Beer Duty — [Sir Roger Gale in the Chair]

– in Westminster Hall at 9:30 am on 7 March 2017.

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Photo of Steve Double Steve Double Conservative, St Austell and Newquay 9:30, 7 March 2017

I beg to move,

That this House
has considered beer duty.

It is a pleasure to serve under your chairmanship, Sir Roger, and to open this debate on a very important matter. First, I must acknowledge and thank my hon. Friend Byron Davies, who secured this debate only to find that it clashed with other, unavoidable parliamentary business. He therefore asked if I would step in for him. His loss is my gain. I am sure he would want me to mention right at the very beginning Gower Brewery, which produces some excellent ales—I remember a very enjoyable evening with my hon. Friend, drinking Gower Gold. It is right to acknowledge that in his absence.

The debate is timely, taking place the day before the Budget. We hope once again for good news from the Chancellor and another cut in the much despised beer duty. There is no doubt that the brewing and pub industry has faced a great many challenges in recent years, which have brought a wind of change blowing through one of the oldest and best loved traditional businesses in the UK. Public houses—or, as we all more affectionately know them, pubs—and breweries have experienced enormous change and upheaval over the past 30 years or so. The vast and often overlooked brewing and hostelry industry is an icon of our nation, cited by tourists the world over as one of the reasons for visiting the UK. Almost 900,000 people work in pubs and the supply chain, from agriculture to brewing, logistics and the licensed trade.

Photo of James Davies James Davies Conservative, Vale of Clwyd

I congratulate my hon. Friend on introducing the debate. He rightly points to the vast number of jobs that the industry supports, many of which are in peripheral areas of the country such as our constituencies. Does he agree that action on beer duty, which is up to 10 times that of the duty paid in our neighbouring continental countries, is a vital step?

Photo of Steve Double Steve Double Conservative, St Austell and Newquay

My hon. Friend is absolutely right. Whereas many other industries are centralised in very specific areas or regions of our country, the pub industry is spread right across it and provides much needed jobs in many of the more rural areas. He is also right that we need to reduce the gap between the duty we pay in this country and the duty paid in many other countries, and I will come on to that later.

Photo of John Spellar John Spellar Labour, Warley

The hon. Gentleman rightly identifies the role of rural pubs, many of which serve those who come out to the countryside from our conurbations. What impact does he think the ill-thought-out proposals from the Local Government Association to cut the number from 2 pints or 1.5 pints to 1 pint will have on those pubs?

Photo of Steve Double Steve Double Conservative, St Austell and Newquay

I assume the right hon. Gentleman is talking about the guidelines for alcohol consumption. I suspect that is a subject for another day, but I understand his point.

Photo of John Spellar John Spellar Labour, Warley

No, I am not talking about the guidelines; I am talking about the drink-drive limit. Most of the offences are recorded at the much higher level of about 150 mg. A reduction in the limit could have a dramatic effect on many rural pubs, let alone rugby clubs, Royal British Legion clubs and so on.

Photo of Steve Double Steve Double Conservative, St Austell and Newquay

I now understand the point the right hon. Gentleman is making. I would never drink and drive at all. That attitude has become much more the norm in today’s society, where most people consider that drinking anything and driving should be avoided. I am not entirely sure that I agree with his point.

The brewing and pub industry not only employs 900,000 people but attracts many younger people to its workforce—in fact, 46% of those employed in the sector are under 25 years old. That level of employment among the young is a critical factor, especially in rural constituencies such as the one I represent in Cornwall. While many start out in basic roles, they go on to become professionals in the trade or elsewhere—for example, working as chefs, licensees or successful businesspeople in their own right, and employing others.

That said, the news has not always been good in recent times. Some 17,000 pubs have closed in the past three decades, and while the closure trend has slowed markedly of late, many communities will grieve the loss of their local, which all too often is the only pub in the area.

Photo of Graham Stringer Graham Stringer Labour, Blackley and Broughton

Although it is not the only factor, does the hon. Gentleman agree that cuts in beer duty increase investment and employment opportunities, particularly for the young, while increases do the opposite?

Photo of Steve Double Steve Double Conservative, St Austell and Newquay

I wholeheartedly agree. Lower taxes generally encourage investment and growth in a sector, and I will press for that as the debate goes on.

Photo of Claire Perry Claire Perry Conservative, Devizes

Does my hon. Friend share my sense of pride that it was a Conservative Government who in 2012 finally put an end to the beer duty escalator—a measure that had led to duty going up 42% between 2008 and 2012? Following that, in 2014 beer sales increased and an estimated 21,000 jobs were created in the industry.

Photo of Steve Double Steve Double Conservative, St Austell and Newquay

My hon. Friend may have been reading my notes, because that is a point I will come on to highlight.

There are many reasons why pubs have closed. Some of them were badly managed, and some lacked investment to keep the facilities up to date. Although I believe that the smoking ban was the right thing to do, and it is popular among many pub goers, we have to acknowledge that it stopped smokers visiting the pub quite so often. There are also changing social habits, with more people drinking at home as a result of cheap alcohol available in supermarkets and other outlets.

Those factors have all contributed, but it is also undeniable that the dreadful and despised beer duty escalator introduced in 2008 had a devastating effect on the industry. Annual duty rises under the escalator led to beer duties rising to among some of the highest anywhere. Even now, following successive years of duty reduction by this Conservative Government, our pints remain heavily taxed at around 52p on a 5% alcohol by volume pint, compared with 4p in other key beer-brewing nations such as Germany and Spain—an enormous and disproportionate difference that needs to be addressed.

There is much more happening now, with a revolution in the old craft of brewing and selling beer to the UK’s 32 million beer drinkers. Numerous microbreweries have opened up and craft beer and real ale are rising in popularity. I have the great privilege of having a great example of a local family-run brewery in my constituency. St Austell Brewery has been a roaring success in recent years, particularly since the launch of its excellent Tribute ale. It now makes many excellent beers, and I spent an enjoyable day during the recent recess assisting master brewer Roger Ryman in making a batch of Proper Job. I count the fact that I managed to make more than I drank that day as a notable success.

While it is right to recognise concerns about alcohol abuse, we must note that the majority of people enjoy healthy levels of drinking. Given the social benefits that come with a visit to the local pub, it makes no more sense to celebrate pub closures than it does to close roads because some motorists speed.

Photo of John Spellar John Spellar Labour, Warley

On the subject of craft breweries, will the hon. Gentleman, who rightly attacks the beer duty escalator, acknowledge the very considerable role played by the duty exemption for small breweries that are getting off the ground? That was a major factor in the explosion of the craft brewery business and was introduced by my right hon. Friend John Healey when he was at the Treasury.

Photo of Steve Double Steve Double Conservative, St Austell and Newquay

I will happily agree. The support given to microbreweries to develop right across the country—they are now producing very high-quality, excellent craft beer—is a success that should be noted.

Photo of David Mackintosh David Mackintosh Conservative, Northampton South

Does my hon. Friend agree that larger breweries, such as Carlsberg in my constituency, also play an important role in providing beer for people, but the beer duty also has an impact on them?

Photo of Steve Double Steve Double Conservative, St Austell and Newquay

I wholeheartedly agree that the beer duty affects the whole industry. That is why I believe it needs to be addressed.

