Beer Taxation and Pubs

Toby Perkins Excerpts

Thursday 28th March 2019 Commons Chamber

[Mike Wood]

My right hon. Friend pre-empts the later part of my speech, and the hon. Member for Stoke-on-Trent North is similarly indicating that she may just touch upon this topic later. Yes, the rise in the number and variety of smaller breweries, and particularly craft breweries, over the last decade and a half has been one of the key features of the sector. This is partly down to the success of the small brewer’s relief.

[Toby Perkins (Chesterfield) (Lab)]

I congratulate the hon. Gentleman on securing this important debate. He is absolutely right about rural pubs. However, the importance of the last pub on the council estates in many of our towns is often overlooked. The last pub has closed on many of those estates, and that has a huge impact on the facilities available for people to get together. Although I entirely support what he says about rural pubs, let us make sure that we do not forget the issue with regards to council estates.

[Mr Deputy Speaker (Sir Lindsay Hoyle)]

Order. Mr Perkins, if you want to speak, we are on a five-minute limit. I do not want to have to drop people down the list; I want everybody to have the same fair chance. If those who are speaking would take fewer interventions, it would help us all.

--- Later in debate ---

[Toby Perkins (Chesterfield) (Lab)]

It is a great pleasure to follow the hon. Member for St Albans (Mrs Main), who called at the end of her speech for more to be done to support our pubs—the theme of this entire debate.

Pubs are absolutely crucial to our communities and certainly to my constituency. Chesterfield has 105 pubs, and 1,419 people there rely on beer and pubs for their employment. In Chesterfield alone, £15 million goes into the local economy through wages paid to people who work in our pubs. Alongside the economic value that pubs provide—we have talked about the huge tax contribution that they make—pubs also make an incredibly important social contribution. As we have heard from other hon. Members, when a pub closes on an estate there is no longer a focal point for the community.

What is the first thing that comes to mind when we think about soap operas? We think of The Rovers Return or the Queen Vic, which are the hub of their communities. When people visit our country, the first thing they want to do is visit the local and have a pint of British ale. We cannot overestimate the incredibly important role that pubs play in our social fabric.

[Alex Sobel (Leeds North West) (Lab/Co-op)]

My hon. Friend is making a wonderful speech. In the market town of Otley in my constituency, there are two grade II listed pubs—the Black Bull Inn and The White Swan, operated by Star Pubs & Bars. It has ruined the heritage of those pubs. Does my hon. Friend agree that that goes against the heritage and tourism that we need to engender? Should we not have more local powers to ensure that that sort of thing cannot happen to grade II listed heritage pubs?

[Toby Perkins]

I certainly feel strongly that the owner or landlord of a pub is its custodian for the local community. Pubs valued by a community have often been lost as a result of the irresponsibility or inadequacy of the people who have run them. When pubs close, that has a huge impact on the local community. Sometimes, we have got too bogged down with the numbers; where pubs close is also important. We have heard about the importance of rural pubs, and I mentioned previously the importance of pubs on the local estate.

The Brampton Mile is a famous area in Chesterfield with 17 pubs within a single mile. Some have attempted to visit them all in a single night—I cannot entirely remember how it ended, but it started well. When a pub closes in an area with a huge number of pubs, the impact may not be the same, but when there is only one pub in an area, it is incredibly important, and we feel strongly about that. Some 243 people in Chesterfield signed the “Long Live the Local” petition.

Here in Parliament, we recognise how important pubs are. The hon. Member for Dudley South (Mike Wood) who started the debate, is chair of the all-party parliamentary beer group. I am chair of the all-party parliamentary pubs group. This year, we held the first ever parliamentary pub of the year competition. I was delighted that so many MPs entered. There was a fantastic array of entries. My own entry, the Chesterfield Arms in Chesterfield, was a finalist, but was ultimately defeated by the Four Elms pub in Cardiff, Central. It was an event in which we came together and celebrated the role that pubs play in our communities.

There are always claims that if the Government only taxed businesses less, the pubs would do better. As a former shadow Business Minister I recognise the extent to which such calls are heard. The Government were elected in 2015 on a manifesto that promised a fundamental review of business rates. I appreciate that that commitment disappeared from the 2017 manifesto, but the Government have not considered themselves to be held to many items in that manifesto. The system of business rates disincentivises investment, whether in pubs, manufacturing or retail. When people make their premises better they pay a higher tax bill, which flies in the face of the sort of investment that we all want to see. I would love the Government to put less focus on reducing corporation tax at the expense of business rates. Corporation tax is businesses paying tax on profits that they have made, whereas business rates are a tax on owning a property. At a time when pubs and so many retail units are closing, the taxation policy achieves the opposite of what the Government intend.

If I had more time, I would talk about the pubs code, and I look forward to the review that the Under-Secretary of State for Business, Energy and Industrial Strategy, the hon. Member for Rochester and Strood (Kelly Tolhurst), is undertaking. Pubs are crucial to our communities, and I am delighted that this debate has taken place. May we all continue to trumpet that crucial role.

--- Later in debate ---

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

I thank the Backbench Business Committee for securing this debate. As numerous Members have noted, it has felt rather like finding a good pub on a long walk when we are feeling weary and looking for a welcome break. The debate has been conducted in a very good-humoured manner throughout. I was first elected at the end of the coalition Government, and pubs was the only vote I believe that that Government lost in all those years, whereas today we are united on this topic but it is just all the other votes we seem to be losing.

