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23 Feb 2010 : Column 26WH—continued
"I am sure this is about winning votes but it could potentially be a good thing if he does his job properly."
The right hon. Gentleman is quoted on the front page as saying:
"While we can't stop every pub from closing it's right that we do everything possible to back them. But they need help now so I am determined to have a deal on the table with a package of practical help in the next few weeks."
I presume that that is where he is today.
The proof of the pie will be in the eating, but past performance from the right hon. Gentleman is not promising. Instead of supporting the massive tax hikes on beer, he should have provided support for an industry suffering from an onslaught of body blows. Never has "punch drunk" been a more appropriate description of an industry attacked from so many sides. It is little surprise that pub closures have been at an all-time high over the past three years, oscillating between 39 and 50 a week.
I will not reiterate the importance of pubs to local communities. I have been vice-chairman of the all-party group for more years than I care to mention, and the hon. Member for Burton (Mrs. Dean) and I produced a report on the importance of community pubs. It took
us more than two years to do so, and we took evidence from a number of sources. The right hon. Member for Stalybridge and Hyde (James Purnell) who, regrettably, is leaving the House, stated in the introduction:
"The Government recognises the cultural importance of public houses in the UK, as centres of entertainment, as hubs for local communities, as a diverse and vibrant part of the hospitality industry and as a unique British institution that helps make our country so attractive to overseas visitors".
Mr. Greg Knight (East Yorkshire) (Con): My hon. Friend is making a powerful case. Does he agree that his arguments in favour of the British pub apply equally to non-profit-making clubs in the UK, such as Labour clubs, Conservative clubs, working men's clubs and British Legion clubs?
Mr. Evans: Absolutely. I agree with my right hon. Friend that such clubs are very much at the heart of communities. The things that make pubs attractive places for people to visit are the same as the things that make people go regularly to clubs in this country.
The community pub inquiry by the all-party group made 17 recommendations, including ending the duty escalator on beer; differential taxation on pump-pulled beer; and an examination of the huge contrast between supermarket prices for beer and prices in the pub. Pub prices used to be twice those of supermarkets, but they are now much greater-sometimes seven times as much-with aggressive pricing by the supermarkets.
I have spoken to many landlords and landladies over the years, and a few more when preparing for this debate. I am particularly grateful for the sage advice of Steve and Chris Dilworth of The Swan with Two Necks in Pendleton, which is a successful free house in the village where I live that offers very good food and excellent real ales from the region. Steve is a CAMRA member, and knows his beer and how look after it.
As a case study, I went to a very different pub in the town of Longridge, which serves pies for locals-that service is aimed at football fans-but relies very much on wet sales. Irene Nuttall is the landlady, but prefers to be called the landlord, and she is chairman of the local pub watch. I sat in the pub with her last Saturday, and listened to her encapsulate the problems. She is tied to Heineken UK, which used to be Scottish and Newcastle, for her beers, and the premises are owned by Trust Inns. I shall show the price differential between what she pays to Heineken and what she might pay if she went to a wholesaler on the free market. An 11-gallon barrel of Fosters costs £127 from Heineken, but from a wholesaler it would cost £92. Cask ales-nine or 10 gallons-cost £96 from Heineken, or £55 from a wholesaler. An 11-gallon barrel of John Smith's costs £114 from Heineken, or £88 from a wholesaler. Cases of Pils bottles cost £31 from Heineken, or £12.99 from a wholesaler. There is even a big differential between the prices of soft drinks. The tie today has the pub industry over a barrel, and penalises the tied landlord.
The Select Committee on Business, Innovation and Skills and its predecessors have examined the matter several times. The Chairman of the Committee, my hon. Friend the Member for Mid-Worcestershire (Peter Luff), would have been here today had he not been
chairing a meeting on a further report on the tie. We look forward to that publication, but a previous report states:
"There are strong indications that the existence of the tie pushes up prices not just to lessees but to consumers...our provisional view is that the tie should be severely limited to ensure there is proper competition in the market."
The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mr. Gerry Sutcliffe): Will the hon. Gentleman comment on what has happened to CAMRA's complaint to the Office of Fair Trading? I am sure that he will be happy with the OFT's decision to look again at what CAMRA has said.
