The Exchequer Secretary to the Treasury (Priti Patel)
I congratulate my hon. Friend the Member for Burton (Andrew Griffiths) not only on securing this debate, but on the reward he received this week for his lobbying and campaigning on behalf of the beer industry. I pay tribute to him for campaigning solidly over this Parliament on behalf of his constituents in Burton, the home of British brewing. He is a champion of the jobs, the investment and the economic security that the industry has provided. I also commend the passion he has shown in his work as chair of the all-party group on beer. It is one of the most popular all-party groups, unsurprisingly, given the effective leadership he has displayed. It has been a delight to work with him on various issues, both before and since becoming a Minister.
This week UK beer sales have increased for the first time in 10 years. That is a testament to the hard work that my hon. Friend has put in over the years in standing up for the beer and pub industries. The great British pub and great British brewers are institutions that we in Government wholeheartedly support. As we heard in the compelling case eloquently made by my hon. Friend, there is a very strong argument that the brewing and pub sector is a major part of the UK economy. It adds £22 billion to the UK’s GDP. It directly employs over 600,000 people and supports almost 900,000 people in total, including, as he said, a significant proportion of young people. There is a very strong skills base in the industry, and young people are part of that. As he said, it also boosts British manufacturing, and its exports are worth over £630 million.
Perhaps as importantly, pubs have been at the heart of British culture for centuries. Fifteen million people visit them each week. They are the cornerstone of our communities, and of tourism. As Members of Parliament, we all recognise that they play a strong and pivotal role in our local communities, particularly rural ones.
Andrew Griffiths
The Minister mentions tourism. Is she aware that visiting a great British pub is one of the key things that visitors to this country want to do when they arrive on these shores? Does she agree that we should be doing more to promote the great British pub as part of our tourism offer?
Priti Patel
My hon. Friend is absolutely right. We have spoken about this at the APPG. The pub is absolutely pivotal to boosting Great Britain’s brand. Tourism and our rural economies are part of that. When we speak about pubs, it is about enjoyment—the fact that people enjoy them. As a policy maker and a Minister, I sometimes think that that is not sufficiently taken into account.
The case for supporting pubs and brewers as institutions is overwhelming. We see that across the country, beyond pubs, in the supply chain and the wider industry. Maltings and other factors in the supply chain are crucial and pivotal to our economy.
Tim Loughton
My hon. Friend the Member for Burton (Andrew Griffiths) made a fantastic economic case for the beer industry that the Minister is fortunately echoing. Will she apply the same criteria to the wine industry, which accounts for some 22% of sales in pubs and restaurants, accounts for no less than 67% of all the wine duty paid in the whole of the EU, and contributes £3.7 billion to the Exchequer? Will she see a delegation from the all-party group on wine and spirits, led by me? If we can combine that with happy hour at the Treasury, I will gladly bring along a bottle of Nyetimber, Ridgeview, or my favourite champenois, Breaky Bottom—“Probably the best bottom in the world”, as it markets itself.
Priti Patel
Of course, the answer is yes to the delegation. My hon. Friend is right that the wine industry makes an enormous economic contribution. Earlier, he referred to English wines. I speak proudly as the Member of Parliament for Witham as I, too, have a good vineyard in my constituency. The wine sector is to be supported and commended as well. I will take him up on his offer; he is very welcome to come and meet me at the Treasury.
As my hon. Friend the Member for Burton pointed out, the previous Government’s beer duty escalator hit the industry hard. It led to pub closures and cost people their jobs. Of course, we have made changes to the escalator. In recognition of what happened in the past, we went on to cut tax on a typical pint of beer by one penny at Budget 2013 and another penny at Budget 2014. I am delighted that he celebrates the fact that the duty on a typical pint of beer is now 8p lower than under the previous Government’s plan. According to the British Beer and Pub Association, the jobs of 16,000 people have been secured by our duty cuts, and for them the duty cuts have been fundamental to their livelihoods. The duty cuts have also boosted confidence in the brewing and pub sector and, importantly, they have led to greater investment and greater economic security when it comes to jobs.