I thank my hon. Friend the Member for Dudley South (Mike Wood) for sponsoring the debate. Like the hon. Member for West Bromwich West (Mr Bailey), he spoke about the Black Country’s long association with beer and brewing. I grew up in the shadow of Banks’s brewery in Wolverhampton and spent my teenage years, like the hon. Member for Oxford East (Anneliese Dodds), working in pubs that my hon. Friend’s constituents might drive out to Staffordshire and Shropshire to visit. I also thank the hon. Member for Stoke-on-Trent North (Ruth Smeeth) for her contribution; I have had a few drinks near her constituency in the Potteries, not least on the night I lost my first election in 2010. Given the scale of the result I probably should have drunk a pint from the Titanic Brewery.

But I do not want to be too negative about what we find today, because there are many great positives about beer and the brewing industry across the United Kingdom, many of which have been heard over the past couple of hours, not least the flowering of the British craft beer industry. That has brought fresh life to the market, creating a new generation of entrepreneurs, many of whom I know from my own constituency, a former brewing town, Newark-on-Trent, which has seen several new breweries created in recent years. This has given people across the length and breadth of the country unprecedented choice and, as we have heard, word has spread across the world and exports have risen very significantly.

[Toby Perkins]

The Minister is right that the small business brewing relief is an example of Government forgoing a bit of tax and a huge industry flowering on the back of that. Might he take note of that example for some of his other decisions?

[Robert Jenrick]

It certainly is, and I will talk shortly about the relief the hon. Gentleman mentions, which has played a significant part in that flowering and which I believe we can make better and fit for purpose for the future.

The value of beer exports has risen now to £500 million a year, and we heard earlier about the tremendous results also with respect to Scotch whisky and other spirits.

Small brewer’s relief gives the smallest brewers across the country a 50% reduction in duty and, as we have heard, it has helped fuel the explosion in the number of local breweries; we now have over 2,000 breweries across the country. At the autumn Budget we announced a review of this relief to give brewers the opportunity to share their thoughts on a relief that is now 17 years old and which has not been reviewed systematically over the course of that period. We have opened the review and had over 500 responses which we will carefully consider and report back on in due course.

Our motives at the Treasury have not been to extract more revenue from the sector, and certainly not to end the relief. However, for some of the reasons that the hon. Member for Keighley (John Grogan) and others mentioned, there is some evidence that although the relief has been hugely positive in some respects, it has limited the growth of some businesses that would like to expand and employ more people and that are concerned about the cliff edge that the relief creates. I hope that we will be able to work with breweries and organisations such as the Society of Independent Brewers to work through that and to do something positive for the industry.

With respect to beer duty, we have taken a number of steps over the past nine years to improve the situation in a country that has been widely acknowledged to have high levels of alcohol taxation. We removed the beer escalator, and we have either cut or frozen beer duty in six of the last seven fiscal events, so that the duty on a pint is lower now than it was in 2012. In real terms, this long-term and significant action by the Government has kept prices low for everyone, in contrast to the period from 1997 to 2010, during which beer duty increased by 60%. This was underlined at the most recent Budget with another freeze on beer duty, meaning that the price of a typical pint of beer is now 2p lower than if prices had risen with inflation. I appreciate that there is always more that we could do this respect.

We are also focusing on other alcohol, such as cider and spirits. My hon. Friend the Member for Ayr, Carrick and Cumnock (Bill Grant) talked about the importance of spirits to his constituency and to many others across Scotland. The hon. Member for Aberdeen North (Kirsty Blackman) talked about their importance to the wider Scottish economy. She also asked me a question about post-duty point dilution. We have given this matter considerable thought for some time, and we announced at the Budget that we will be bringing this practice to an end from April 2020. She also asked, as did the hon. Member for Oxford East, about a wider review of alcohol duty more generally. This is a complex area, and there are clearly no easy answers. There are certainly few answers that are fiscally neutral and that would create no losers, which would be important to many who work or own businesses in the sector. It is perhaps premature to conduct a review at this moment, because the greatest flexibility will be available to us after we leave the European Union. A future Chancellor might then have the choice to take action.

We heard from the hon. Member for Strangford (Jim Shannon) and my hon. Friend the Member for Faversham and Mid Kent (Helen Whately) about responsible drinking, and they asked whether we could lower the duty on low-alcohol beers. We are somewhat constrained in that respect by EU law. The EU alcohol structures directive sets the maximum threshold for reduced duty on low-alcohol beer at 2.8%. Her Majesty’s Government charge a reduced duty of 6p a pint on beers with a strength between 1.2% and 2.8%. Until we leave the EU, we cannot raise the threshold for low-alcohol beer above 2.8%, but this is something that we will work on with our partners across Europe, and we could have further flexibility in the years ahead. The Government have taken action in some specific circumstances—with respect to white cider, for example—and our approach is that we will continue to take action as necessary where there is clear evidence that certain alcohol duty rates are causing difficulties for society.

We have heard a great deal about pubs, which are, as we heard from numerous colleagues, the bedrock of many rural and urban communities. As the hon. Member for Chesterfield (Toby Perkins) rightly highlighted, they boost the economy, create jobs and, crucially, act as hubs for our communities. We have heard about their importance in tackling loneliness, and about the issues for older people, whether older gentlemen or others. They are great places for people to work and start their careers in. The pub industry currently employs about 450,000 people, many of whom are younger people, as has been said.