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26 Mar 2009 : Column 547

Some 350,000 people are directly employed by pubs, but a large number are also indirectly employed by them. On average, each pub contributes about £3,000 to charities in their areas. I pay tribute to all the landlords and landladies who have run such fine institutions over the years and provided such a great contribution to their communities.

Alas, however, there are problems, and that is the main reason for my wanting to hold this debate. I am thinking particularly of pub closures. Pubs are closing at a rate of 39 every single week. That is bad enough, but an even bigger problem is that the rate is accelerating. Since the last Budget, more than 2,000 pubs have closed, costing the Government £180 million in lost revenue, with the loss of 20,000 jobs—that is a lot of jobs to lose. In my own constituency, 11 pubs have closed since June 2005, including one very recently that I really would not have expected to close. Of course, in some areas, where the market might be saturated, a few pub closures are to be expected now and again, but this trend represents more than that, and it is very worrying. I would suggest that there are other reasons for it apart from the economic downturn, which obviously is not helping any business. I will name just a few: high tax; competition with supermarkets; pubcos, which are the organisations that own the pubs; the weak pound, to some extent; and the smoking ban. All those problems have contributed; I should like to take each of them in turn.

There are two worries as regards tax. It is sometimes difficult to get exact figures for tax on beer, but it seems that it accounts for 28 per cent. of the price of a pint in the pub. Over the years, the sale of beer has declined dramatically. Now there is the question of what the Chancellor of the Exchequer will do in a few weeks’ time in his Budget. It is feared that the escalator that was imposed, which meant that beer duty would increase by the retail prices index plus 2 per cent., will create further problems for the pub industry. A while ago, VAT was reduced for almost all goods and services across the country, but that did not apply to drinks—beer, in particular—because the duty was put up to ensure that the price of alcohol did not fall. The beer industry did not get any boost from that reduction in VAT—although I doubt that any industry did, as it was a futile measure—because it, together with smoking, was singled out as an area that should not benefit. That is bad enough, but when VAT is restored to 17.5 per cent., it will face an even bigger increase because the duty was adjusted when the rate was reduced.

I do not have anything against supermarkets, but there are two problems: first, their provision of very cheap alcohol, usually through using it as a loss-leader to get people into them in the first place; and secondly, their power of purchase, also used against farmers, which enables them to refuse to accept increases that breweries might feel the need to pass on to them, even when the tax paid by the brewery has gone up. All the people who buy from supermarkets then drink unsupervised. Pubs provide a supervised forum for drinking; supermarkets do not. Under-age people are often—not always, by any means—able to get alcohol from supermarkets very cheaply and cause trouble in communities as a result. In pubs, tax forms about 28 per cent. of a pint of beer; in supermarkets, and in the off trade
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generally, it forms 50 per cent. That reflects the different prices that are charged. I am informed that in the 1990s the on-off ratio—the price in a pub compared with the price outside the pub—was 2:1; now, it is 7:1. The very cheap alcohol that is available in supermarkets has a big effect in terms of social behaviour, as well as on pubs.

There is also the question of pubcos. Punch Taverns, Enterprise Inns and many other companies own pubs that were once owned by breweries. Bass, for example, which was a brewer but also a pub owner, had 7,190 pubs in 1989. In 2007, Punch Taverns had 9,095 pubs. The ownership of pubs is very different now. Why is that important? All four or five of us in the Chamber today realise that a monopolistic situation exists—vertical integration might be a better way to describe it. The Select Committee on Business and Enterprise finished a report on that recently, but unfortunately it has not been published—we look forward to it. I am not against pubcos, but the fact that they act as a middleman, buying beer and then charging extra for providing it to pubs, which could get it directly from the breweries if they were not tied to the pubco, makes beer a lot more expensive for those who go into pubs. And we can see that the situation is worse for pubs when we compare their prices to those of supermarkets. I referred to my own pub, and Punch Taverns recently ordered a 10p a pint increase there because of the pressure it is subject to from breweries due to extra tax pressure, but it could add a bit more if it so wished. That said, only 14 per cent. of closures are of pubs owned by any of the top six pubcos; I am not saying that they do not do a good job in some cases, but I am highlighting a difficulty.

