Thank you for contacting me about the challenges which pubs are facing with energy costs, about alcohol duty, pubs’ business rates and the importance of supporting pubs to continue to play their vital role in our communities.
Pubs up and down the country play a vital role not only in the economy but in our local areas, supporting a sense of community and pride of place. After nearly two years of difficulties as a result of the pandemic and following extensive support provided to the hospitality sector during this period, I am glad that pubs were able to resume trading on something approaching a more normal basis but I appreciate that more recently increased energy costs and concerns about the cost of living have also impacted pubs.
However, I hope that this response reassures you about the extensive support which has been made available to pubs not only during the pandemic but since.
In terms of some of the current challenges, initially through the new Energy Bill Relief Scheme, the Government provided a discount on wholesale gas and electricity prices for all non-domestic customers whose current gas and electricity prices have been significantly inflated by global energy prices. This included all UK businesses and will be equivalent to the Energy Price Guarantee put in place for households. This will see the Government set a Supported Wholesale Price which is a discounted price per unit of gas and electricity. It applied to fixed contracts agreed on or after 1 December 2021, as well as to deemed, variable and flexible tariffs and contracts. It applied until 31 March 2023, running for an initial six-month period for all non-domestic energy users: Energy Bill Relief Scheme (EBRS): scheme documents - GOV.UK (www.gov.uk).
In April 2023, the EBRS was replaced by the Energy Bill Discount Scheme (EBDS), which will run until March 2024. The EBDS will support businesses and other non-domestic customers by providing a discount on gas and electricity unit prices, you can read more about it here: Energy Bills Discount Scheme - GOV.UK (www.gov.uk).
The Government is committed to supporting our pubs and I welcome the fact that the Government’s long-term strategy for the hospitality sector includes an extension to pavement licences, making it easier and cheaper for pubs, restaurants and cafes to continue to make outdoor dining a reality with seating, tables and street stalls to serve food and drinks.
Additional funding also aims to support community groups to protect and take over local assets, like pubs, which are at risk without community intervention. The £150 million Community Ownership Fund allows community groups to buy assets so that they can continue to serve their local area. I am aware that rural pubs were among the local assets allocated funding in the scheme's first round, giving them a new lease of life for generations to come.
In the last two Autumn Statements, the Chancellor has supported pubs through a range of measures. In his Autumn Statement 2022 the Chancellor confirmed that Alcohol Duties would be frozen and confirmed reforms to the alcohol duty system. Following a review, these measures came into effect from August 2023. This simplification of the duty system will reduce the number of main rates from 15 to 6, and tax products in proportion to their alcohol content.
All tax categories, such as beer and wine, will be moved to a standardised set of bands, with rates for products between 1.2-3.4 per cent alcohol by volume (ABV), 3.5-8.4 per cent ABV, 8.5-22 per cent ABV, and above 22 per cent ABV. Above 8.5 per cent ABV, all products across all categories will pay the same rate of duty if they have the same proportion of alcohol content. Registration and payment will also be simplified, and the practice where individual products have different administrative rules will end.
The new progressive manner in which alcohol is taxed will ensure higher strength products incur proportionately more duty, and these rates will be the same across all product categories. This change will address the problem of harmful high-strength products being sold too cheaply, and the new rates for low strength drinks below 3.5 per cent ABV will encourage manufacturers to develop new products at lower ABVs, giving consumers greater choice and greater options to drink responsibly.
I also welcome the introduction of a new small producer relief which will build on the previous success of the Small Brewers Relief, which will benefit cidermakers and other producers of lower ABV drinks. This will allow small producers to diversify their product range to other products below 8.5 per cent ABV while still benefitting from reduced rates.
In addition to this new, simpler, alcohol duty system the Government confirmed last year that Alcohol Duty would remain frozen, initially extending the freeze for a further six months until August 2023 when the new system took effect and then extending it further this year. I include the link to my thoughts on the freeze here: Government freezes alcohol duty until August 2023 | Richard Fuller
In this year’s Autumn Statement, I welcomed the Chancellor's decision to freeze the Small Business Multiplier for another year and extend the Retail, Hospitality, and Leisure Relief Scheme, offering a 75 per cent discount on business rates up to £110,000. This will save the average independent pub over £12,800 next year at a cost of £4.3 billion. Pubs will also benefit from the freeze to the business rates multiplier for 2023-24, a tax cut worth £9.3 billion over the next 5 years, meaning all bills are 6 per cent lower than without the freeze.
The Chancellor has decided to continue the freeze on all alcohol duty until 1 August 2024, meaning no increase in duty on beer, cider, wine or spirits.
As of 1 August 2023 pubs have been able to benefit from the expanded Draught Relief, which effectively freezes or cuts the alcohol duty on draught beers and ciders to protect pubs, who are often undercut by supermarket competitors. The government has pledged that the duty pubs and bars pay on these drinks will always be less than retailers, known as the Brexit Pubs Guarantee - Tax cut for 38,000 British pubs - GOV.UK (www.gov.uk)
Moreover, to continue to support the hospitality sector, the Government recently announced the extension of the temporary off-sales regulatory easement – set out in the Business and Planning Act 2020 – until 31 March 2025. This extension enables holders of licences that only cover ‘on sales’ to continue to sell alcohol for consumption off the premises, including ‘takeaway pints’, for a further 18 months.
For many years I have felt that the level of beer duty is too onerous for our pubs. This has created an unfair competitive advantage for alcohol sales through supermarkets and other retail outlets, with long term consequences for socialisation, a sense of community as well as potentially serious concerns for excessive drinking at home.
I therefore support the freezes on alcohol duty and the specific measures set out above as a start in rebalancing the pricing of alcohol so that pubs can compete fairly with supermarkets.
Thank you for getting in touch.