One interesting statistic I read was that communities that have a well loved pub are happier. Pubs have that very positive effect on local communities. I was dismayed when a local Liberal Democrat councillor in St Austell recently suggested tightening up the local licensing regulations and limiting the number of pubs to curb incidents of antisocial behaviour. That misses the point entirely, because well run pubs promote responsible drinking, and in my experience they have a positive impact by reducing crime and antisocial behaviour, rather than being the cause of the problem.

Photo of Liz McInnes Liz McInnes Shadow Minister (Foreign and Commonwealth Affairs)

I am pleased that the hon. Gentleman has mentioned St Austell —I am very partial to a pint of Clouded Yellow myself. A family brewery, John Willie Lees, is a major employer in my constituency. I fully support the comments that the hon. Gentleman is making about social drinking. I am sure that he will agree that we should be promoting pubs, keeping them open and stopping people buying cheap alcohol and drinking alone at home.

Photo of Steve Double Steve Double Conservative, St Austell and Newquay

I wholeheartedly agree. Not only are pubs great places for community cohesion, but they promote responsible drinking in a safe environment, which we should wholeheartedly support.

Photo of Jessica Morden Jessica Morden Opposition Whip (Commons)

I thank the hon. Gentleman for giving way again; he is very generous. On responsible drinking, another change has been the move to lower alcohol beer. Is the hon. Gentleman aware that beer with an alcoholic strength of less than 3.5% is subject to 66% more duty than very high-strength cider at 7.5%? Does he agree that we could do more to incentivise the consumption of beers under 3.5%?

Photo of Steve Double Steve Double Conservative, St Austell and Newquay

I agree. We do need to look in particular at the amount of duty on high-strength ciders, because it is disproportionately low and should be increased. The duty on lower strength beers should also be looked at, to encourage their consumption. The industry was challenged by the Government to reduce consumption of alcohol units by 1 billion by 2015. By reformulating and introducing lower alcohol drinks, the industry surpassed that target ahead of schedule, which we should acknowledge and welcome. There is also a fall and clear downward trend in problems relating to under-age drinking in pubs, as licensees—pub landlords—have become more responsible in their approach to that matter.

The problems associated with drinking have less and less to do with pubs and more and more to do with sales of cheap alcohol in supermarkets and other off-licence establishments. It is clear that pubs can and do have a very positive impact on their local communities. Pubs are experiencing a revolution. They have caught the spirit of the times and of this Government: there is a belief and a strategy about getting best value for money and a happier, better outcome for everyone by making best use of what we have and combining our efforts.

Let us take as an example the village of Nanpean in my constituency of St Austell and Newquay. Once a bustling, busy community, almost solely reliant on the booming china clay industry, it has declined in recent years. That and changing shopping habits over the years meant that the Co-op supermarket, four general stores, the butcher’s, the bakery, the fish and chip shop and the post office all had to close. No shop remained—none was viable as a stand-alone unit; none could survive with separate overheads and wage bills. Thanks to innovation, though, the Grenville Arms pub in Nanpean now houses the post office and a shop, and the combination of the three has proved a great success. Each one helps the others to provide key services to the local community of about 2,000 people. The shop sells essentials and locally produced food, and the return of the post office is a real asset to the whole community. The scheme has created new jobs and, with its fresh role at the centre of village life, the pub has become a community meeting point.

All that was achieved by converting a disused room. Of course, there was a cost. That was met by the licensee and an organisation that was originally the inspiration of His Royal Highness the Prince of Wales. Pub is The Hub is a voluntary, not-for-profit organisation helps pubs in rural communities to innovate and thrive. By working with all interested parties—breweries, licensees, councils and local communities—it has had success in bringing together talents and opportunities and meeting needs. It gives guidance to groups seeking to buy their local pub to save it from closure. Besides advice, it gives grants—modest sums of money that make a big difference. Pub is The Hub says that, on average, for every pound in grant provided, an additional £1.60 is forthcoming from other sources.

I am very grateful to the Under-Secretary of State for Communities and Local Government, my hon. Friend Andrew Percy, who is responsible for pubs. He continues to champion Pub is The Hub and has this year supported the organisation further with a £50,000 grant. Heineken matched the funding, giving Pub is The Hub further assistance to continue its excellent work across England and Wales and now, I believe, in Scotland.

A revolution is under way in the pub trade, and we need to do a lot more to support it. The simplest and best way to do that is by continuing the process of reversing the crazy, punitive, unfair and mean-spirited hikes in beer duty imposed by the previous Labour Government. The UK’s excise duty rate for beer is much higher than that in most European countries. Despite the three duty cuts by the Conservative Government in recent years, the UK has the third highest duty rate in the European Union. Forty per cent. of all beer duty paid in the EU is paid by the UK, yet we drink only 12% of the beer.

Tax on beer has been a sorry story. From 2008 to 2012, there were steep and relentless tax increases, with a staggering 9.1% hike in March 2008 and an 8% increase in December of the same year. Then came the beer duty escalator, which increased beer duty by 2% above inflation every year. By 2012, beer duty had increased by 42% since 2008. Although other factors played their part, that was a disaster for the industry, with thousands of pubs closing and tens of thousands of job losses. Despite the hike in duty, revenues rose by just 12%. Punitive taxes do not work.

In 2013 the beer duty escalator was, mercifully, dropped. Then came further relief with three 2% cuts and a freeze in 2016. There is revived confidence in the sector. Beer sales have increased, which in turn has led to higher levels of investment in pubs and breweries. Tax cuts work. They boost trade at home and give this major exporting industry extra confidence in its future. In 2016 the value of UK beer exports was a healthy £584 million; it was up 17% on the previous year. So there we have it: a multimillion-pound industry that exports the world over, employs the young in record numbers, attracts visitors to our shores and yet has in its sights ensuring that villagers still have a post office and the lonely have a place to go and be part of the local community.

I and many other hon. Members present want to thank the former Chancellor and the Government. Despite the enormous task of deficit reduction and the difficulties that lay ahead, they chose to reduce beer duty, seeing the beneficial effects that that would ultimately have. Confidence and investment are returning but now we need another hand up—we need a further reduction in beer duty. Seven out of 10 alcoholic drinks sold in pubs are beer, and 82% of those are brewed in the UK. The most effective way of keeping our community pubs open and trade buoyant is by continuing to support them and giving them the confidence they need. I am calling for a revival of the beer duty escalator, but escalators go in both directions. I want an escalator that goes the other way and reduces beer duty significantly.

Photo of Chris Matheson Chris Matheson Labour, City of Chester 9:50, 7 March 2017

It is a great pleasure to serve under your chairmanship, Sir Roger. I congratulate Steve Double on his speech; he told us that he was a substitute, but that was certainly not the introductory speech of a substitute. May I also take this opportunity to welcome my next-door neighbour and good friend, Graham Evans, to his place? He is the chairman of the all-party parliamentary beer group. I was with him in the Terrace marquee the other night where, I must say, I enjoyed the award-winning beers from the Campaign for Real Ale, including Binghams vanilla stout, which I enjoyed—but only in moderation, of course.

I have had the pleasure of going to two pub openings in my constituency in the past couple of weeks. I went to the Handbridge pub, which has been refurbished by Punch Taverns, and I was very pleased to go to the Bull and Stirrup in Chester, which is a historic pub, particularly for the labour movement, to open it with the actor Ricky Tomlinson. It has been the beneficiary of a £2 million refurbishment courtesy of Wetherspoon’s. It employs 70-odd people—most of them very young—and is an excellent example of the fact that pubs and the industry provide employment, including at entry level, for people looking to make their way in their career.

