1 October 2012
Waveney MP Peter Aldous has written to Sajid Javid, Exchequer Secretary at HM Treasury asking for action to mitigate the impact of Progressive Beer Duty Relief on local breweries such as St Peter’s Brewery in Bungay. Peter was following up on a question he asked the Chancellor of the Exchequer in the House of Commons on 11th September.
Mr Aldous decided to take this concern to the Government after receiving correspondence from the Managing Director of St Peter’s Brewery concerned that their success in export markets results in them being penalised by the Government . The brewery exports beer to over 30 countries worldwide but because the rate of beer duty paid is based on total production, including beer shipped, duty free, to export markets, the current system penalises St Peter’s competiveness in the UK as they pay considerably more duty per pint than similar sized breweries .
Aldous is requesting a meeting with the Exchequer Secretary to discuss how the business can overcome such limits to export production. Peter has also recently written to Michael Fallon, Minister of State for Business and Enterprise, urging him to consider reform to the relief.
Mr Aldous said:
“Progressive Beer Duty is holding back successful breweries such as St Peter’s who are looking to increase their exports. Serious consideration needs to be given to changing the relief so that all production which is exported is excluded from the relief to ensure a fair and competitive market.
I am very pleased to be supporting a successful local businesses such as St Peters at a time when Government should be doing all it can to encourage businesses to grow and create jobs. I encourage other local breweries to contact me if they are experiencing similar difficulties.”
Colin Cordy, MD of St. Peter’s brewery commented:
“We are pleased to have the full support of our local MP regarding this matter which is of great importance to the future of the company.”
-Substantive Question to HM Treasury, 11 September 2012
Peter Aldous (Waveney):
To ask the Chancellor of the Exchequer, what assessment he has made of the relative effect of Progressive Beer Duty Relief on breweries seeking to maximise export opportunities. [120157]
-Written Answer from HM Treasury to Peter Aldous MP [HMT Ref: 1081O 12/13]:
SAJID JAVID, answered on 11 September 2012
Small Breweries Relief provides a tax relief worth £30 million to over 700 of the UK’s smallest brewers. The relief helps to encourage investment in small breweries, promoting growth and increasing diversity in the beer market.
The Government has made no assessment of the effect that Small Breweries Relief may have on export opportunities for small brewers. However, the Treasury keeps all taxes under review and is open to receiving any evidence of the impact of the relief in this area.
Supplementary Question:
St Peter’s Brewery in the Waveney constituency have built up a successful exporting business, which is handicapped by the way that Progressive Beer Duty relief is calculated. Can the Minister meet with St Peter’s and give consideration to changing the Relief so that all production which is exported is excluded from the relief?
Full text of the questions is available at:
http://www.publications.parliament.uk/pa/cm201213/cmagenda/ob120911.htm
-In January 2012 Peter Aldous highlighted the unfairness in the rating system which puts community pubs at a disadvantage during a debate on the Government’s proposals for reform of the pub industry:
Peter Aldous (Waveney) (Con): I am grateful to the Backbench Business Committee for granting this debate and to the hon. Member for West Bromwich West (Mr Bailey) for securing it.
Before I came to this place, I spent 27 years as a chartered surveyor. During that time, I carried out rent reviews on most types of business properties, although my experience with licensed premises was peripheral. Underpinning most rent review valuations is a requirement to assess the open-market rental value. That is the best way of establishing a rent that is fair to both parties, providing landlords with a fair return on their investment and tenants with a reasonable opportunity to build a sustainable business into the long term. If the two parties are unable to agree, the matter is referred to an arbitrator or an independent expert.
It is bizarre that a procedure that is routine for the vast majority of business people who lease premises is not available to a particular group: pubco tenants. Research produced by CAMRA shows that such publicans are at a considerable disadvantage compared with non-tied operators. They are worse off financially and work harder for a lower return, normally burning the midnight oil, tackling red tape and filling in the dreaded VAT return.
The tied system has some advantages in that it can provide an opportunity for people to set up their own businesses without having to raise large amounts of capital, and it continues to form an important part of many family brewing businesses. However, it should have the potential to act as a stepping-stone, with people then moving on to own their own businesses, as we heard from my hon. Friend the Member for Staffordshire Moorlands (Karen Bradley); it should not drive people out of business altogether.
