Beer Taxation and Pubs

Part of the debate – in the House of Commons at 3:01 pm on 28th March 2019.

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Photo of Anneliese Dodds Anneliese Dodds Shadow Minister (Treasury) 3:01 pm, 28th March 2019

I absolutely agree with that point. There is now evidence of that. Work has been undertaken, commissioned by CAMRA, which set out clearly that there is a positive impact of people using pubs in the kinds of ways that we have been talking about during this debate. The point has also been made that many people who use pubs are not necessarily drinking alcohol. They use them in a whole variety of ways. I would also mention the fact that many pubs—particularly community pubs, and I will come back to that point later—are setting up special sessions for people with different conditions, such as dementia, so they are very important institutions from that point of view.

We have seen some worrying developments, which many Members have referred to. We have seen pubs closing at an alarming rate. Last summer, we saw figures showing that 18 pubs a week are closing. Those closures are occurring at the same time as the closures of libraries, post offices, banks and many local shops. They are happening in rural areas, as has been mentioned, but in urban areas as well. My hon. Friend Toby Perkins noted very movingly what happens when the last pub leaves an estate, and my hon. Friend Stephanie Peacock raised the same issue.

Members on both sides of the House rightly referred to the importance of local pubs, but also drew attention to the challenges they face. The first of those challenges relates to the tax system, and involves beer tax, small brewer’s relief and business rates.

We are in a peculiar position when it comes to beer tax. I agree with the Institute for Fiscal Studies, which has said that

The UK’s current system of alcohol excise duties is a mess”,

and that the way in which we tax our alcohol does not necessarily

“fully correct for the social costs of alcohol.”

I hope that the Minister will spell out what the Government intend to do in the longer term, because a longer-term approach is needed, given the developments at EU level that were mentioned earlier and given the development of the low-alcohol beer sector, which was mentioned by Helen Whately and many others. Those developments are significant, but the tax system has not yet responded to them.

Many Members, including Jamie Stone, my hon. Friend Mary Glindon and Jim Shannon, referred to the corrosive impact of low-quality, high-alcohol products which are drunk at home and are cheaper to drink at home.

We had an interesting discussion about small brewer’s relief. My hon. Friend Ruth Smeeth spoke of its importance to small breweries, but I think we should also look carefully at its calibration in the light of the unintended consequences that were mentioned. My hon. Friend John Grogan made some good suggestions, and I hope that they will be noted in the review that is currently being undertaken. Despite those pressures, however, we are seeing incredible innovations, especially in the craft brewery sector. I want to plug the micro-pub movement which is taking place in my constituency, and our amazing covered market as well.

Many Members referred to business rates, which have been extremely damaging to pubs and to many other businesses that are based on bricks rather than clicks. My hon. Friend the Member for Stoke-on-Trent North, and many other Members, talked about the imbalance in that regard. A business pays corporation tax only when it has become profitable, but the Government appear to have focused on reducing the corporation tax rate. My party would not take that approach, because we value the high streets and we value bricks-and-mortar-based businesses. Of course, that does not just apply to pubs. My hon. Friend Kevin Brennan mentioned the impact on music venues, many of which are, in practice, in the same place as the local pub. We need to look at these issues in the round, and, in fact, we should look at them in relation to council tax as well. That is why we have committed ourselves to a proper review of local taxation, which we think is well overdue.

However, pubs face many other impediments that are not related to tax. That point was made very forcefully by my hon. Friend Mr Bailey. The pubs code, which was intended to level the playing field for small pub tenants, has not operated in the way in which many of us hoped that it would. It appears that the situation is being manipulated, which is immensely problematic, because, as was pointed out by my hon. Friend Alex Sobel, tenants are still subservient to pub companies. That is also a big problem for the social mobility referred to by my hon. Friend Hugh Gaffney, because it means that people who start off pulling pints cannot end up as pub owners.

I should like to hear from the Minister when the compulsory review of the pubs code will be announced. I thought that it was to be announced this month. Can we also be assured that the process will be open and accountable? We need to restore trust and accountability to the process. We also, as was mentioned by my hon. Friend Dr Drew, need to make sure communities are aware of that social value process so they can take over those community assets when they want to; many communities are not aware of it.

Many of us have said this debate is a refuge from Brexit, but, sadly, it is not entirely of course. That is first because the workforce is very important to the pub sector and we are all aware of many of the concerns about what will happen if in particular we have a threshold of £30,000 to get workers into the UK. UK Hospitality has said the current proposals are illogical. We need to deal with this challenge. Also, Peter Aldous rightly referred to the importance of exports from our brewery industry in particular; we must not impose any additional bureaucracy on those exporters, particularly in growth fields and innovative parts of our brewing industry.

I hope the Minister will respond to my points in his remarks, particularly on the beer tax, small brewer’s relief, business rates and some of the legal issues.