I want to speak briefly about one of the big employers in my constituency, Admiral Taverns, which I am proud to represent. It employs 145 people in my constituency, has 850 pubs across the UK and is consistently winning awards. It was the leased and tenanted pub company of the year in 2013 and 2016, which makes it the current holder of that prestigious award, and I can tell Members this morning that it is again shortlisted for community pub operator of the year. The hon. Member for St Austell and Newquay talked about the importance of community pubs. I worked with Admiral Taverns when it closed the Centurion pub in Vicars Cross in my constituency. I worked with community leaders Trevor Jones and Bob Hindhaugh, and we managed to persuade Admiral Taverns to reopen it with community leadership. That was a tough business, because the numbers had to add up, and part of the reason for the closure was the high beer taxation levels. I have worked with Admiral Taverns on a couple of projects since, and I am proud to do so. It is keen to see a continued light touch in the taxation of the pub sector.

In this short contribution I want to draw the Minister’s attention to the conflict between beer duty and business rates. I am told that business rates for pubs are calculated on turnover, but that that turnover includes beer duty. As Admiral Taverns point out that is, therefore, a double whammy—I believe that is the phrase, Sir Roger. They are being taxed on taxation, because turnover includes beer duty. I ask the Minister whether levels of beer duty or the business rates calculations can be taken into account.

Photo of Louise Haigh Louise Haigh Shadow Minister (Culture, Media and Sport) (Digital Economy)

I want to reflect on that briefly, because my hon. Friend is making an exceptionally important point. Even before the re-evaluation of business rates, which will hit pubs particularly hard, pubs were paying 2.8% of the total business rates bill but only accounting for 0.5% of total business turnover. That is a crucial area that I hope the Minister will take into account and feed into the Budget negotiations for tomorrow.

Photo of Chris Matheson Chris Matheson Labour, City of Chester

I am grateful to my hon. Friend for making that point. There does seem to be a discrepancy. I would not like to think that pubs, which play such an important part in communities, as we correctly learned from the hon. Member for St Austell and Newquay, are seen as a soft touch and an easy hit.

I am keen to convey on behalf of my constituents, particularly Admiral Taverns, with which I have an excellent relationship, that there needs to continue to be a light touch to allow the sector to flourish. We heard from my right hon. Friend Mr Spellar, who is no longer in his place, about the effect on microbreweries when there was a reduction in taxation—that sector of the business expanded. I believe that could also help in the pub sector and in community pubs, but there is a real problem in the conflict between business rates and beer duty, and I ask the Minister to look at it.

Several hon. Members:


Photo of Roger Gale Roger Gale Conservative, North Thanet

Order. Graham Evans, Jim Shannon, Helen Whately and Claire Perry are all seeking to speak, and I intend to call the Front-Bench speakers at 10.30 am. I am not going to impose a limit, but do the maths.

Photo of Graham Evans Graham Evans Conservative, Weaver Vale 9:55, 7 March 2017

It is a pleasure to serve under your chairmanship, Sir Roger. I pay tribute to the Backbench Business Committee and the Chairman of Ways and Means for enabling the debate and to my hon. Friends the Members for St Austell and Newquay (Steve Double) and for Gower (Byron Davies) for their speeches. Indeed, I pay tribute to Gower Gold, which is an excellent beer, and to Tribute; I look forward to visiting St Austell brewery in my capacity as chairman of the all-party beer group. I pay tribute to my predecessor, my hon. Friend Andrew Griffiths, who did an excellent job in slaying the hated beer duty escalator.

I must confess that I have stopped many a barrel of beer going sour in my life. I met Mrs Evans in a pub when I was a wee slip of a lad in my 20s working behind a bar. My mother was a barmaid and she worked in a pub; my brother and sister worked in a pub; my father spent most of his time in the pub. My auntie and uncle had a pub in Chester on Northgate Street—I am sure Christian Matheson knows it well—and it is an excellent coaching inn. I used to stay there for my school holidays. It was haunted—I believe it still is—and it used to scare the life out of me, but that does not stop me going in whenever I visit Chester.

The economic value of pubs and beer is important. The industry employs nearly 1 million people, many of them young, and contributes £23 billion to UK plc and £10 billion in tax to the Exchequer. I welcome the steps taken in the last Parliament on the dreaded beer duty escalator, with the three successive cuts in beer duty before the freeze in the 2016 Budget. Although it is easy to think that a penny or two off a pint does not make any difference, it does make a significant difference, as right hon. and hon. Members have said. The turnaround in confidence since 2013 has seen more than £l billion invested by brewers and pub owners each year, with thousands of pubs across the country being able to keep their doors open.

Yet despite those positive steps, the UK still has the third highest duty rate in the EU. The amount paid per pint is almost three times the EU average. UK beer drinkers pay 52p of duty per pint, whereas those in other major brewing nations such as Belgium, Germany and the Czech Republic pay around 5p per pint. Having recently met the Minister, I know she will be aware of the cross-industry initiative to incentivise the production of low-alcohol beers benefiting from the duty reduction on products below 3.5%. Although the industry has taken some steps with low-alcohol beers, the lower the percentage, the less the flavour, so looking at a stronger strength up to 3.5% ABV gives brewers the opportunity to create tastier beers.

Photo of Jessica Morden Jessica Morden Opposition Whip (Commons)

The hon. Gentleman makes a valuable point on lower-strength beers. Does he agree that AB InBev in my constituency, which is developing more of those products, has a laudable aim in trying to have 20% of its products in the lower strength range by 2025? Does he agree that that is a positive development?

Photo of Graham Evans Graham Evans Conservative, Weaver Vale

That is a good and powerful point, and I wholeheartedly agree with the hon. Lady. I grew up with a Manchester brewery called Boddingtons; we used to call it the “cream of Manchester”, but sadly it cannot be called that because it is brewed in Luton these days. AB InBev is producing it at 3.5%, which puts it in that low ABV category. I am keen to support the promotion of beers such as the ones made by the company in the hon. Lady’s constituency. At 3.5% Boddingtons is still a tasty beer, although it is not quite how I remember it from the ’70s and ’80s.

Few can argue that 3.5% beers should have 66% more duty imposed on them than 7.5% high-strength cider, which is more associated with problem drinking than any other drink. Hon. Members may remember the question that Mary Glindon asked at last week’s Prime Minister’s questions about her constituent who tragically died while drinking high-strength cider.

We are in a difficult economic position and alcohol excise duty makes an important contribution to reducing our inherited deficit, but beer duty clearly remains a concern to publicans, constituents and hon. Members. I therefore urge my hon. Friend the excellent Minister to carefully consider beer duty’s impact on the profitability of pubs, responsible drinking and the future of our local communities. Some 90% of the beer we drink is brewed in the United Kingdom and supports UK jobs and industry. In a post-Brexit Britain, the Great British pint drunk in the Great British pub will be able to compete on a level playing field with our European and international competition. We are lucky that the Minister loves beer and pubs—she is a member of CAMRA—and I urge her to do whatever she can for the Great British brewing industry.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Health), Shadow DUP Spokesperson (Transport), Shadow DUP Spokesperson (Equality) 10:01, 7 March 2017

It is a pleasure to speak in this debate, Sir Roger, and I congratulate Steve Double on presenting his case well. He was certainly a super-sub, so well done to him.