Mr. Evans: I am delighted, but we need action. The matter needs to be considered urgently, and I look forward to the report from the Business, Innovation and Skills Committee, which I hope will be finalised today. I am sure that the industry is waiting with bated breath to see what it says. One recommendation was that it should be referred.
Anne Main (St. Albans) (Con): It is no secret that CAMRA has its headquarters in St. Albans. I met, as I am sure did many other hon. Members, the lobby against the tie. Publicans are expected to squeeze out more beer from a barrel than they are supposed to. CAMRA's Fair Pint campaign says that publicans are expected to make up money by selling in that way, but publicans are very unhappy about it.
Mr. Evans: The regulars with whom I drink would certainly not stand for any short measures. If the head on a pint is too big, they let it settle before it is refilled. They do not even have to ask for it to be refilled, because landlords and landladies are very good at ensuring that people do not receive short measures. I congratulate CAMRA on that campaign.
Mr. Andrew Pelling (Croydon, Central) (Ind): I congratulate the hon. Gentleman on securing this important debate. Will he comment on something that the managing director of Marston's said yesterday-that the tie protects people in the business?
Mr. Evans: The best antidote to such comments, which is a generalisation, is that in some cases, the pubco or brewer may take a particular interest in their estate, and in such cases the tie may be a good thing, but clearly it is not brilliant in the instance that I just described. During our community pub inquiry, far too many landlords and landladies said that there is a serious problem and that they are being crippled, because they have been forced to pay so much for the beer from their pubco or brewer. A free house down the road is able to compete more fairly and has more chance of surviving in an economic downturn, when fewer people are going to pubs and drinking beer.
Greg Mulholland (Leeds, North-West) (LD): I congratulate the hon. Gentleman on securing the debate and on his excellent speech. Does he think that there is a stark contrast between Wetherspoon, a large managed pub chain that gets huge discounts from brewers which it passes on to customers, and those big pub companies that get the same discounts but take them as profit for their shareholders and do not pass them on to the pub?
Mr. Evans: That is an issue of muscle in the purchasing of beer, and it also involves supermarkets that are able to sell beer cheaply and buy it more cheaply from brewers than those pubs that are tied to a particular estate. That issue needs to be looked at in its generality, and I hope that the OFT will look hard at the survival and prosperity of the network of pubs throughout the country.
Let me return to Irene Nuttall of The Durham Ox in Longridge. She lists a few points, and perhaps I can quickly rattle through some of the problems faced by landlords and landladies, which I am sure a lot of hon. Members will recognise. First, aggressive supermarket pricing is crippling for a lot of pubs. Secondly, the tie can be oppressive and should be opened up. Thirdly, dry rent is paid, but a lot of publicans also pay residential rent, as they are required to live on the premises, which can be incredibly expensive and insurance on top of that takes a huge chunk of money. Fourthly, the duty on pub-sold beer is too high. Irene Nuttall mentions the sleight of hand in the VAT reduction last year from 17.5 to 15 per cent. However, the Government waved a magic wand, and the duty was increased on beer, so that its price was not reduced when the rate of VAT came down. However, when VAT went back up to 17.5 per cent., so did the price of beer.
Mr. Tobias Ellwood (Bournemouth, East) (Con): My hon. Friend makes a powerful argument. Does he agree that the change in VAT was unhelpful, given the length of time for which it lasted, and the time at which it returned to 17.5 per cent? The rate went back up at midnight on 31 December-a busy time of the year for publicans across the country.
Mr. Evans: Some publicans did not even bother putting the price up. They took the hit, for the reason mentioned by my hon. Friend. Furthermore, around this time of the year, wholesalers often look at their pricing and start to put up prices for their customers. That means that a publican might have had to reproduce lists twice at a busy time of year. A lot of pubs have not yet put up prices and are waiting to see what their suppliers are going to do. Clearly, it was an awkward situation for them.