I mentioned the weak pound. I do not want to say too much about that, but if we buy alcohol from abroad, it will be dearer. I now come to the smoking ban. I realise that this will be the most contentious part of my speech, but that has never worried me before. I spoke against the ban on smoking in public places, not because I do not respect the right of people to enjoy themselves in smoke-free environments, but because I felt that it was up to the local landlord to know his potential customers and decide what was best for them. There can be no doubt that beer sales have fallen. There may be a few extra people who come into pubs because they are smoke-free—I do not think that there are many—but we could have had high-quality extractor units and separate areas in pubs, and things could have been so much better. I do not mean this discourteously, but if people are fair-weather patrons of pubs, they do not spend much money. They are entitled to sit in the corner with an orange juice all night—that is their privilege and I defend their right to do so—but that does not keep the pubs going. It is the more regular patrons, such as myself and many others, who provide more of the money.

Another aspect of that problem relates to the supermarkets selling alcohol very cheaply. People might be persuaded to stay at home, drinking cheap and probably stronger alcohol in greater measures, while smoking in front of children. Previously they would have smoked in a pub in front of adults who had a choice of whether to be there or not. The ban has not helped in any respect.

Rate relief and rural rate relief are helpful, but are seen as rather inadequate because qualifying levels are far too low. They are also discretionary and perhaps
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they should be mandatory. Business rates will increase by 5 per cent. in a few days’ time across the board, including for pubs, even though that increase is based on September’s retail prices index. I do not think there is an RPI at the moment—I think that it is nil—but there will still be an increase, which seems unfair.

Mr. John Grogan (Selby) (Lab): On the subject of rate relief, does the hon. Gentleman agree that there is a strong case for extending rate relief not just to village pubs, but to those in market towns and suburbs? Any pub that calls itself a community pub should be able to apply for such rate relief—such a measure might be of some assistance.

Mr. Robertson: I agree with the hon. Gentleman. That would help, although it would not entirely rescue the situation. We must consider the position of small businesses. They have to pay money out before they have earned any. That payment is not based on their activity, and they really are in a difficult situation. I hope that the Government will do something about that.

Mr. Evans: Does my hon. Friend agree that something else that disadvantages a lot of small pubs with high rateable values is the fact that they are unable to put on Sky Sports, and particularly some football matches, because the charges are so prohibitively large? That is another reason why people are staying at home. They watch football there, because they are unable to do so in a lot of pubs, particularly in rural areas.

Mr. Robertson: My hon. Friend is absolutely right. I have seen examples of that situation, which has a bad effect. My sister has a bar in Spain, and when there is a world cup tournament on, or cricket, football or whatever it is, the takings rise greatly. If that facility cannot be made available by pubs in this country, for the reasons that my hon. Friend gives, it is a setback.

I suggest that there should be no increase in alcohol tax in the Budget. I know that the Government are looking to get back the billions of pounds that the Prime Minister has spent on rescuing failing banks and now on effectively printing money, but I think that an increase would be counter-productive. Oxford Economics estimates that an increase would cost a further 75,000 jobs over the next two years, which is a lot of jobs. Those people would then be unemployed, and the situation would get worse. The tax should be frozen. Actually, I would like it to be reduced, particularly on beer. I do not suppose that the Government will do that, but the situation is certainly becoming urgent when 39 pubs a week are closing. If people continue to turn away from pubs, it will be counter-productive from a health point of view because supermarkets will fill the void in a dangerous way.

I was pleased to hear the Prime Minister say recently, when there was a suggestion of a minimum price per unit of alcohol, that other methods should be chosen to counter the problems that are related perhaps to alcohol, but more particularly to people’s bad behaviour. That is what we should put them down to. Yes, the low price of alcohol is fuelling the problems in certain places, but we should not lose sight of the fact that it is people’s bad behaviour that is causing them.