The tied system was devised in a different era, which is long since gone, when the pub market was dominated by many family brewers, who wanted to ensure that their pubs sold their beer. Those brewers had a vested interest in ensuring that their pubs were well run, and landlords duly received support. In return, they bought their beer directly from the brewers, with no middleman in between. Many of those breweries were household names, but they have long since gone. Tollemache, Cobbold, Lacons, Bullards and Manns owned pubs across Suffolk and Norfolk. Today, only Greene King and Adnams remain, along with micro-breweries such as Green Jack in Oulton Broad in my constituency. Greene King and Adnams continue to run their tied houses well and successfully, but the market is now dominated by pubcos, which do not brew their own beer; they are middlemen taking their margin, and they have different business objectives from the family brewers. Given those changes, it is appropriate that the tied system should be reformed, and the proposals in the motion appear sensible and logical.
As we have heard, there are other issues that need to be addressed: the taxation of beer; the reform of licensing laws, which, since 2003, have made it more difficult to play live music; and the below-cost sale of alcohol by supermarkets. However, for me as a chartered surveyor, there is one other subject that needs to be addressed: the rating system. Many publicans scratch their heads over how the Valuation Office Agency has arrived at such a high rateable value assessment for their properties. The art of rating valuation has, I am afraid, become totally abstract and distant from reality. Town centre drinking barns, which are subject to a different rating regime, seem to have an unfair advantage over community pubs. That anomaly needs to be addressed, but that is a debate for another day.
Mr Davey: I wanted to intervene on the hon. Gentleman before he finished his remarks, because he is a chartered surveyor. I therefore invite him to welcome the fact that, in our negotiations with the BBPA, we secured a strengthening of the industry framework code, which will specify that all rent review assessments must comply with Royal Institution of Chartered Surveyors guidance, and that rent assessments for new full repairing and insuring leases must be signed off by a RICS-qualified individual.
Peter Aldous: I am grateful to the Minister for giving that clarification.
In the meantime, let me conclude by saying that although there are other issues that need to be addressed to enable pubs to compete on a level playing field, we have an opportunity to address an iniquity that, in many respects, is leftover from a bygone age. I therefore support the motion.
Full text is available at: http://www.publications.parliament.uk/pa/cm201212/cmhansrd/cm120112/debtext/120112-0002.htm
Mr Aldous decided to take this concern to the Government after receiving correspondence from the Managing Director of St Peter’s Brewery concerned that their success in export markets results in them being penalised by the Government . The brewery exports beer to over 30 countries worldwide but because the rate of beer duty paid is based on total production, including beer shipped, duty free, to export markets, the current system penalises St Peter’s competiveness in the UK as they pay considerably more duty per pint than similar sized breweries .
Aldous is requesting a meeting with the Exchequer Secretary to discuss how the business can overcome such limits to export production. Peter has also recently written to Michael Fallon, Minister of State for Business and Enterprise, urging him to consider reform to the relief.
Mr Aldous said:
“Progressive Beer Duty is holding back successful breweries such as St Peter’s who are looking to increase their exports. Serious consideration needs to be given to changing the relief so that all production which is exported is excluded from the relief to ensure a fair and competitive market.
I am very pleased to be supporting a successful local businesses such as St Peters at a time when Government should be doing all it can to encourage businesses to grow and create jobs. I encourage other local breweries to contact me if they are experiencing similar difficulties.”
Colin Cordy, MD of St. Peter’s brewery commented:
“We are pleased to have the full support of our local MP regarding this matter which is of great importance to the future of the company.”
-Substantive Question to HM Treasury, 11 September 2012
Peter Aldous (Waveney):
To ask the Chancellor of the Exchequer, what assessment he has made of the relative effect of Progressive Beer Duty Relief on breweries seeking to maximise export opportunities. [120157]
-Written Answer from HM Treasury to Peter Aldous MP [HMT Ref: 1081O 12/13]:
SAJID JAVID, answered on 11 September 2012
Small Breweries Relief provides a tax relief worth £30 million to over 700 of the UK’s smallest brewers. The relief helps to encourage investment in small breweries, promoting growth and increasing diversity in the beer market.
The Government has made no assessment of the effect that Small Breweries Relief may have on export opportunities for small brewers. However, the Treasury keeps all taxes under review and is open to receiving any evidence of the impact of the relief in this area.
