business rate relief, VAT, the apprenticeship levy, planning and licensing, or a commitment on national insurance and beer duty. I hope the Minister will make representations to the Chancellor and the Treasury to ensure that that vital aspect of support is implemented by the Government. In closing, I ask that the Chancellor, in her upcoming Budget, implements policies that will not hinder the sector, but enable it to flourish and grow.

Question put and agreed to.

Resolved,

That this House has considered support for pubs and the hospitality sector.