Finance (No. 2) Bill

Dave Doogan Excerpts

Committee of the whole House
Tuesday 13th January 2026 Commons Chamber

[Lucy Rigby]

I am pleased to open this session—the sixth and final session in Committee of the whole House on the Finance (No. 2) Bill—on clause 86, which concerns alcohol duty. This Government’s approach to alcohol duty is one of proportionality. Indeed, we are taking a fair and coherent approach to alcohol taxation as a whole. The measures in the Bill take account of the important contribution of alcohol producers, pubs and the wider hospitality sector, the Government’s commitments to back British businesses, and the need to maintain the health of the public finances.

Clause 86 makes changes to alcohol duty rates from 1 February 2026. Specifically, the clause changes the rates of alcohol duty for all alcoholic products in schedule 7 to the Finance (No. 2) Act 2023 to reflect the retail prices index.

[Dave Doogan (Angus and Perthshire Glens) (SNP)]

The Minister says that she has considered carefully the fairness of the changes in this clause. Has she considered at all the compound effect of this and all the other taxes that are currently killing hospitality businesses?

[Lucy Rigby]

We take all impacts on the hospitality sector and the pub sector extremely seriously, and this Government are proud to be backing British pubs across the piece.

The changes we are making will help to ensure that, as a country, we live within our means, that we balance the books and that we properly fund the public services we all rely on. On Second Reading, concerns were raised about the impact of alcohol duty on the hospitality sector and British pubs. We have made it clear, as I just have, that we are steadfast supporters of British pubs and the wider hospitality sector, including through the introduction of the new pro-growth licensing policy framework that was announced at the Budget.

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[Dave Doogan]

I remember precisely the dynamic that the hon. Member sets out in his local high street. We used to have it in Scotland, too, until we introduced minimum unit pricing, which took the very large volume, high-strength alcohol products off the shelf in Scotland, or at least put them way up in price. He can check with the hon. Member for Edinburgh South West (Dr Arthur), who I am sure would endorse that SNP policy.

[Laurence Turner]

I sit on the same Select Committee as my hon. Friend the Member for Edinburgh South West (Dr Arthur), and I know better than to speak for him. I have a degree of personal sympathy with the case that the hon. Member for Angus and Perthshire Glens (Dave Doogan) sets out. I also think there is something to be said for giving more powers to our councils, because these decisions—particularly when they relate to areas at risk of complex interactions between homelessness, lack of mental health provision and the sales of these at times dangerous products—are best made locally, in addition to national policy setting.

My final point is that there have been calls outside this place for uprating to be moved to a different inflation index, principally the consumer prices index or the consumer prices index with housing. That important matter has not been raised in this debate, so I will touch on it briefly. Although CPI and CPIH are both of use as macroeconomic indicators, RPI remains the only measure that is in general circulation and is updated regularly that actively seeks to measure the cost of living as it is experienced by working people. Criticisms can be made of the retail prices index, but it is important to place on record that in the early 2010s, regular changes to the methodology for RPI were discontinued. That is behind the formula gap that has led to the widening between the headline rates of RPI and CPI. I am not convinced that moving to a different rate at this time is appropriate, given some of the limitations of CPI and its twin CPIH, which we can discuss on another occasion.

The Office for National Statistics has been developing the alternative household costs indices measure. That is particularly useful, because it captures the different rates of inflation experienced by households of different income levels. I hope that in future we can look at the HCIs as an alternative means of uprating the various charges, levies and escalators that the Government apply. We are not in that place yet, and it is important that the ONS makes progress in this area.

On the whole, I welcome the Minister’s statement. Compared with some of the other debates we have had in this Parliament—particularly on the Product Regulation and Metrology Bill, where it was suggested that there was some secretive and sinister plot to change sales of the pint to some metric measure—this has in contrast been a sober debate. I look forward to voting for the Finance Bill tonight.

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[John Lamont (Berwickshire, Roxburgh and Selkirk) (Con)]

It is a privilege to speak in this debate. I want to speak about the pub and hospitality sector in my constituency in the Scottish Borders, but also more broadly about the impact of these changes on an important industry that is the lifeblood of the Scottish economy. We are debating the hike in alcohol duty, which the Treasury has described merely as “uprating”, but for Scotland this technical change will have a real impact on our iconic industry. It will be a hammer blow to the Scottish whisky industry as well as to the pub and hospitality sector.

