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Public Houses

I can tell my hon. Friend that, yes, others did enter. Pubs play host to skittles matches, card games, dominos, darts and pool, as well as many other activities. They are headquarters for various societies, and—even more so these days—provide meals for families and individuals. In fact, almost 40 per cent. of pubs' turnover comes from food sales. People watch sports in pubs and pubs provide supervised drinking, an important point to which I will return in a minute. Some provide wonderful examples of fine architecture and many raise money for charities. Furthermore, they are particularly, although not exclusively, important in rural areas. They have been described as a uniquely British institution. Pubs also make an important economic contribution, particularly through tax; according to the House of Commons Library, the drinks industry alone contributes £14.79 billion a year. Each pub contributes an average of about £90,000 in taxes, which is an awful lot of money. When we next go to our local pub, we should think about the £90,000 contributed just by that pub; we will then realise pubs' economic value to the country as well as to the community. At a time when people who enjoy a social drink are under pressure because of the misuse of alcohol by the few, we should remember how much money people who enjoy a drink contribute to the Exchequer. 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 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 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.