I have been contacted about the beer duty on numerous occasions—a few times by constituents complaining about the rising price of their well-earned beer at the end of a day, but mostly by the hospitality sector and industry, groaning with the weight of trying to inspire growth while being restricted by a seemingly never-ending duty increase, which happens year on year without fail. I would like to give Northern Ireland’s perspective and talk about how important the issue is for us and about the Minister’s responsibility.

I was contacted before the debate by Hospitality Ulster, which is the professional body that represents the hospitality industry in Northern Ireland—its membership consists of pubs, bars, café-bars, restaurants, hotels and major visitor attractions. Tourism is important for us in Northern Ireland, and the hospitality sector’s role is particularly important. Hospitality Ulster believes that it can transform the local economy and create additional wealth and job opportunities. The successful growth and expansion of the industry will have direct financial benefits, but only with the Government’s help and support. That is why the chance to set out the issues in this debate is important and why I am presenting this case on the industry’s behalf.

Figures indicate that there are 45,000 jobs in the hospitality sector in Northern Ireland. That may not seem a lot compared with similar job opportunities across the United Kingdom, but when we pare that down, it equates to one in 20 jobs being sourced in food and drink and the hospitality sector in Northern Ireland, so the importance of this debate is clear. The hospitality sector overall accounts for 60,000 jobs across Northern Ireland and generates some £88.4 million in tax. It contributes approximately £1.1 billion to the Northern Ireland economy and pays out £653 million in wages, keeping people in employment and creating opportunities. Its importance, therefore, cannot be underlined enough.

In my area of North Down and Ards and in my constituency of Strangford, the sector pays some £7 million in tax and provides just over 3,700 jobs. There is potential for so much more, but we need to put in place support networks and help. That is partly about addressing the issue of taxation and duty, which is the key reason why we are here.

The tourism industry in Northern Ireland is competing in a cost-sensitive marketplace locally and globally. High taxation and the additional costs of unnecessary, disabling regulations and outdated legislation directly affect its ability to compete. In addition, the lack of access into and around Northern Ireland limits not only the number of people visiting the country but its residents’ access to the evening economy. Tourism brochures and information indicate that Belfast is one of the best areas for nightlife in the United Kingdom, and there are tremendous opportunities to do much better on access to it.

Much of the responsibility for this issue lies with the Northern Ireland Assembly—these are devolved matters—and I hope that it will soon be up and running; we are in the middle of a process of talks at the moment. However, taxation and duty are major issues for this House to address. Duties on all alcohol products are forecast to raise some £11.2 billion in 2016-17. To split that up, the duties on beer and cider are expected to raise £3.6 billion, whereas the duties on wine and spirits are expected to raise £4.2 billion and £3.4 billion respectively. Receipts from beer and cider duties are expected to rise slightly to £3.8 billion in 2017-18. That is a massive amount of money, and we understand its importance to the Treasury in balancing the books. We also need sustainability for the industry, which is why we want this matter to be looked at.

We need to ensure that this is the last small rise in a series of rises that has seen the price of a pint rise to £3.46, which is 20 times the amount that it would have cost in the 1970s. Graham Evans referred to those free and easy days, and that is a fond memory of a time when I also had hair. Correct me if I am wrong, but wages have not increased at a similar rate, so people are missing out and publicans are seeing customers sitting at home with a tin of beer at half the price. We have to address that as well. I will come on to that point, because some of these issues could be dealt with in the Budget and, at the same time, the importance of the hospitality sector could be reinforced.

We want to encourage a society that enjoys a drink responsibly. That is what pubs do: people are refused drinks if they are too drunk and car keys are removed, and there are protective barriers when people leave the pub. Pubs and landlords are careful about what they do, and they are responsible. On the other hand, the alcopops sector can have special offers in supermarkets, allowing 20 shots of vodka from a one-litre bottle to be downed for a shockingly small price tag. That issue was highlighted at a reception in Westminster three weeks ago. I was not aware that a big, one-litre bottle—it looked like lemonade, by the way, but it clearly was not—was so cheap and was placed in supermarkets to make it more attractive for people to buy. We have to address these issues. We all have great respect for the Minister, as others have said; she has always done her best in the many portfolios she has held, and I know that she will do the same for us today.

Something is not quite right about how we are approaching this issue. I believe that the duty rises should be put on the alcopops sector, which is often a favourite of under-age drinkers and is often where alcohol abuse takes place. The hospitality industry should be given a break, which may well keep businesses open and attractive to consumers who can put money in the local economy as opposed to the pockets of supermarket shareholders. I am not against supermarkets making money, but something is unfair when there is a clear imbalance.

I oppose any rise on beer duty, and I ask the Government and the Minister to fully consider the needs of this industry, which brings so much into the local economy and has the potential to do so much more if encouraged to do so.

Photo of Helen Whately Helen Whately Conservative, Faversham and Mid Kent 10:08, 7 March 2017

It is a pleasure to serve under your chairmanship, Sir Roger. I congratulate my hon. Friend Byron Davies on securing the debate and my hon. Friend Steve Double on his impressive opening speech, particularly given that he was a substitute. He covered an enormous amount of ground and made important points.

This debate is an opportunity for colleagues to talk about their experiences with the world of pubs, but I cannot possibly compete with my hon. Friend Graham Evans, who told us that his family have been in the pub trade. I have not been to a pub since Sunday. I can vouch for the health benefits of pubs in my constituency, because the best way to get my children to go on a long walk in the rain and hail is the promise of a pub at the end of it—however, I assure hon. Members that they have a packet of crisps while the rest of us may have some beer.

Beer, the pubs trade and brewing are important to my constituency and have enormous historical significance. Brewing in the area goes back to medieval times. I have been told that my constituency is the first place in England where hops were grown. At the time, they were a new-found and not entirely welcome import to the English brewing scene, but times have changed, and they are most certainly welcome nowadays.

As well as being part of our history, brewing and pubs are critical employers in my constituency. Shepherd Neame, our largest brewer and the oldest in England, employs about 700 people in the constituency. Its well-known brands include Spitfire, Whitstable Bay and Master Brew, with which I hope colleagues are familiar, along with many other own brands and beers brewed under licence for other breweries. Whitstable Brewery is also in my constituency, although Whitstable itself is not. We also have several craft breweries and microbreweries, such as Hopdaemon, the excellent Mad Cat Brewery, which I have visited, and many others. Brewing is important to my patch, providing at least 2,000 jobs including in pubs.

On top of that, there is the agricultural side of brewing. Kent was once renowned for its hops. Although we do not still grow hops on the same scale, the hop sector is still a significant part of the Kent economy, and British hops are experiencing a revival. Hop growing in the UK has increased by about 8% in the last couple of years, and at least half of that is in my constituency. We have renowned experts on hops, such as the farmer Tony Redsell, who recently produced an excellent video about hop growing; I point viewers to it on my Twitter feed.

Pubs themselves are also important to my constituency. We have 84 pubs, and hopefully there will be another one soon: the Harrow pub in Ulcombe. It is currently closed, but the community are getting together to revive the pub. Pubs are so much more than just a place to go and have a drink; they can be the heart of a community. In a small village, there are often no other amenities or facilities, and the pub is the one place where people can meet up. It is important that we look after our pubs.

