Thank you for your email as part of Long Live the Local’s and CAMRA’s campaign for tax reform.
I couldn’t agree more that pubs are a hugely important parts of our local communities up and down the country, providing space for people to connect and enjoy a pint or some grub while catching up with friends and family. We’re fortunate to have many great pubs across Beverley & Holderness.
I’m acutely aware that pubs have faced considerable challenges during the coronavirus pandemic. I know significant financial support has been provided throughout the worst of the pandemic, such as £9,000 grants in January followed by a Restart Grant of up to £18,000.
In addition, an extended holiday on business rate payments was in place until the end of June, which will continue as a 66% relief until the end of March next year.
Pubs are also currently benefitting from a reduced rate of VAT, which was at 5% until the end of September, and has now increase to 12.5% until the end of March 2022. There are calls for a permanent lower level of VAT for all food and drink sold in pubs, but I’m afraid I’m unaware of any plans to this end.
I have spoken to colleagues at the Treasury, who have made it clear that the temporary reduction to VAT was intended as a measure to support the industry during the coronavirus pandemic and that to extend this reduction indefinitely would limit long-term funding for vital public services, which have also been badly hit by the Covid-19 crisis.
Alcohol duty, meanwhile, has been frozen for the 2021/22 financial year – the second year running. This covers duty on spirits, beer, wine and cider and will save a total of £1.7 billion. Beer duty specifically has been frozen or cut several times since the Government ended the beer duty escalator in 2013.
However, in recognition of the importance of supporting pubs, I’m pleased to say that there is broad recognition of the need to reform the current duty system. A Call for Evidence was published last October and the Government is currently analysing people’s responses before taking a decision.
I’m also pleased to say that long-term strategies for hospitality and high streets have been published by the Government, with the intention of supporting the recovery and resilience of pubs across England. Temporary pavement licence provisions introduced during the pandemic, which have made it easier and cheaper for pubs to make outdoor dining a reality, will be extended, with an intention to make them permanent.
While evidence continues to be collected on the impact of the pandemic on the hospitality sector generally, and on pubs specifically, I am pleased to hear that all evidence as part of the Alcohol Duty Review, and any potential changes will be kept under advisement in the lead up to the next budget. Furthermore, while there are currently no plans to introduce a preferential rate of duty for draught beer, I appreciate your strength of feeling on this issue and have therefore passed your comments on to my colleagues at the Treasury.
With regards to the broader issue of alcohol and beer production, the Small Brewers Relief scheme’s taper will be smoothened. Colleagues at the Treasury assure me that this change has been subject to substantial consideration, and it is believed that it will support growth, boost productivity, and remove any ‘cliff-edges’ to the growth of smaller breweries. As for cider production, more specific support has been introduced to support cider makers, through the freeze on cider duty announced at Budget 2021. In fact, cider duty has been frozen in five of the previous six Budgets and will be considered for continued support in the upcoming budget.
Thank you once again for taking the time to get in touch about the importance of supporting our pubs.