The Treasury is hiking these taxes to fill the black hole in its balance sheet, but the Scottish whisky industry is a global brand that not only supports the Scottish economy but is very important to the UK economy, and it is really important that the Treasury and the Government understand the impact that these changes will have on this global brand.

It is important to remember the numbers associated with the Scottish whisky industry. It contributes £7.1 billion to the UK economy. It also supports 41,000 jobs in Scotland, some of them in our most fragile and vulnerable communities in the highlands, in Moray, in the Borders and all over Scotland. The whisky industry has a footprint and an impact. Whether it is the distilleries or the farmers who are growing the crops that go to be distilled, the whisky industry is a key part of the Scottish economy as well as the key part of many local economies, in that it provides local jobs in remote communities and supports local events and, often, local services such as the local school, the village shop and many other key parts of the community.

The Minister and the Chancellor claim that the rise in alcohol duty will boost revenue, but history says something very different. Indeed, the Treasury’s own data says something very different, because when duty was hiked by 10.1% in 2023, spirits revenue did not go up; it actually plummeted. Before colleagues seek to intervene, I appreciate that it was a Conservative Chancellor who made that change, but Scottish Conservative MPs argued strongly for it not to happen. We accepted the representations that the Scottish whisky industry, the Scotch Whisky Association and many of our constituents were making against the tax rise.

The evidence has backed up what the industry was saying. When we put up taxes, the revenue generated actually falls. According to the Scotch Whisky Association, that tax hike actually cost the Treasury £150 million as consumers pull back and stop spending as much as they did. By doubling down, the Labour Government will compound the situation. The Chancellor and this Government are trapped in a doom loop where higher taxes lead to lower sales, which lead to lower tax receipts, which lead to—you guessed it—even higher taxes from elsewhere as they scramble around to try to fill the gap. It is not possible to tax a sector into prosperity.

I want to touch briefly on the impact on our high streets and pubs, because it is not just the distilleries that will suffer as a consequence of this tax hike. From the highlands to the Borders, our hospitality is screaming out for “breathing room” because all it is getting from this Government is a tightening of the noose. The Scottish Government are compounding matters in Scotland with their anti-job policies. Taken with the UK Government’s policies, that is making things even worse.

[Dave Doogan]

The hon. Member refers to his belief that the Scottish Government are engaged in anti-jobs policies. Can he therefore explain why unemployment in Scotland is substantially lower than it is in England?

[John Lamont]

I am grateful to the hon. Member for making that point, but by any measure the Scottish economy is not doing well. Scotland is, by any definition, the most highly taxed part of the United Kingdom. While paying all this extra tax, none of my constituents—I am sure his constituents would agree—feel that they are getting any extra benefit from it. Our NHS and our education system are not performing well; there are potholes on all our roads; and our local authorities are underfunded. Taxes are going up in Scotland, but public services are going down. But of course we have an opportunity in a few weeks in Scotland to replace a failing nationalist Government with a pro-UK Scottish Conservative Government.

The hospitality and pub sector in Scotland is having to deal not just with these higher rates of alcohol duty, but with national insurance hikes, the jobs tax and the national living wage hike, as well as all the other red tape being imposed on it. Pubs are finding it more and more difficult to do business, which is why numbers are falling as a direct consequence of decisions that this Government have taken. In fact, in 2025 we saw a record number of licensed premises handing back their keys because they could no longer make their balance sheets work.

As colleagues have mentioned, pubs are more than just where people go to have a drink and more than just the value of a drink; they provide social value to the local community. I represent 90 to 100 different communities in my constituency. Not all of them have a pub, but for those that still do, the pub is a focal point. It is where people go not just to have a drink, but to meet friends and chat to neighbours. It might be the only conversation and contact someone has that day, over a social pint or a can of cola.

I want to mention a couple of the excellent pubs in my constituency: the Black Bull in Duns, the Cobbles in Kelso, the Ship Inn in Melrose, the Plough Hotel in Yetholm and the Office Bar in Hawick. One pub I must mention that has bucked the trend—I said earlier that lots of pubs are closing—is the Blackadder in Greenlaw, which has just reopened and is going from strength to strength. But the pub highlights the huge challenges that the Government are imposing on it. Despite the fact that it has made this effort to open and get people back in the pub, the challenges being imposed on it—largely, I have to say, by the UK Government—are clear, and it is finding it so difficult to continue the service it is providing and keep the business running.