Fifthly, business rates are too high. Irene Nuttall is paying £4,617, and although there is a small amount of business rate relief, for her it amounts to only £182, which would hardly contribute to the survival of some small pubs. Sixthly, council tax must be paid on top of that sum for the residential part of the property. Point number seven is that she has a TV in her own flat and a TV downstairs, so she needs two licences for the BBC, even though both sets are in the same building. Eighthly, the water rates cost several hundreds of pounds.
The ninth point concerns Sky TV. The Minister knows that there have been problems with Sky TV-the Government have promised to look at that, but we have seen nothing yet. Irene Nuttall's pub is relatively small, and she said, "Guess how much I pay for Sky TV?" My mind went wandering, and I said, "£120? £150? £240?" No-it costs £594 a month to have Sky Sports in a relatively small pub. That is based on rateable value. As we know, in a lot of villages and towns, a pub's rateable value could be extremely high, but the number of people in the pub at any one time might be relatively small. All
the profit that a pub makes by getting people in who are attracted by the magnet of Sky Sports is completely lost as a result of the £594 charge. Something desperately needs to be done about the pricing of Sky TV. It is an attractive venture for pubs wishing to get people through the door, but surely they should not be clobbered to such an extent.
The 10th point is the building insurance of £1,500, which must be paid, even though Irene Nuttall does not own the building. Electricity is the 11th point and costs £400 a month. The gas bill is £850 a quarter, and bank charges of £90 a month are charged for paying money in, taking money out and direct debits. It all adds up, and there are staff to pay on top of that. She finished by saying, "I wonder why I'm doing it." Considering all the pressures on one pub, I think exactly the same thing. She clearly loves the business in which she operates, otherwise she simply would not do it.
Banks have proven to be unco-operative. One landlord I spoke to wished to borrow more money due to investments that he had made in his restaurant and pub trade. The bank said no, then charged a huge amount for the loan that the landlord already has, including an interest rate insurance fee-which I had never heard of before-to insure against fluctuations in the interest rate. It costs him a fortune to insure against those fluctuations. The bank then needed to value the property, and it charged him for that. It wanted his accounts to be audited by its officials, and it charged him for that service. Woe betide him if any cheques are returned, as there are swingeing penalties to be paid. One might think that the bank was working hard to give this landlord the little nudge that he needs to go bust. A number of pubs also have accountancy fees to pay, as well as a music licence if they have music.
Mr. Greg Knight: There is another issue that my hon. Friend has not yet mentioned but which has been devastating for many pubs and clubs-the smoking ban. It is not the ban per se that is the problem, but the heavy-handed way in which it has been introduced in the United Kingdom. Does my hon. Friend agree that it is ludicrous that the only way in which a licensee can provide an indoor smoking room for his or her customers is if they happen to operate on a boat?
Mr. Evans: One imaginative pub thought that if it changed itself into an embassy, it might get away with it. Sadly, that did not work. The way in which the smoking ban was introduced was far stricter than in almost any other country. There are 12 million smokers out there, and a lot of them used to go to pubs, but now that is clearly not the case. I know that my right hon. Friend and hon. Members from other parties are trying to get changes in the law, not to lift the smoking ban but to amend it sensibly so that smokers will at least be treated like human beings when they go to pubs and clubs, and be looked after as opposed to being treated like lepers. A friend of my right hon. Friend, Antony Worrall Thompson, stated:
"The smoking ban has had an extraordinary detrimental effect on pubs and clubs. The legislation as it stands is excessive and I would like to see it amended."
As I have noted, MPs from all parties have co-operated with my right hon. Friend in his campaign. We are all familiar with seeing people standing outside pubs having
a cigarette in sub-zero temperatures, in the rain and the snow with all the elements against them. Hypothermia has become a smoking-related disease under this Government.
Mark Hastings, director of the British Beer and Pub Association, commented succinctly on the value of pubs to local communities. On average, pubs inject about £80,000 a year into the local community and pay £107,000 in taxes. Over half a million people a year are directly employed by pubs, with 380,000 people employed in associated trades. Mark Hastings states that beer taxes have risen 20 per cent. since March 2008, with another 2 per cent. above inflation expected in the Budget next month. I hope that when the Minister speaks on behalf of the Government, he will at least give us some good news about the Budget next month and say that that escalator will be taken off and that there will be no duty increase on beer. Research by Oxford Economics suggests that halting the proposed Budget increase of 2 per cent. above inflation could save 7,500 jobs and the Government tax take would increase.
