Question to the HM Treasury:

To ask the Chancellor of the Exchequer, if she will take steps to support (a) hospitality, (b) consumers, (c) pubs and (d) breweries by (i) reducing (A) VAT and (B) draught beer and cider duty and (ii) introducing targeted relief for (1) energy and (2) employment costs through the Autumn Budget 2025.

The Government recognises the significant contribution made by hospitality businesses, including pubs, to economic growth and social life in the UK.

The Government keeps all areas of the tax system under review. Any changes to the tax system are announced as part of the annual Budget process.

On VAT, HMRC estimate that the cost of a 5 per cent reduced rate for accommodation, hospitality and tourist attractions would be around £13 billion this financial year. If the scope were also to include alcoholic beverages, the cost would be approximately £3 billion greater. VAT reliefs reduce the revenue available to fund public services and must be good value for the taxpayer.

The current duty system supports breweries through Draught Relief, which ensures products served on draught pay less duty, and Small Producer Relief, which permits smaller producers to pay reduced duty rates.

In recognition of the economic and cultural importance of pubs, as well as the wider ‘on trade’, at Autumn Budget 2024 the Government cut alcohol duty on qualifying draught products by 1.7% in cash terms. This duty reduction, worth over £85m a year, covers approximately 60% of the alcoholic drinks sold in pubs and is equivalent to a 1p duty reduction on a typical pint.

As a Government we understand the importance to businesses of reducing their energy bills and reaching net zero and recognise the barriers businesses face trying to overcome these challenges. On energy costs, the Government has announced a new Zero Carbon Services Hospitality Trial, which aims to provide pubs, cafés, restaurants and hotels with free energy and carbon-cutting advice to slash their energy bills as part of the Government’s Plan for Change. This initiative is designed to help businesses reduce costs and support the transition to net zero.