We are fast approaching the point when people in Scotland and across the UK will no longer be able to go down to their local to enjoy a drink, and when the only people who can afford Scotland’s national drink—a glass of whisky—will be those living outside Scotland, as opposed to those living in Scotland.

I just wish that the Chancellor, the Minister and the Government would reflect on all the voices highlighting these issues and crying out for help, and that they would recognise the service that these important local businesses are providing to their communities. They should listen to all the publicans who have decided to ban Labour MPs from their premises because they do not agree with the policies that they are proposing. They feel so strongly about this issue that they have decided to make a stand. I encourage the Government to think again. If they cannot think again tonight, they should at least recognise that a cumulative assessment of all these changes would allow them to come back to the Chamber better informed and justify the choices that they are making in this Budget.

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On behalf of the many pubs and hospitality venues that I represent across Keighley, Ilkley, Silsden, and the Worth valley, which have been kind enough to come to me with their concerns, I say this to the Government: get a grip. If they do not, I fear for many of the pubs and hospitality venues that will quickly go out of business under this Labour Government.

[Dave Doogan]

With clause 86, the Treasury in Westminster continues to treat Scotland’s vital Scotch whisky sector as a cash cow, with duty rising again in line with inflation in the Budget. As the Scotch Whisky Association warned, the previous 3.65% increase to spirit duty reduced revenue by 7%, costing the Treasury £150 million, so it seems an opportune moment to remind the Minister that her ambition, and that of her colleagues, should be to increase tax receipts, not erode them.

Dewar’s, Blair Athol, Edradour and Glencadam—just some of the distilleries in my constituency of Angus and Perthshire Glens—are four of the many distilleries striving to deliver global excellence, all while being gouged year after year by the Treasury in London. Through the hiking of duty, for the third time in two years, in the November Budget, a sector that is already mitigating job losses, stalled investment and business closures will face substantial additional headwinds. If the Labour Government genuinely value industry in Scotland beyond the grasping hand of the Treasury, they should work with us to amend or remove clause 86. That would have been a lot easier if SNP amendment 30 had been selected for debate. Nevertheless I can but appeal to the Minister’s better and last-minute judgment on this matter.

A Scottish coalition of drinks, tourism and farming representatives warned in October that duty increases had already contributed to around 1,000 job losses, and claimed that duty can make up around 70% of the cost of a bottle of Scotch. That same coalition emphasised spirits’ outsized role in hospitality margins, as they represent a smaller share of sales but a larger slice of profits, meaning that duty uprating can squeeze already extremely fragile margins in venues, especially in Scotland’s towns and rural areas where footfall is thinner.

I cannot emphasise enough to the Minister that this tax rise could be the final nail in the coffin for many hospitality businesses that are already on the margins of solvency, especially those in rural settings, such as my constituency and those of many other hon. Members. I do not hold with banning Labour MPs from pubs, because pubs are about being in the company of people from all walks of life. If people wish to select the company that they keep, they can do that in their own house. In a public house, we convene with the whole community and visitors alike—that is the magic of it.

[Gideon Amos (Taunton and Wellington) (LD)]

The hon. Gentleman is making a strong case for the whisky industry. Does he recognise that the cider industry in my part of the world in Somerset is deserving of good treatment because of its support for agriculture? It used to benefit from a duty of 40% that of the wider beer and drinks industry, but that has crept up. The average is now about 75%, and the duty on some classes of cider is now more than the duty on beer. Does he accept that that differential should be restored to support agriculture?

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[Dave Doogan]

I have heard a range of cases from right hon. and hon. Members about that differential, and I would certainly like to see nothing happen that would jeopardise the drinks, hospitality or agricultural sectors in the west country, but I will leave that to be divined by others with a more material interest, if the hon. Gentleman does not mind.

Pubs are revered institutions, and they are under threat as never before across these islands, so let me put the situation in simple terms. Let us not forget that before the election hospitality was already struggling with the post-covid recovery, the highest taxes since the war, a punitive and unrelenting business rates regime, the disastrous misadventure of Brexit and labour shortages, and 16 years of the UK without any meaningful economic growth. On top of all that, we had the highest energy costs in the developed world.

