Thank you to those constituents who have contacted me about draught relief for beer and cider served in pubs. I am aware of the campaign on this issue and continue to spend a lot of time discussing challenges with our local pub landlords around the Mid Sussex Constituency.
I have ensured colleagues in the Treasury are aware of the concerns raised ahead of the Budget, including the Chancellor, emphasising the importance our pubs continue to play in our local communities.
Under the new alcohol duty system, draught relief provides a 9.2 per cent duty reduction on draught beer and cider products below 8.5 per cent alcohol by volume. This ensures that there will always be a lower duty rate for draught products to recognise the value of our great British pubs. This means that every pint, in every pub across the UK, pays less duty than their supermarket equivalent – this is the Government's Brexit Pubs Guarantee.
I understand the Government is closely monitoring the impact of the recent reforms, including draught relief, and will evaluate the impact of the new rates and structures three years after the changes took effect on 1 August 2023. This will allow time to understand the impacts on the alcohol market, and for HM Revenue and Customs to gather useful and accurate data with which to evaluate the effects of the reform. As with all taxes, the Government keeps the alcohol duty system under review during its yearly Budget process.
Moreover, relaxed licensing regulations that allow pubs, restaurants and bars to sell takeaway pints without red tape holding them back have been extended. Under the relaxed regulations, any site permitted to sell alcohol on their premises can sell for off-site consumption too, without the hassle of applying for a new licence. Premises will also be able to continue to serve alcohol in the area covered by any pavement licence that they have.
On VAT, the Government already introduced an exceptional one-off VAT cut for hospitality and tourism during the COVID-19 pandemic. A further cut is estimated to cost around £8.5 billion - roughly a third of the Home Office budget. At a time when the public finances are still recovering from the pandemic and protecting the public through the global energy shock, I am not currently aware of plans to reduce the rate of VAT for the hospitality industry. However, at £85,000, the UK has a higher VAT registration threshold than any EU Member State and the second highest in the OECD. This keeps the majority of UK businesses out of VAT altogether.
The Government has also announced a £4.3 billion business rates support package. The small business multiplier will be frozen for a fourth consecutive year, and the 75 per cent relief for eligible retail, hospitality and leisure properties will be extended for 2024-25 - a tax cut worth £2.4 billion.
Regarding the juice content of cider, the present requirement under the Alcoholic Liquor Duties Act 1979 that 35 per cent of the finished product be made up by apple juice was last revised in 2010, following consultation with cidermakers. I believe that this strikes a suitable balance, facilitating the various ancient traditions found on these islands while still allowing for innovation in the sector and large-scale production of popular styles.
