Beer Duty

Jonathan Brash Excerpts

Tuesday 15th July 2025 Westminster Hall

[Mr Forster]

My hon. Friend is completely right. If the Government reviewed and cut beer duty, as I am requesting, the hospitality sector would see increased growth. Consumers would enjoy cheaper beer, and the industry would have more capital to invest, growing our economy when we need that most. Most critically, there would likely be an uptick in sales due to lower prices. All of that could lead to overall higher tax receipts, counteracting the flawed economics of the EPR policy.

Beyond the industry numbers, this is about people, communities and our British way of life. As my hon. Friends have highlighted, pubs are vital cultural and social centres. They bring people together, help combat loneliness and support the mental health of the nation. Many of us have personal stories that connect us to our local pubs. They are woven into the fabric of our lives, yet pubs continue to face immense pressures. The British Beer and Pub Association estimates that 378 pubs will close in 2025 alone, risking over 5,600 jobs. That is more than one pub a day.

[Mr Jonathan Brash (Hartlepool) (Lab)]

The hon. Gentleman is making a persuasive speech about reducing beer duty. One of the other great pressures facing microbreweries—such as the Crafty Monkey Brewing Co. in Hartlepool—is the inability to get their product into tied pubs. That is bad for pubs and microbrewers. Would he support a change to the pub code to allow them to get their produce into more pubs?

[Mr Forster]

It will be interesting to see what the Government make of my persuasive speech, but I thank the hon. Member for his kind words. I am sure he will not be told off for saying that from his side of the Chamber. I am happy to look into what he said about changing the pub code. One of the things I am highlighting is that we want a thriving independent sector that supports small businesses, and reviewing the code could help.

I am really concerned that, effectively, one pub has closed every day in this country this year. Nationally, hospitality employs 3.5 million people. That is 10% of all UK jobs, and the concentration is even higher in coastal areas, such as those represented by some colleagues who have spoken today. The beer and pub sector contributes £34.3 billion to the UK economy and generates £18 billion in tax. It supports around 1 million jobs from grain to glass.

The UK has the second-highest beer duty in the whole of Europe. The highest is Finland, where alcohol can be bought only in state-owned shops or licensed bars and restaurants. It is one of the two European countries that effectively has an alcohol monopoly. On a European level, Finland’s alcohol prices are considered extreme compared with other countries, but even now, the Finnish Government are aiming to reform their policies to bring them more into line with others in Europe.

Bizarrely, we are more like Finland in regard to our alcohol laws, when we should be more in line with countries such as France and Germany, which have similar drinking traditions to us. So I ask the Minister: when will the UK take the same approach? Higher beer duty has wider consequences, such as increasing prices for consumers, reducing investment, fewer choices on the shelf and making the UK less attractive for international brewers.

Even with some recent reforms, the burden remains far too high and continues to threaten the viability of local pubs and breweries. Reducing beer duty is an economic argument, yet it is also about protecting British culture, supporting local jobs, encouraging investment in communities and helping people with the cost of living. I hope that the Minister will recognise that, as some of his colleagues have, and agree to review beer duty to ensure that the level that is set grows our economy and protects jobs. Let us act before the damage to the British way of life becomes irreversible.

--- Later in debate ---

[Mike Wood]

The hon. Lady is completely right because of the margins that such brewers operate on. The concern now is that, if reports are correct and the Government are considering beer duty as a revenue raiser to fill the gap in the Chancellor’s budget, so much of the progress will be put at risk.

Since the Government took office last July, almost every decision that the Chancellor has taken seems to have gone in the wrong direction when it comes to supporting pubs, hospitality and brewing. Just months into office, the Chancellor confirmed that beer duty would rise in line with the retail prices index from February this year—a sharp and sudden shift, which wiped out so many of the gains. That really needs to be a one-off because the return of automatic uprating every year would be a real betrayal of both the brewing industry and consumers. It would mean higher prices at the local, more pressure on struggling pubs and reduced confidence for independent brewers. That would be not just bad policy but economically incoherent. While costs are high across the supply chain and the Government are piling further costs on to pubs and brewers through wage costs, the Government have decided to add further instability and more tax, rather than consolidating reforms that were already delivering value.

Under the last Government the draft relief was introduced to give pubs a much needed lifeline, cutting duty on beer from draft containers over 20 litres and reinforcing the social and economic value of the on trade. I campaigned hard for that. I was delighted when my right hon. Friend the Member for Richmond and Northallerton (Rishi Sunak), as Chancellor, agreed to a differential duty for draft beer. Then the Leader of the Opposition, as Exchequer Secretary, introduced it as part of the alcohol duty review.

I know that the Minister harbours some ambitions; I hope that the subsequent elevation of predecessors who moved to support pubs through duty reform will offer him some inspiration. Reports of a potential review that could scale back the benefits of that draft beer duty rate are deeply concerning. Small producer relief, launched under the last Government and building on the success of Gordon Brown’s small breweries relief, was a significant step forward. I pay tribute to Gordon Brown for that measure, if nothing else: small breweries relief played an important part in encouraging the emergence of a thriving small brewing community, from hobbyists through to established local brewers, in every part of the country. We are seeing the long-term benefits, both economic and cultural.

[Mr Brash]

The hon. Gentleman has argued eloquently in favour of the record of the last Government, but ahead of the last general election the British Beer and Pub Association reported that more than 10 pubs a week were closing under the last Government. That does not seem a record to be particularly proud of.

[Mike Wood]

The hon. Gentleman is right to say that 10 pubs a week were closing; a number of those, I think, had been artificially sustained through covid by support, but there has been a long-term trend, going back to the turn of the century, of far too many pubs closing. The difference was that the last Government were taking action to try to address that trend. We are waiting to see whether this Government will match that action.

British beer is not just an industry but a cultural institution. The evidence of a link between price and alcohol consumption is tenuous at best, but we do know that as prices rise, habits change. When they rise sharply, consumers switch how and what they drink: they go from drinking low-strength beers and ciders to higher-strength wines and spirits. They go from drinking in well-regulated pubs and bars to drinking more at home, without that monitoring and oversight. Publicans tell us that the support that they once felt is now gone. Brewers, especially in rural and coastal areas, are seeing margins tighten and options shrink, and it is drinkers who are paying more for less.

We are looking to the Government to reverse the automatic RPI uprating and freeze duty for the remainder of this Parliament; to expand draught relief, to ensure that packaged beer sold in pubs pays a significantly lower duty rate than that sold mainly in supermarkets; to raise the small producer threshold, allowing businesses, including family brewers, to grow without fear of penalty; and to commit to a long-term transparent policy that supports investment and sustainability in the brewing industry.

Neither our brewers nor our community pubs can afford to take the hit now by being seen as cash cows for the Chancellor’s need to raise revenue. Real ale deserves real support. Labour’s national insurance rises and slashing of business rate relief has hammered pubs, while its cap on business property relief is a real threat to family brewers. The least that the Government can do is offer some comfort by reducing the pressures caused by high beer duty rates. Consumers, publicans and brewers alike will be watching carefully to see whether the Minister is truly on their side.