Mr. David Hamilton (Midlothian) (Lab): The Government have the opportunity to separate draft beer tariffs from those of normal beer where canned beer is involved. It would need a change in the European legislation, but surely all parties can agree across the board that if we change the draft beer position, that would give an edge to all the pubs and clubs that are involved.
Mr. Evans: I could not agree more; I am 100 per cent. with the hon. Gentleman. What he describes needs to be done. I have asked Ministers about it and every time, they say, "Brussels won't allow it. There's a problem with Brussels." Let us sort out Brussels. The pub is an iconic British institution. If we want to support pubs and ensure that supermarket pricing does not give supermarkets such a great advantage, the one thing that we need to do is recognise that the product served in a pub is different from the product that people receive when they get 24 cans from a supermarket. Therefore, different taxation on draught beer-pump-pulled beer-needs to be put in place. We need to tell Brussels that that is what we shall do. I do not see how any other part of the European Union would be disadvantaged by our recognising that pump-pulled beer is somewhat different and involves something more than just lifting up 24 cans. I am 100 per cent. behind the hon. Gentleman and I hope that we can take that matter to Brussels and say that it is something that we want to do in this country to support British pubs and that we will do it.
Since March 2008, 4,100 pubs have gone bust. Beer sales are down 16 million pints a day compared with 1979. Turnover on beer in the past 12 months alone is down £650 million. Since 1997, beer duty has gone up 14 per cent. in real terms, yet spirits duty is down by 20 per cent. How about equality of treatment for a product that is so synonymous with Britain? Like almost 200 Members of Parliament, I have backed the "I'm backing the pub" campaign led by the British Beer and Pub Association, and more than 100 MPs have signed the early-day motion on the campaign tabled by the
hon. Member for Selby (Mr. Grogan), the chairman of the all-party beer group. I am delighted to see him in his usual place.
Like many other MPs, I shall be in a pub on 19 March, as part of British tourism week, to show my support for pubs. Every year, 13.2 million tourists visit pubs in the United Kingdom. We cannot let the pub die. It is the hub, the social centre, the heart of villages and towns. It is where business deals are done, family occasions are celebrated, and darts teams, pool teams and football teams play, celebrate their wins and drown their sorrows. It is where every problem is discussed and where, as the Minister will know, a Government in waiting drink regularly. It is where the general election will be discussed daily and every evening. It is where we as candidates will banter with the regulars, and on election night it is where we shall have a final tipple, perhaps, to steady our nerves. It is where I have celebrated every election victory since moving into my village, with locals, friends and those who have helped out in the campaign.
The British pub is iconic. It represents the very heart of Britain. We have seen so much of the fabric of our way of life threatened in so many ways over the decades, from post offices to churches and from village schools to small shops and rural bus services. Now is the time to make a stand, so the message for the Minister for pubs is that we are holding him to his word about giving a helping hand now to the great British pub. Now is the time to deliver. I hope that at the end of the debate, this Minister will do just that-stand and deliver for the great British pub.
11.23 am
Mr. David Drew (Stroud) (Lab/Co-op): I am delighted to take part in the debate, albeit briefly, with so many knowledgeable hon. Members present. I congratulate the hon. Member for Ribble Valley (Mr. Evans) on obtaining the debate. I also congratulate my hon. Friend the Member for Selby (Mr. Grogan), who chairs the all-party group on beer with great skill and is held in great esteem, and the hon. Member for Leeds, North-West (Greg Mulholland), who has led the save the pub group, of which I am proud to be part.
I have come to the debate with some trepidation, because I am a long-time teetotaller. One reason why I do not visit pubs as much as I would like is that someone who drinks soft drinks feels particularly exploited currently, because the price differential is so unfair for those who choose not to drink. One argument advanced by the British Beer and Pub Association is that low-alcohol drinks are disproportionately priced, meaning that people feel adversely affected in that way.
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