I am grateful that the Government have been doing so. I know that the industry in my constituency has welcomed the reductions and freezes in beer duty over recent years. I ask the Minister to consider continuing that approach to support the industry, bearing in mind that at the moment, pubs and the brewing industry as a whole face rising employment costs as well as the challenge of increasing business rates, as other hon. Members have mentioned. In that context, this is a particularly important moment to consider whether the industry can be helped through beer duty.

As other Members have mentioned, we are mindful of the difference in beer duty between the UK and some other brewing countries. Belgium and Germany have both been mentioned as countries with lower beer duty for their brewers. We know that we want to increase our exports, and that beer exports have been growing. There is a significant connection: a strong and vibrant brewing industry at home provides a good platform for brewers to export successfully. I feel strongly about supporting it through the tax system. On behalf of my constituency, I welcome the support that the Government have given to the brewing and pub industry, and I urge the Minister to continue that support.

Photo of Toby Perkins Toby Perkins Labour, Chesterfield 10:14, 7 March 2017

I congratulate Steve Double on securing this important debate. Colleagues have already referred to pubs in their constituencies; if I started doing that, I would have more than 100 to read out, and no one else would get an opportunity to speak. I will not play favourites towards any of them, but I will say that in Chesterfield, our night-time economy is incredibly important to us. I welcomed the liberalisation of licensing hours as a punter, although I must say that as the parent of a 19-year-old I am less enthusiastic than I used to be about our pubs being open until 6 o’clock in the morning.

None the less, pubs are an important part of our economy. When we reflect on their importance, as other Members have done, we must reflect on the contribution that they make to the economy and the community, and the contribution that they make as employers. They employ young people, and predominantly women, which is important to areas where the economy needs more help.

This debate is specifically about beer duty. Understandably, hon. Members have taken the opportunity to reflect on some of the other issues facing pubs, but beer duty is an important issue, and I am glad that the hon. Member for St Austell and Newquay reflected on it. It sends a message from the Government about the importance of pubs to our communities, our society in Britain and our sense of national being. Beer is one of those iconic products of which I think all of us in Britain feel proud.

It is also important to reflect on the fact that if the Chancellor announces something about beer duty today but simultaneously puts pubs through the mill on business rates, not many will raise a glass. Beer duty needs to be seen alongside the impact of VAT and the potentially serious impact of business rates. The previous Chancellor deservedly got credit for cutting beer duty, but we should also remember that he raised it through the beer duty escalator. He came to power in 2010, and it was 2013 before he got rid of it; he milked it as well as abolishing it. It is important to see his record in that broader context.

As the chair of the all-party parliamentary group for pubs, I work closely with Graham Evans and his all-party parliamentary group on beer. We all collectively recognise the importance of pubs in our communities and our economy. In the spirit of working together with that group, I join him in calling for the Minister and the Chancellor to recognise the value of pubs in the Budget, and to ensure when considering beer duty and business rates that publicans will raise a glass to the Chancellor on Wednesday.

Photo of Claire Perry Claire Perry Conservative, Devizes 10:17, 7 March 2017

I join others in congratulating my hon. Friend Steve Double, and my hon. Friend Byron Davies, who cannot be here, on securing this important debate.

I have spoken several times in similar debates over the years. As I am sure Members know, I am the proud representative of Wadworthshire. I have in my constituency Wadworth Brewery, which brews iconic beers such as 6X, Swordfish and Bishop’s Tipple. It has 240 pubs in its chain and employs about 500 people. Nobody who visits Devizes can fail to be struck by the incredibly iconic brewery building, in which brewing has taken place since 1875, and Max and Monty, its two dray horses, who often cause traffic chaos when delivering to local pubs, although nobody minds, because they are a symbol of a wonderful local business. As well as Wadworth, I have Ramsbury Brewery, Shed Ales, World’s End Ales, Three Castles Brewery, Stonebridge Ales and Eastbury Brewing Co. in my constituency, all of which report that things are definitely looking up.

Why did I come along today to support the call for a cut in beer duty? I must confess that I was a little sceptical about what the impact might be when the original tax cuts were announced, for many of the reasons that have been mentioned: we drink in a different way; we often prefer to drink at home; supermarkets have historically used alcohol as a loss leader to generate foot traffic; the smoking ban has hurt businesses; and the drink-driving laws, which I absolutely and heartily support, have changed people’s way of being entertained. However, it is obvious that since we abandoned the beer duty escalator and cut beer duty in 2013—I am thinking of the billboard outside the Red Lion pub that day with a big sign saying, “Cheers, George!”; the former Chancellor should indeed be applauded for it—there has been a material impact on the industry.

I know that the Opposition Members present would not have voted for this, but in 2008 taxes on beer were hiked twice: by 9% in March and then by 8% in December. The escalator was then whacked on at inflation plus 2%, which led to a whopping 42% increase in overall duty between 2008 and 2012. As we have heard today, thousands of pubs exited the industry. It was a significant hit to an industry that we all know and love, and that had a major impact on employment in many of our constituencies.

Since then, with relatively modest measures—the abandonment of the escalator and a reduction in duty—we have seen some really rather extraordinary things. In 2014, beer sales increased for the first time in a decade. Oxford Economics has estimated that more than 20,000 more new jobs have been created in the sector than there would otherwise have been. That shows that very small changes in taxes can have a material impact. I submit that what the Exchequer is giving up in tax duty is being more than recouped from the increased income tax paid by the now thriving businesses and the employment contributions coming in.

On the subject of employment, let me mention a couple of very important things that are happening in my constituency. As a result of the change in the business climate, companies such as Wadworth are now substantially increasing their own investment programmes; indeed, investment in Wadworth’s 240 pubs will increase by 30% this year. I am proud to have been associated with the reopening of some wonderful pubs that are now thriving, such as the Three Crowns in Devizes: morning, noon and night, groups of people are going in for coffee and sampling the wonderful beers and delicious food. That is happening not just in my constituency but right across the country. I was fascinated to hear from my hon. Friend Helen Whately that it is also having an impact on the supply chain—a piece of good news for hop production that I did not know about.

I support future investment and the increase in apprenticeships. Wadworth now has 62 apprentices—it has been investing hugely in my area—but it is facing pressures, including the apprenticeship levy and the increase in rates that we have discussed. It seems to me that to support the industry, stimulate demand and encourage companies to invest their own capital so that we can have a thriving beer, pub and hospitality industry, this relatively small adjustment in the Budget would be very welcome indeed.

Photo of Owen Thompson Owen Thompson SNP Whip 10:22, 7 March 2017

I congratulate Steve Double on introducing this debate and Byron Davies on securing it.

It is clear from hon. Members’ contributions today that there is a large degree of agreement among us all. We have heard about the benefits of the local pub in our constituencies—I certainly support the pubs in mine as much as I possibly can. A strong case has been made this morning for minimum alcohol pricing, given the dangers from the very high levels of alcohol in alcopops and other such drinks.

I have recently noticed an increase in the number of craft beers being produced with 0% alcohol, including Tennent’s Hee Haw and BrewDog’s Nanny State—I think the brewers were having a deliberate go at the establishment when they came up with that name. Many such beers are coming into the market, demonstrating that a 0% alternative that still retains flavour is possible.

