Thank you for contacting me about pubs, alcohol and beer duty.
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.
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.
I understand that pubs were subject to debilitating restrictions for a long time, and I hear requests for a longer-term sector-specific package of support. That is why I am assured that the Government has provided unprecedented levels of support throughout the pandemic and, building on this, has published long-term strategies to help the hospitality sector and our high streets to recover with more resilience.
Evidence continues to be collected on the impact of the pandemic on the hospitality sector and I am glad that the Government’s support is helping pubs, which are the lifeblood of our communities, to recover and build back better.
Thank you again for taking the time to contact me.