I welcome the temporary cut to VAT from 20 per cent to 5 per cent for all food and non-alcoholic drinks, which has been extended until the end of September and will be followed by a 12.5 per cent rate until 31 March 2022. This will continue to support restaurants, pubs, bars, cafés and similar premises across the UK. I am not aware of any plans to permanently reduce the rate of VAT on all food and drink sold in pubs. I have spoken to colleagues at the Treasury who have made it clear that the temporary reduction to VAT was intended as a measure to support the industry during the coronavirus pandemic. To extend this reduction indefinitely would limit funding long-term for the vital public services which have served us so well in this time of national crisis.
In 2013, the Government took the decision to end the beer duty escalator, and beer duty has been frozen or cut several times since then. Duty on spirits has been frozen over the past two years. As a result of these changes, a typical pint is cheaper than it would have been had these measures not been introduced. I share your concern about the future of pubs and the hardship caused by the coronavirus outbreak. The steps taken by HMRC to make it easier to claim back the duty on any beer thrown away as a result of pub closures were a timely and sensible intervention.
I welcome the Chancellor’s announcement that, for the second year running, alcohol duties will be frozen, covering duty on spirits, beer, wine, and cider which will save drinkers £1.7 billion.
There are currently no plans to introduce a preferential rate of duty for draught beer. All taxes are kept under review, and any changes would be considered before the next budget.
Moreover, my understanding is that Beer Duty doesn’t always have to be paid to HMRC immediately, and that an application can be made to HMRC before duty becomes payable in these cases. These suspensions can be granted if, for example, beer is held post-production on your registered premises in duty suspension, has been sent to other registered premises approved to receive beer in duty suspension, has been sent to an excise warehouse approved to hold beer in duty suspension for certain purposes, or has been sent to a registered beer packager. There are strict rules governing these suspensions so I would suggest directly contacting HRMC to discuss these options, or identifying specific criteria at https://www.gov.uk/guidance/beer-duty.
It is regrettable that some of our local community assets, such as pubs, theatres, shops or local sports clubs, are at risk of being lost due to the effects of the pandemic. I therefore welcome the Community Ownership Fund which was announced at the Budget, which will total £150 million and will allow community groups to bid for up to £250,000 of matched-funding to buy or take over these local assets to be run as community-based businesses. In exceptional cases, up to £1 million matched-funding will be available. This programme will be a lifeline to some of our beloved amenities that play such an important part in local communities.
Some pubs have unfortunately been forced to close their doors permanently due to financial strain. As hard as this is for owners and communities, it may not be the end. Since 2017, planning regulations removed permitted development rights from all pubs, requiring that planning permission must now be obtained prior to change of use or demolition. If listed as Assets of Community Value, this allows communities to have up to six months to bid to buy them if they have been put for sale. Ultimately, local councils must decide whether a building or land should be listed as an Asset of Community Value. I know the Government is nonetheless committed to making it easier for community groups to protect and take over local assets like pubs and will continue to explore options to strengthen the rights of our communities to do so.
However, it is important to note that excessive use of alcohol can have devastating effects not only on individuals’ health but also their families and communities. I was glad to see measures including the new UK Chief Medical Officers’ low risk drinking guidelines, the prevention of low cost selling, curbing irresponsible promotions, and introducing new powers to deal with antisocial behaviour. On a more local level, powers and responsibilities have been given to local areas to tackle public health concerns, and Public Health England (PHE) is working closely with them in assessing local alcohol-related need. Guidance has also been published by PHE to improve support for young people in A&E with alcohol related problems. Local authorities can commission the support services as they deem fit, and I am pleased to note that high quality, evidence-based treatment services are being run throughout the country. Those affected by alcohol abuse are then further supported by the tireless efforts of Alcoholics Anonymous (AA). I commend the AA’s ongoing work to assist individuals with their personal recovery.
In conclusion, I am encouraged that the Government and the Treasury recognise the importance of supporting our pubs and keeping costs down for customers. I welcome the Chancellor’s commitment in the recent Budget to extend this support. There is a broad recognition of the need to reform the current duty system to support the alcoholic drinks and pubs sector in the longer term, and on 1 October, a call for evidence for reform of Alcohol Duty was published.