It is clear that there are many points that we agree on, and the one thing that we can be absolutely certain of agreeing on is that beer is good. It is good for our economy, it is good for our communities and it is definitely best served while watching Scotland win the rugby. Like most worthwhile inventions, it has been suggested that it was invented in Scotland, in some form at least; evidence has been discovered of fermented beverages being brewed in Scotland, possibly as early as 400 BC. In my constituency, Midlothian, there was a brewery in Dalkeith that had been there since at least 1789. The last remaining brewery, McLennan and Urquhart, brewed what I am led to believe was a very fine selection of sweet ales, and the business thrived in Midlothian for the best part of a century. Unfortunately, it closed in the late 1950s and was demolished in the 1960s, and sadly brewing left Midlothian for quite some time.

That was a common picture in Scotland. The economic situation in the ’60s and ’70s made it impossible for breweries and pubs to survive, and closures were savage. The ’60s may have been swinging, but there was not much for brewers to smile about. High unemployment, shipyard closures and the decline of traditional industries were common throughout Scotland, and for breweries the picture was just as bleak. In 1920, there were 62 breweries in Scotland; by 1960, there were just 26, and in 1970 only 11 remained. What we must learn from that period is that not nurturing the right business environment for breweries creates consequences that can be far-reaching across communities, have an impact on national, local and micro-economies and have knock-on effects on pubs and jobs.

We are now witnessing something of a beer revolution, as the hon. Member for St Austell and Newquay put it. More consumers are searching for new flavours, or simply for good beer, and new breweries are starting up more and more frequently. I am pleased that new breweries are flourishing and growing in Midlothian. I positively encourage all hon. Members to visit my constituency, have a look around the breweries and taste their products. The first brewery to rekindle Midlothian’s brewing history is Stewart Brewing in my home town of Loanhead. It was founded in 2004, led by a team of ambitious, passionate and hardworking beer enthusiasts, and its business has grown and expanded considerably—some may suggest that my own contribution and appreciation of its very tasty craft IPAs has contributed to that. I have also been fortunate to have the opportunity to visit the newly established Cross Borders brewery in Eskbank. It was clear from speaking to the team there that they have an absolute desire to expand, to contribute to the local and national economy and to be a key player in the beer market.

In fact, all over Scotland there is a rapidly growing industry, which we are embracing. The food and drink sector is vital to Scotland’s economy, with one in five people in Scottish manufacturing working in it. The SNP Scottish Government have been working hard to support this key sector: since 2008, they have supported 173 food and drinks companies and organisations to achieve a 77% improvement in their access to local suppliers and a 62% increase in new market penetration. Scottish food and drinks exports are now worth some £4.8 billion every year. In February, the SNP Scottish Government announced business rates relief for the hospitality sector, which will save Scottish pubs around £6 million. The package also included a one-year cap on business rate increases in Scotland for the hospitality sector at 12.5%, which will benefit a further 8,000 businesses. Brigid Simmonds, chief executive of the Scottish Beer and Pub Association, said:

“The introduction of a business rates cap, set at 12.5 per cent, is welcome, and shows that the Scottish Government has listened to the concerns of Scottish pubs and other hospitality businesses.”

The association’s analysis suggests that the cap will save Scottish pubs around £6 million, with pubs standing to benefit by an average of £4,700. Many microbreweries may also benefit from the small business bonus scheme, which will give up to 100% relief in many cases.

What can we do to help this very important industry, and what can we learn from Scotland’s approach? I agree with many hon. Members that a cut in beer duty is essential, but I fear that that alone may not be enough. I would like the UK Government to go further. The evidence is compelling. Of course businesses should pay their share in tax, which should be fair, but in 2015 beer duty comprised 49% of a brewer’s turnover, and the British Beer and Pub Association calculates that the beer and pub sector is one of the most highly taxed in the country. Brewers also face more tax: business rates, employment taxes and corporation tax are added on top. Once costs of production are taken into account, a brewer makes an average profit of just 2p or 3p a pint. For all brewers, but particularly the types of brewer in my constituency, this situation stifles the potential for growth and the ability to employ more staff.

The SNP supports a better, fairer, evidence-based way of taxing alcohol. We need to find the right balance. I very much hope that today’s debate will provide the Chancellor with beer for thought for his Budget tomorrow.

Photo of Peter Dowd Peter Dowd Shadow Chief Secretary to the Treasury 10:29, 7 March 2017

It is a pleasure, as always, to serve under your stewardship, Sir Roger. I too congratulate Steve Double on bringing this matter to our attention.

Tomorrow’s Budget day is also International Women’s Day, so I thought it would be apt to begin my remarks by quoting the great female poet of the 20th century, Sylvia Plath:

“The beer tastes good to my throat, cold and bitter”.

At the other end of the spectrum, we have Frank Zappa, who said:

“You can’t be a real country unless you have a beer and an airline—it helps if you have some kind of football team, or nuclear weapons, but at the very least you need a beer.”

That probably sums matters up. They are just two of two of the vast number of people who, like us, have enjoyed what is widely believed to be the oldest and most consumed alcoholic beverage in the world.

According to estimates by the British Beer and Pub Association, around 30 million adults visit a pub at least once a month, and beer accounts for around two thirds of alcohol sold in pubs. In economic terms, the pub sector contributes £23.1 billion to the British economy and £12.6 billion in tax to the Exchequer. It also supports nearly 900,000 jobs, 42% of which are for under-25s. Brewing alone employs over 100,000 people, as many Members have referred to today.

Of course, that picture has to be counterbalanced by the health impacts of alcohol, which has already been touched on by Members today. Public Health England estimates that alcohol harm costs about £21 billion a year generally and specifically costs the NHS £3.5 billion. Consequently, when we debate this issue, we really must consider it in that wider context.

Of course, many traditional drinking establishments are now under threat, not least because business rates revaluation is coming into effect, as my hon. Friend Toby Perkins said. In fact, in my constituency we have had to say goodbye to several novel establishments, including the Talbot, the Elm House, the Wyndham Hotel, St George’s Tavern and the Stand Park, some of which I have drunk in myself in the past. We tried to make the Priory a community pub but could not succeed, and the story is the same right across the country. None the less, we still have many great pubs and long may it remain so. In my constituency, in the Crosby area, there is a micro-pub called the Liverpool Pigeon. That has given a really good boost to the sector and to the confidence of the local community, so I say “Well done” to the Liverpool Pigeon.

Pubs are more than just small businesses. As many Members have said today, they are often community hubs. Increasingly, they offer other goods and services, such as food, hot drinks and meeting spaces, and even libraries and postal services in some places. In my constituency—and, I am sure, in many others across the country—we have church parish clubs, including St Benet’s and St Elizabeth’s and even one called the Holy Ghost, which play a similar role to community pubs. The Holy Ghost is not the top of the pile, except perhaps in theological terms. My constituency also has the Royal British Legion and the Royal Naval Association comrades clubs. All those establishments help to support our communities in a whole range of ways.

I think all hon. Members would acknowledge that pubs are an important community asset and that we must do all we can to help them to succeed, not withstanding the health issues. We always need to have those issues in mind, but we should not let them overshadow all other considerations.