Supplementary Question:
St Peter’s Brewery in the Waveney constituency have built up a successful exporting business, which is handicapped by the way that Progressive Beer Duty relief is calculated. Can the Minister meet with St Peter’s and give consideration to changing the Relief so that all production which is exported is excluded from the relief?
Full text of the questions is available at:
http://www.publications.parliament.uk/pa/cm201213/cmagenda/ob120911.htm
-In January 2012 Peter Aldous highlighted the unfairness in the rating system which puts community pubs at a disadvantage during a debate on the Government’s proposals for reform of the pub industry:
Peter Aldous (Waveney) (Con): I am grateful to the Backbench Business Committee for granting this debate and to the hon. Member for West Bromwich West (Mr Bailey) for securing it.
Before I came to this place, I spent 27 years as a chartered surveyor. During that time, I carried out rent reviews on most types of business properties, although my experience with licensed premises was peripheral. Underpinning most rent review valuations is a requirement to assess the open-market rental value. That is the best way of establishing a rent that is fair to both parties, providing landlords with a fair return on their investment and tenants with a reasonable opportunity to build a sustainable business into the long term. If the two parties are unable to agree, the matter is referred to an arbitrator or an independent expert.
It is bizarre that a procedure that is routine for the vast majority of business people who lease premises is not available to a particular group: pubco tenants. Research produced by CAMRA shows that such publicans are at a considerable disadvantage compared with non-tied operators. They are worse off financially and work harder for a lower return, normally burning the midnight oil, tackling red tape and filling in the dreaded VAT return.
The tied system has some advantages in that it can provide an opportunity for people to set up their own businesses without having to raise large amounts of capital, and it continues to form an important part of many family brewing businesses. However, it should have the potential to act as a stepping-stone, with people then moving on to own their own businesses, as we heard from my hon. Friend the Member for Staffordshire Moorlands (Karen Bradley); it should not drive people out of business altogether.
The tied system was devised in a different era, which is long since gone, when the pub market was dominated by many family brewers, who wanted to ensure that their pubs sold their beer. Those brewers had a vested interest in ensuring that their pubs were well run, and landlords duly received support. In return, they bought their beer directly from the brewers, with no middleman in between. Many of those breweries were household names, but they have long since gone. Tollemache, Cobbold, Lacons, Bullards and Manns owned pubs across Suffolk and Norfolk. Today, only Greene King and Adnams remain, along with micro-breweries such as Green Jack in Oulton Broad in my constituency. Greene King and Adnams continue to run their tied houses well and successfully, but the market is now dominated by pubcos, which do not brew their own beer; they are middlemen taking their margin, and they have different business objectives from the family brewers. Given those changes, it is appropriate that the tied system should be reformed, and the proposals in the motion appear sensible and logical.
As we have heard, there are other issues that need to be addressed: the taxation of beer; the reform of licensing laws, which, since 2003, have made it more difficult to play live music; and the below-cost sale of alcohol by supermarkets. However, for me as a chartered surveyor, there is one other subject that needs to be addressed: the rating system. Many publicans scratch their heads over how the Valuation Office Agency has arrived at such a high rateable value assessment for their properties. The art of rating valuation has, I am afraid, become totally abstract and distant from reality. Town centre drinking barns, which are subject to a different rating regime, seem to have an unfair advantage over community pubs. That anomaly needs to be addressed, but that is a debate for another day.
Mr Davey: I wanted to intervene on the hon. Gentleman before he finished his remarks, because he is a chartered surveyor. I therefore invite him to welcome the fact that, in our negotiations with the BBPA, we secured a strengthening of the industry framework code, which will specify that all rent review assessments must comply with Royal Institution of Chartered Surveyors guidance, and that rent assessments for new full repairing and insuring leases must be signed off by a RICS-qualified individual.
Peter Aldous: I am grateful to the Minister for giving that clarification.
In the meantime, let me conclude by saying that although there are other issues that need to be addressed to enable pubs to compete on a level playing field, we have an opportunity to address an iniquity that, in many respects, is leftover from a bygone age. I therefore support the motion.
Full text is available at: http://www.publications.parliament.uk/pa/cm201212/cmhansrd/cm120112/debtext/120112-0002.htm