Research for the British Beer and Pub Association estimates that an additional 186 million pints will be sold in the on-trade this year as a result of our beer duty cuts. To meet that increase, it estimates that there has been a 12% rise in investment—in monetary terms, an additional £44 million—in the sector in the last year directly as a result of the cut in duty. According to a recent survey, 86% of its members are planning to increase their investment in the UK. That strengthens our economic case, and shows that we are serious about supporting the pub sector.
As my hon. Friend said, nearly two thirds of all the alcohol sold in pubs is beer, but other drinks are important to pubs. To ensure that help is extended to pubs that have diversified away from beer, at Budget 2014 we froze duties on spirits and ordinary cider. Of course, we ended the escalator on wine as well; I am somewhat familiar with the campaign in favour of that.
Pubs are benefiting from the wider changes that the Government have made to support business. Three quarters of pubs are benefiting from a £1,000 reduction in their business rates this year. The reduction will rise to £1,500 next year. We have extended the doubling of small business rate relief to April 2016, which, as my hon. Friend knows, will particularly help the eight out of 10 pubs run as individual small businesses. Pubs will benefit from our national insurance changes. The £2,000 employment allowance has reduced employer national insurance contributions for all businesses. Pubs will also benefit from the reduction in employer NICs for young people, which is particularly important because 46% of the people employed in pubs are aged between 18 and 24. We have introduced regulatory changes to make it easier for pubs to play live music, and to allow beer and wine to be served in glasses of different sizes.
As I am sure my hon. Friend will know, there is no such thing as a typical pub. There are as many different types of pub as there are types of customer, so pubs should have the flexibility to meet customers’ needs. It is fair to say that customers want reasonably priced drinks, naturally, and I am glad to say that our duty cuts are translating directly into more beer for your buck. Beer prices in the on-trade are rising at their lowest rate for more than 25 years: 96% of British Beer and Pub Association members have said that they plan to reduce or freeze their prices as a result of our policies. That is fantastic news for the 32 million people in the UK who drink beer each year; incidentally, that is more than the number of people who voted in the last general election.
Our customers want choice. It is great news that more than three quarters of respondents to the British Beer and Pub Association survey intend to launch new products directly as a result of the cut in beer duty. Small brewers relief has reduced the beer duty paid by micro-brewers by up to a half. That has encouraged new micro-breweries to be set up and to expand. There are now 1,000 more breweries in the UK than in the year before small brewers relief was introduced.
I am particularly interested in how we can do more to help those industries, because there are many associated benefits from having more thriving breweries, not just in exports, but in the tourism offer, as my hon. Friend has said.
Sir Peter Bottomley
Regional brewers also matter. Will my hon. Friend allow me to pay tribute to Hall & Woodhouse, which is one of the many? It set up the community chest in Dorset and West Sussex, which gives grants to good organisations. Not all of the organisations are run in the pubs, but the pubs and brewers want to support them.
Priti Patel
My hon. Friend is absolutely right. Regional brewers play an important role by bringing diversity to the mix and by making a contribution. When there is a range of thriving breweries, with regional aspects as well, it provides differentiation and helps with tourism, because it makes regions attractive to people and brings them in.
I want to touch on the big societal changes that we have seen over the past few years. People give a lot more consideration to what they are drinking. They take an interest not only in what they drink, but in how it is produced. With some notable exceptions, people are much more knowledgeable about responsible drinking and regional varieties. Every landlord knows that any drink is capable of being enjoyed in a responsible way or of being misused. This Government will always argue against the top-down approach. I pay tribute to the industry for everything that it has done on responsible drinking and to pubs for the role that they have played in promoting responsible behaviour. We have seen successful schemes, such as the highly renowned Best Bar None.
My hon. Friend the Member for Burton has spoken eloquently about continued action through the tax system to ensure that pubs and breweries continue. I commend him for his speech today.