Since the election, Labour has added to that. At the outset of the debate, I expressed my concern and the Minister was kind enough to take my intervention on the compound effect, which many other Members have mentioned. She should really take cognisance of that, because since the election, Labour has added to the hospitality sector’s pain with a massive rise in employer national insurance contributions, even higher energy bills, even greater economic despondency pervading across society, an entrenched cost of living crisis keeping people at home, an increase to the minimum wage with no increase in revenue to support the payment of that wage, and no respite or consideration for the VAT millstone around hospitality’s neck. Labour should really listen, because on top of all that, there is now a 25% increase in unemployment, with 352,000 people now unemployed who were not before Labour came to power.

[John Lamont]

As the hon. Member will know, the Scottish Government announced their Budget today. I am sure he is aware of the comments from UKHospitality Scotland’s executive director, who said that the Scottish Government Budget had

“not sufficiently addressed the challenges that hospitality businesses in Scotland face”,

and that the majority

“will still be paying higher business rates bills in April”.

How does he reflect on those comments in the light of what he was just saying?

[Dave Doogan]

I reflect on the fact that, following the Cabinet Secretary for Finance and Local Government’s Budget today in Scotland, 93% of hospitality, retail and leisure businesses in Scotland will be paying no rates or reduced rates. That is because the SNP is responsive and closer to people in Scotland.

Further to that, not wishing to shoot the hon. Gentleman’s fox again, he spoke about the taxation rates for people in work in Scotland. I am sure his constituents will be grateful to know that 55% of taxpayers in Scotland are paying less tax than they would if they were part of the fiscal regime in the rest of the United Kingdom.

The problem with the figure for unemployment, which is a scandal—352,000 people are unemployed who were not unemployed before Labour came into power—is that unemployed people cannot afford to go to the pub or go out for a meal. It is against that backdrop that the Minister seeks to defend this latest hike in alcohol duty. That is totally unforgiveable.

I do not think the Minister believes a word that I am saying, and she certainly will not refer to anything I say in her winding-up speech, which I take as a kind of contrarian compliment. I do not know whether she has a local that she goes to; if she does, she can take my list of 12 life-threatening headwinds for pubs, all caused by the UK Government—mostly by Labour—and see if the landlord and landlady in her pub disagree with my analysis. She should do that before she introduces the 13th headwind—unlucky for pubs—with clause 86.

The SNP will back new clause 9, because, as many Members have said, we really need to review the way in which alcohol is purchased and consumed in the United Kingdom and the fiscal burden that follows that. Off-sales are getting far too easy a run of it, and on-sales will disappear before our eyes. I also support new clause 26.

It is too late today, as we have not been able to stop Labour coming to assault our pubs, but I look forward to standing up for Scotland’s hospitality sector again on Report. I hope the Minister will then have had a change of heart, or at the very least be in possession of a revised cost-benefit analysis that stacks up for hospitality.

[Dr Luke Evans]

I have come here to talk about duty, but not duty in the conventional sense. I feel that I owe a duty to the cafés, restaurants and pubs in my constituency to tell the Government just how poor their impact is and to hold them accountable. That is why I support new clauses 9 and 26.

Let me start with new clause 9, on the review of the cumulative impact. I agree with the Liberal Democrat spokesperson that there is a cumulative impact, but I would go further, as I have done, and call it a toxic concoction. It is true that the Conservative Government raised taxes, and I can imagine that in the future another Conservative Government may need to do the same, but the toxic concoction that this Government have set out on, with the Employment Rights Bill, raising the minimum wage and the reduction in support on hospitality exemption all at the same time, is compounding the problem. I am here to use my voice and do my duty to ask the Government to be accountable and able to show their workings, and these two new clauses are an attempt to do that.

We saw the Government come forward in their first Budget and say that they did not need to raise any further taxes, yet the subsequent Budget in 2025, which we are debating now, brought taxes further forward by £26 billion. The Chancellor said that the slate was wiped clean, by her own admission, but it seems that she has hospitality in her sights, and it is not clear why. What does she have against cafés, hotels and restaurants? She seems to be softening, because she has heard from her Back Benchers about the impact that all this is having on pubs.