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We would like to see, as all small businesses would, an end to the drip-drip regulation that affects all businesses, but small ones disproportionately. We need to allow diversification—perhaps post offices could be put in pubs—and we need a simplified planning system for smaller planning applications. I have said that mandatory rate relief should be considered, and there should not be any increase in business rates this year. As I said, the inflation figure is now nil anyway.

I stand to be corrected, but I understand that the Government have not yet responded to the excellent report on the community pub inquiry produced by my hon. Friend and his team. Perhaps they could respond to the excellent suggestions in it. I look forward to hearing what the Minister has to say, and I thank him again for attending. Pubs are well worth saving, for the reasons that I have given—their economic value and their value to the community. To pinch a quotation from my hon. Friend’s excellent report, the writer and one-time MP Hilaire Belloc said:

I think he had it about right.

6.18 pm

The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mr. Gerry Sutcliffe): I am delighted to respond to the hon. Member for Tewkesbury (Mr. Robertson) and grateful that he has had the opportunity to discuss the future of pubs. I am also pleased to see the hon. Member for Ribble Valley (Mr. Evans) and my hon. Friend the Member for Selby (Mr. Grogan) in their places. I believe that they are all members of the all-party beer group and active participants in the beauty of drinking alcohol responsibly.

This is an important debate, and part of a continuing one. The hon. Member for Tewkesbury mentioned the all-party group’s report, to which I want to respond very shortly. He will know that a number of Departments are involved in that response, and I shall co-ordinate it because the Department for Culture, Media and Sport is, I hope, the champion of the licensing industry. He referred to the fact that I enjoy the odd tipple—in fact, he knows that I am a keen pub goer and was pleased to support the “Proud of Pubs” week last year. I pay tribute to Phil, the landlord, Jenny, his wife, and the excellent staff of my local pub, The Glen in Gilstead. I look forward to their excellent service this weekend, when I hope to be there.

It was good to see so many parliamentarians attending the recent summit arranged in the House by the all-party beer group. It was clear from the excellent turnout ranging across MPs, Ministers, the industry and licensees, and from the quality of the debate, that there was concern about the role of pubs and their importance to our constituents. I and my ministerial colleagues recognise that the pub industry faces difficult times, and we want to address the issues and recommendations raised. The hon. Gentleman is right to say that the number of pubs closing is alarming, and that the number of jobs lost and the impact on the economy are serious issues.

I understand some of the frustrations of the pub sector with what it sees as the cumulative impact of Government measures, but those alone are not the cause of pub closures, as was identified in the excellent
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debate—the hon. Gentleman raised some of the issues in that regard. We need to consider the role of tied houses and other pub companies, which, through differential pricing and the rents charged, have an impact on landlords. Although I understand the issues in relation to duty and regulation, I will discuss with colleagues in the Department for Business, Enterprise and Regulatory Reform how we can better understand the sector and provide help.

The ideas about the role that community pubs can play are excellent. The hon. Gentleman gave examples of what goes on in pubs, whether sport, which is important to me, as the Sports Minister, or other activities. In a rural setting, the pub is important in providing services to the local community. We need to consider those matters.

Although we take seriously the concerns expressed by the trade about many issues, I am afraid that I disagree with the hon. Gentleman about the smoke-free legislation, which is and should be a benefit to pubs. Given my role before I became an MP, he will not be surprised that workers’ rights and public health are close to my heart. I believe that the restrictions introduced were the right way forward. A number of pubs have come up with ingenious solutions, in consultation with local authorities, to enable them to accommodate smokers. The debate will rumble on, but the majority of people backed our efforts.

The hon. Gentleman was right to talk about responsible and supervised, as opposed to irresponsible, drinking. He will be concerned, as I am and many responsible pub owners are, about alcohol-related crime and disorder, and the need to treat and deal with those who cannot handle drink and commit crime as a result. In many cases, customers are put off going to pubs in town centres, for example, because of the violence that takes place. We want to see the growth of community pubs, but we must acknowledge the wider public intentions of policy to tackle such problems. We want to achieve a balance.