As hon. Members have said, it was announced in the 2016 Budget that the duty on beer, spirits and most ciders would be frozen for 2016-17; that freeze followed three consecutive years of duty cuts on a typical pint of beer. On the other hand, duties on all other alcoholic drinks, such as wine at or below 22% alcohol by volume and high-strength sparkling cider, rose in line with the retail price index. Will the Minister say what effect that has had on prices for customers and what mechanisms are in place to monitor the effectiveness of these measures?

Of course, the industry welcomed the duty freeze, and Oxford Economics has produced research supporting the argument for a beer duty cut, to protect jobs and investment during uncertain times as the UK leaves the European Union. Labour was not opposed to the freeze on beer duty. However, in distributional terms the freeze favoured those who consume more of the relevant types of drinks. The equalities impact statement relating to last year’s freeze noted that

“any changes to alcohol duties will have an equalities impact that reflects consumption trends across the adult population”,

but it failed to outline what the specific equalities impact is with regard to gender. It would be helpful to get that assessment at some point. Data from the Office for National Statistics show that wine, the tax on which was not frozen, is the most popular type of drink among women, while the most popular types of drink among male drinkers of all ages are normal-strength beer, lager, cider and shandy. We must take that factor into account as well. Additionally, many trade bodies have questioned why wine has been singled out for a duty rise, and I invite the Minister to comment on that issue, either today or in the future.

Of course, it is only proper to point out the Government’s continuing duty of health care, and I will re-emphasise that. It is absolutely crucial, but having said that, let us strike a balance. The Government acknowledged in their policy paper that the freeze last year was

“likely to lead to a minor increase in overall alcohol consumption”.

Will the Minister provide information on whether such an increase did occur and, if so, what mechanisms are in place to monitor it?

As I have said before, Labour is committed to securing the long-term future of pubs and the wider hospitality sector. Action must be taken to give pubs a fair chance to be profitable and to make a go of things, as well as give some of the independent small businesses a chance to grow, which is absolutely crucial. My hon. Friend the Member for Chesterfield raised the issue of business rate revaluation, which needs thorough examination. I point the Minister in the direction of Labour’s five-point plan, which will be a good starting point for her. We are calling for an overhaul of business rates to support local high streets and small businesses, including pubs and clubs, and I hope she will take these ideas on board, because this debate is not all about beer duty. It is also about helping pubs in a range of other ways.

Photo of Jane Ellison Jane Ellison The Financial Secretary to the Treasury 10:37, 7 March 2017

I thank colleagues from all parties in the House for what has been a typically vivid and enthusiastic debate. It has been wonderful to hear so many fantastic pubs and breweries— both large and small—getting a name-check today in the House, which they deserve. I will not repeat them all, because there were so many mentions of people’s local star businesses, but I pay tribute to all of them. Debates such as this one are so valuable, because they allow Members to bring real colour to a debate about duty by demonstrating the impact that duty has had or could have on businesses in their own area.

I particularly thank my hon. Friend Steve Double for opening this debate on behalf of our hon. Friend Byron Davies. I know that my hon. Friend the Member for St Austell and Newquay and others here are advocates for the important role that pubs can play; we have heard today about pubs’ community role, as well as their wider economic role.

I congratulate both the all-party group on beer and the all-party group on save the pub for the work they do. Of course, the all-party group on beer is led by my hon. Friend Graham Evans, who took us through his own extensive history of pubs. However, bearing in mind that he was born in 1963, I hope that his experience of Boddingtons in the 1970s came very much at the end of that decade and not at the beginning.

I noted that my hon. Friend the Member for St Austell and Newquay said that it was important that this sector was not overlooked. I can reassure the pub and brewing industries that their interests are never overlooked in Parliament; they have fantastic advocates in Parliament, who are passionate and articulate champions, and they come from up and down the country and from all parties. As a result, industry concerns are regularly brought to the attention of Ministers. I myself have taken part in debates such as this one as a Back Bencher; I responded to similar debates as the Minister with responsibility for public health; and now I am responding to this debate today as the Minister with responsibility for tax.

I will try to respond to as many of the issues raised this morning as I can without repeating some of the points that others have made. As I am sure Members will realise, I cannot pre-empt anything that my right hon. Friend the Chancellor will announce tomorrow. [Interruption.] I will resist all blandishments on that front.

Turning to beer duty rises, the Government of course recognise the importance of the UK pubs sector and its contribution to promoting responsible drinking. I mentioned my previous role as Public Health Minister. In that role I made the case for pubs as advocates of responsible drinking. That was not always the most straightforward thing to do, because there is always a balance in reconciling the undoubted problem our country has with alcohol in some regards against the fact that we love our pub and brewing industry. Actually, pubs are very much the answer in that regard. They bring together those two ambitions: they encourage people to drink responsibly while at the same time doing all the other good things they do, such as providing employment and contributing to community life.

As we have heard, the sector’s footprint covers every constituency across the country. If I am allowed one namecheck, it is for the fantastic Sambrook’s Brewery in my constituency. Along with other Members, I managed to get one of my local ales into the Strangers Bar. I know that many of us have taken that opportunity over recent years. We appreciate the contribution that all breweries—large and small—make to local economies and the wider beer market. The rise in the number of small breweries has increased diversity and choice in the beer market and promoted consumer interest in a much larger range of beers, which has benefited all brewers and the industry as a whole.

We have heard about the action taken on the beer duty escalator since 2013. My right hon. Friend Mr Osborne deserves the praise he has been given for that. A pint of beer is 10p cheaper than it would have been had the beer duty escalator not been ended in 2013. That has disproportionately benefited pubs, given that two thirds of the alcohol sold in pubs is beer. The British Beer and Pub Association—it stays closely in touch with Members and briefs them—feels that the action taken since 2013 has increased confidence. I heard that in person from the head of a well known brewery who came in as part of the delegation led by my hon. Friend the Member for Weaver Vale last week. As my hon. Friend Claire Perry said, when we talk to people involved in the industry, we can hear the impact that confidence has. Sometimes it is hard to put an exact figure on its impact on a particular part of our economy, but I have heard that from people.

The BBPA estimates that more than £1 billion is being invested by brewers and pub owners each year, and that impacts on employment decisions across the supply chain. I draw the House’s attention to the ways in which the Government have supported the innovative domestic brewery industry other than by duty cuts and freezes. The shadow Minister noted them in his contribution, and they include supporting the employment of younger people through some of the changes made there, boosting research and development for small and medium-sized enterprises and reducing corporation tax on company profits from 28% in 2010 to 19% from April. In 2020, it is moving to 17%. Cutting the tax on profits encourages reinvestment and innovation.

Photo of Toby Perkins Toby Perkins Labour, Chesterfield

Does the Minister recognise that there is a real debate about the value of a reduction in corporation tax on the profits that businesses make as compared with the fact that we have the largest corporate property tax in all of Europe? We are expecting businesses that often are not making a profit to see their business rates tax bill go up and up.

Photo of Jane Ellison Jane Ellison The Financial Secretary to the Treasury

The hon. Gentleman brings me to the next section of my speech, which is about business rates. I am not surprised that colleagues across the House have raised that issue. We recognise that business rates can represent a high fixed cost for some businesses. I will not rehearse all the facts about the 2017 revaluation. I think we all acknowledge that there was a long gap between revaluations, but I emphasise that for those who face an increase in business rates as a result, there is a £3.6 billion transitional relief scheme. It will support them by capping and phasing in rises in bills. The Chancellor has already said that he is working with the Secretary of State for Communities and Local Government to provide additional support for the hardest hit businesses.

