Beer Duty

Mike Wood Excerpts

Tuesday 15th July 2025 Westminster Hall

[Mike Wood (Kingswinford and South Staffordshire) (Con)]

I draw hon. Members’ attention to my entry in the Register of Members’ Financial Interests. I have also received hospitality from CAMRA, the BBPA, UKHospitality and probably the Society of Independent Brewers and Associates. I rise to speak not only as the Member of Parliament for Kingswinford and South Staffordshire, but as someone who had the honour of chairing the all-party parliamentary beer group for more than five years. During that time, I worked with colleagues across the House to ensure that our brewers, pubs and beer lovers had a Government that understood their value to communities, our economy and local culture.

Under the previous Government, real progress was made on duty. We delivered reforms that simplified beer duty, recognising the unique role that pubs and small brewers play in British life. We implemented draught relief, giving pubs a competitive edge and encouraging the sale of lower-strength beer on tap. Crucially, there was a series of freezes and cuts to beer duty year after year, scrapping Gordon Brown’s damaging beer duty escalator and meaning that, by the time of the last election, the duty paid on a pint of real ale in a pub was lower than it had been 12 years earlier.

We embraced the freedoms afforded to us post Brexit to create a more proportionate, strength-based alcohol duty system, designed to support responsible consumption and encourage the production of lower-strength drinks, while putting pubs and licensed premises on a fairer footing compared with supermarkets and off-licences.

[Wera Hobhouse]

Does the hon. Gentleman agree that, although beer duty seems to target large brewers, it quickly trickles down and hits the much smaller venues and brewers disproportionately hard?

[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.

--- Later in debate ---

[Clive Jones (Wokingham) (LD)]

It is a pleasure to serve under your chairship, Dr Murrison. I thank my hon. Friend the Member for Woking (Mr Forster) for securing this debate. I agree with him; I, too, love beer, and I have for some time—we will not go into how many years—been drinking it and thoroughly enjoying it.

As my hon. Friend will know, back in February our party supported the beer duty cut to support our pubs. The Liberal Democrats have always supported the local pub, perhaps because of our heritage as a party grounded in community politics. Across our country, pubs and other hospitality businesses are the lifeblood of our communities. That is true of my constituency of Wokingham, where we are blessed with many excellent pubs, and I know that it is true of my hon. Friend’s constituency as well.

Wokingham is not just a place where beer is consumed, although I know my constituency team do their best in that department whenever they get the chance, but a place where beer is produced. I have spoken in the House before about some of the breweries that operate in Wokingham. Siren Craft Brew has grown from a small local producer to a significant competitor in the market, with beers such as Lumina being found in pubs across the country. Just across the road, Elusive Brewing produces Oregon Trail, which won best IPA at this year’s champion beer of Britain awards. There are also countless smaller producers across Wokingham and the Reading area, as there have been for many centuries.

Like most MPs, I am happy to stand in this House and make the case for businesses local to me, but I am not just here to plug the record of Outhouse Brewery in Wokingham town centre, whose taproom is open five days a week, including Sundays, selling the feline-themed Apocalypse Meow pale ale.

Brewers and publicans regularly tell me of the challenges that the industry is facing. We need to address those challenges head-on. When the previous Government tried to make hay out of a draught discount in 2023, they managed to apply it only to containers of over 40 litres. That excluded many producers of real cider or craft beer, like those produced by the companies in Wokingham that I have mentioned, who often ship product in smaller containers. As so often with the Conservatives, it was a break for big business, not for local businesses that really needed the support.

[Mike Wood]

Will the hon. Gentleman give way on that point?

[Clive Jones]

I will carry on, if the hon. Gentleman does not mind.

To add insult to injury, the Prime Minister at the time managed to launch the policy with a photo opportunity in which he lifted up a beer keg for all to see. The keg was a 30-litre container, which did not qualify for the discount he was launching. If I were him, I might have drowned my sorrows in a couple of pints of Apocalypse Meow after that one. The industry knows which parties in this place have its back. After pressure from the Liberal Democrats, the Government applied the draught discount to containers of 20 litres or more. I do not believe that the former Prime Minister returned to lift more kegs to mark his U-turn.

A key challenge that comes up time and again, especially when I talk to local independent pubs, is the crushing impact of the broken business rates system. The Liberal Democrats have been calling for years for it to be reformed and replaced with a commercial landowner levy based on the value of landlords’ land, which would remove the responsibility for this tax from local businesses. This fair reform has one core goal: supporting our local economies to thrive and grow. I am led to believe that the Government place a very high value on growth. They are right to do so, but they will not get it while small local businesses choke under the weight of the outdated business system and increases in employer national insurance contributions.

My hon. Friend the Member for Woking spoke eloquently about the impact of extended producer responsibility on the industry. He is not wrong. It is a cause for huge concern among those I talk to across the drinks and hospitality sector. Our party welcomes the Government’s intention to make packaging more sustainable, but it cannot be at the expense of uncertainty and financial turmoil for local businesses, with all the economic consequences that that brings.

The assumption that local authorities will recycle the packaging from drinks bought in the pub is flawed, and the proposal means that pubs may pay for waste disposal twice: once for private recycling, and then again through EPR-related charges from producers. I urge the Minister to consider our call to exempt pubs from EPR, and to review the scope and timeline of that policy to avoid further harm to our hospitality sector. Will he today commit to a review of how successful the extended draught duty cut has been in supporting hospitality? If he finds that it has been successful, with all the economic benefits that that will bring, will he consider reducing it further to help our struggling pubs across the country?