I will respond to the all-party beer group, whose inquiry was important and dealt with well. I was pleased to give evidence to it, and it came up with a range of recommendations based on detailed consideration of the views of a variety of witnesses. I assure the hon. Gentleman that the Government will give a response soon, although it would be wrong to say exactly what it will be. Whatever the group feels about the outcome, I want to ensure that the message gets through that Ministers are aware of the current campaign and that the concerns are being heard.

We have taken some measures, such as the decision to extend the enterprise credit guarantee scheme to all types of smaller pubs, which has helped many tied pubs in particular. In relation to legislation for which I am responsible in the Department for Culture, Media and Sport, I have placed orders before the House that would introduce a simpler process for making minor variations to licences, and to increase the stakes and prizes for pub gaming machines. Previously, I have also committed myself to measures to improve other aspects of the licensing regime. We will reflect on the issues raised by the hon. Gentleman today.

Although the measures that we can take are important, they will not in themselves secure the viability of the trade or ensure that it can see out the economic downturn.
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How, then, should the pub trade help itself to respond to the challenges? The hon. Gentleman has already offered some solutions, but let me repeat that, in my view, community pubs could have a bright future.

The issues raised by the hon. Gentleman were reflected in a recent seminar conducted by the Institute for Public Policy Research, which presented all sides of the argument. I was particularly pleased to hear a representative of Alcohol Concern say that the idea of community pubs service was a good one. The debate about alcohol-related health problems has sometimes featured the argument that those who are concerned about them do not understand the issues surrounding pubs, but Alcohol Concern was clearly prepared to support community pubs because they promoted responsible drinking. I consider that to be a major breakthrough. It is possible that pubs could become community businesses. I know that my colleagues in the Department for Communities and Local Government are discussing the possibility that rate support and other support could be given to pubs.

Pubs have a great record of reinventing themselves and adjusting to changing demands—by offering better food, as many now do, or by offering more family-friendly premises. Sunday afternoon satellite television is important in securing the football market. I note what was said about that by the hon. Member for Ribble Valley. We must get that right. We speak of the decade of sport and the need to persuade more people to participate in sport. People want to see their role models on television, particularly footballers. We need to speak to representatives of Sky and Setanta, and similar providers, to see what they can do for the smaller pub—for pubs that are not part of a big chain that can afford the fee. I undertake to ensure that we at least talk to them about the possibility. The hon. Gentleman will be aware of the wider review of issues related to sport shown on terrestrial television, in which my hon. Friend the Member for Selby is heavily involved, but I think that he made a fair point.

The editor of the Morning Advertiser wrote in June last year that some of the current challenges had accelerated the decline in pubs that could not adapt to modern demands. That loss is sad, but we must ensure that we provide an opportunity for the pubs that remain to emerge successfully from the present downturn. I believe that that can be done if we adopt a positive attitude. Yes, there are issues to which the Government should respond with tax-related and other measures, although they should be seen in the round and in the context of all the other spending issues with which Government are faced.

Given that the all-party beer group is the largest group in Parliament, it is perhaps surprising that only five of us are present this afternoon. However, I am sure that the group’s other members will be watching our debate avidly on television, back in their constituencies, to see what I have to say about the outcome for pubs.

Mr. Evans: On their pub televisions.

Mr. Sutcliffe: On their pub televisions, yes. Certainly the group is concerned about the impact of what is happening.

The pub is a traditional part of life here in the United Kingdom, and we must do what we can to ensure that it continues. Pubs face many challenges, but I think we are
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all united in wanting to advance consistent arguments in favour of enabling as many as possible to survive.

Drinking habits are an issue. Social changes are taking place: people are turning from beer to wine, and more drinking takes place at home. Let me make a point now in case I am challenged on the matter in future. What we are talking about is responsible drinking, supervised drinking, and ensuring that people drink reasonably in a safe environment.


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I undertake to deal with as many as possible of the points made by the hon. Member for Tewkesbury when I respond to the all-party group. I am grateful to him for raising the issue this evening.

Question put and agreed to.

6.29 pm

House adjourned.


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