As Christian Matheson and others have said, pubs are valued for business rates around the idea of a fair maintainable turnover. An approved guide on the valuation of public houses for business rates has been agreed between the Valuation Office Agency and all five bodies representing pubs, including the British Beer and Pub Association and the Association of Licensed Multiple Retailers. That formula has been agreed, and that is a welcome step that provides more certainty for pub operators over their business rates bill.

It is also worth noting that in the Budget 2016, the Government announced a £6.7 billion business rates reduction package to benefit all ratepayers. I draw the House’s attention to the switch of the annual indexation of business rates from the retail prices index to the main measure of inflation, the consumer prices index, from April 2020. That will represent a cut every year from 2020. In 2020-21, that benefit will be worth £370 million, and it will grow significantly thereafter.

I will turn to a number of the issues raised by Members. A number of people have made the case—I am familiar with it and recently had the chance to hear it in person from industry representatives—that duty cuts boost Exchequer revenues. It is fair to say that even if we allow for other additional tax revenues, the industry analysis we have seen shows that duty cuts still have a net cost to the Exchequer. For example, because the public finances assume an increase by RPI each year, the duty changes from Budget 2013 onwards are estimated to have reduced total alcohol duty receipts by £800 million for 2016-17. That implies that to make up for that, Government would have to raise taxes in other areas of the economy, cut spending elsewhere or increase the deficit. I put it on record that cuts and freezes have a real impact on how the public finances account for things.

A number of Members have raised the issue of lower duty rates on low-strength beer. I recognise some of the challenges around the point at which that line is drawn and around brewing to that level. High-strength beer is taxed more than the equivalent low-strength product, but the 2.8% threshold is set by European Union law and is being reviewed by the Commission at the moment. In the industry meeting, we explored the impact and discussed where the threshold should be.

Members have rightly discussed the challenge around the on-trade and the off-trade and discussed how pubs can encourage responsible drinking. Current rules do not permit the Government to apply a different tax treatment to the same product. We cannot tax alcohol sold in shops at a different rate to alcohol sold in pubs, but we recognise the role that pubs play in promoting responsible drinking. In 2014, we took action on very cheap alcohol by banning sales below duty plus VAT in England and Wales.

Photo of Liz McInnes Liz McInnes Shadow Minister (Foreign and Commonwealth Affairs)

I appreciate the point that the Minister is making about different rates of tax, but is it not true that minimum pricing for alcohol would apply only to alcohol sold in supermarkets and retail outlets, and not to alcoholic drinks sold in pubs? Is that not correct?

Photo of Jane Ellison Jane Ellison The Financial Secretary to the Treasury

I suspect that is a debate for another time. It is certainly a debate in which I took part in my previous role. If the hon. Lady will forgive me, I will stick to the topic of the debate, lest we get drawn into minimum unit pricing, as it is a complex issue.

My hon. Friend Helen Whately spoke about the long history of the brewing industry in her constituency. She is another strong advocate for the brewing industry, and she rightly mentioned beer exports, which were worth £531 million in 2015, up 10% on the previous year. I reassure her that no duty is payable on exported alcohol, so the link between duty cuts and exports is not a direct one, although I take her point about general confidence within the industry.

The issue of high-strength alcohol has been challenged. I think the House is unanimous in wanting to tackle excessive alcohol consumption and the related health harms associated with the strongest products. The question is how we do that, but the point has been well made and the Government are of course reflecting on that.

I hope I have covered most of the points raised. I have not been able to respond to the whole thrust of the debate, although more will be said tomorrow in the Budget. The debate has been a valuable opportunity to discuss the issues, and it has been interesting to see so much common ground.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Health), Shadow DUP Spokesperson (Transport), Shadow DUP Spokesperson (Equality)

In my contribution I talked about alcopops—I know that might be a separate issue—and the advantage that high-street supermarkets have over the pubs. Do the Government intend to address that imbalance, the unfair advantage that high streets have over pubs, and the control of the alcohol that is sold?

Photo of Jane Ellison Jane Ellison The Financial Secretary to the Treasury

Again, that is perhaps for a wider debate, but, as I recollect from my time as Public Health Minister, the industry was rightly praised for the extent to which it stepped up to address issues with certain products. A lot of alcopop products have been phased out by some producers who decided to change their portfolio. One or two speakers referred to the bigger chains and the fact that they have tried to shift their portfolios as they recognise the challenges that certain products pose, especially for younger drinkers. It is worth putting on the record a recognition of the industry’s actions in that regard, although there is always the challenge to do more.

I hope that I have been able to reassure Members on some issues. In opening the debate, my hon. Friend the Member for St Austell and Newquay said that the industry wanted to make sure it was not overlooked, and I can reassure him that it is not. Its voice is rightly heard loud and clear across the House and within Government. We have regular meetings and dealings with the industry and we listen very carefully to all the points made.

Photo of Peter Dowd Peter Dowd Shadow Chief Secretary to the Treasury

I take the point that the Minister makes about the industry not being overlooked, but it is important to put this in context. For example, according to the industry, the business rates rise will put a 15% increase on pubs’ costs and 23% on restaurants’ costs. That is an additional £300 million to £500 million a year. The Minister should perhaps give more consideration to that.

Photo of Jane Ellison Jane Ellison The Financial Secretary to the Treasury

If the shadow Minister thinks that the Government have not given consideration to business rates in recent weeks, he has not been looking at the newspapers. Of course it is an important issue and we have given consideration to it. Many establishments in different parts of the country will gain from the business rates revaluation. More businesses will see their rates cut or frozen than will see an increase. For those that see an increase, transitional relief is available, so it is important for people to look at that. No doubt people will look at the impact of that fiscally neutral revaluation in their own areas.

To return to my previous point, the industry’s voice is rightly heard loud and clear in Government. It has powerful advocates in all parties in this House. The debate has been constructive and has brought out important issues. I have heard all hon. Members’ contributions today and will take them as representations ahead of tomorrow’s Budget.

Photo of Steve Double Steve Double Conservative, St Austell and Newquay 10:53, 7 March 2017

I thank all hon. Members for their contributions to this debate, which has been positive. There has been a great deal of unity among all parties on the importance of the sector to our economy, to jobs particularly for our young people, to our communities and to the Exchequer, and on the vital role that pubs play. I can reflect on the comment that the Minister made and recognise the reduction in beer duty and the drop in the amount of beer duty going to the Exchequer because of that. However, because the industry has grown and employed more people, I suspect that the overall tax take by the Exchequer has not dropped too much because extra income tax, national insurance and other taxes have been paid as a result of the growth. So there is a balancing act.

There has been a clear message from the debate today. Lowering beer duty has a positive effect on the industry. We have heard about an increase in confidence and about increasing investment to enable the industry to produce better beer and more beer more efficiently. That contributes to the overall growth of our economy and will become even more important once we have left the EU. We must ensure we have a very robust beer and pubs industry in this country that can play its part in making sure our economy is strong going forward.

I am grateful to the Minister, who has listened and taken on board the points made. I am grateful for her reassurance that the industry is in the minds of Government as they make decisions. I am sure we all look forward to—let us hope—good news tomorrow from the Chancellor.

Question put and agreed to.


That this House
has considered beer duty.

Sitting suspended.