Rural Pubs: Fiscal Support

[Wera Hobhouse in the Chair]

I beg to move, That this House has considered the matter of fiscal support for rural pubs.

It is a pleasure to lead this debate on fiscal support for our country’s great rural pubs. Although this debate is about fiscal support, it is really about our heritage. To demonstrate that, I would like to take hon. Members on a pub crawl around my constituency. Meriden and Solihull East has the historical, grade II listed Malt Shovel in Barston, which dates back to the late 15th or early 16th century and is widely regarded as one of the oldest pubs in the borough of Solihull. There is also the Queen’s Head in Meriden, a 17th century coaching inn. We would then move on to Hampton in Arden, where there is the White Lion, another 17th century pub with traditional architecture. I should say at this stage that I do not drink, so I am happy to drive Members if they come.

From Hampton in Arden, we would travel to Catherine de Barnes, where the excellent Boat has a tremendous beer garden for sunny afternoons. In Dorridge, the Railway Inn, right next to the station, often serves hard working commuters after a long day’s work. Dorridge also has the Forest, a 19th century coach house just by the train station, serving tremendous food and drink, with great rooms for weary guests. There is also the Drum and Monkey, my local, which is a famous country pub with a history dating back to the 1860s.

After all that, we would end up in the historical village of Knowle, where I want everyone with me. In the village, there are a number of pubs that we could choose from, but I have selected a couple. The Wilson Arms, now a Toby Carvery, is a 16th century pub with timber frames and excellent Sunday lunches. The Red Lion, right on the high street, has great food and drinks.

I pick Knowle to end, because this weekend we are celebrating the 750th anniversary of the village. I pay tribute to all those who make the village the special place that it is: Visit Knowle, the Knowle Society, the various publicans and, of course, our residents. To them, I say thank you. Community, character and identity, that is what our rural pubs represent. That is why they are worth fighting for, and why I am here today, concerned about the impact of the Government’s policies on our rural pubs.

I will start by talking about the economic importance of pubs and their contribution to the economy, especially in rural areas. There is no doubt that the UK’s pub and brewing sector plays an enormous role in rural constituencies across the UK. Rural pubs provide jobs and huge economic value. According to the British Beer and Pub Association, the pub and brewing sector supports more than 300,000 jobs in rural constituencies in the UK. Combined, rural pubs and breweries contribute almost £11 billion to the economy and generate £7 billion in tax.

In addition, as I have outlined, rural pubs are steeped in history and heritage. They attract tourism from across the country and the world. Tourism is estimated to be responsible for about a third of employment in rural pubs. People come from all over the world to spend time in the great British countryside and enjoy the excellent food and drink that we put out in our great pubs. In all our constituencies, but particularly for Members from rural seats, the influence of pubs in our constituencies is enormous. I am immensely proud of the pubs in Meriden and Solihull East. We have almost 40 local pubs, which support 1,740 jobs. Of that cohort, there are 500 16 to 24-year olds working in the sector, which makes an overall contribution of £61 million to the local economy. In the wider west midlands, there are more than 4,000 rural pubs, which employ 88,000 people and contribute £2.9 billion to the economy.

Aside from the huge economic impact of these pubs, they are also a vital part of the fabric of our rural communities. They provide food, drink and places to stay, and some historical pubs date back centuries, truly making them part of our great and unique British history.

I congratulate the hon. Gentleman on securing this debate. As everybody knows, I represent the most beautiful constituency in the United Kingdom. As he says, pubs are not just about food and drink; they are also somewhere for people to go to socialise. They are great for people who are lonely. The Butchers Arms in Carhampton reopened in January, and it now has a library and a shop. I am sure he would agree that is a very good situation to be in.

Bhatti: I thank the hon. Member for her intervention, but I think we should have a rule in this House that when a Member says they have the best constituency, they owe everyone a pint. [Hon. Members: “Hear, hear!”] I could get used to this popularity. The hon. Member is absolutely correct, and I will come to the social value of pubs as a meeting place.

When people think of Britain, they of course think of our iconic landmarks such as Buckingham Palace or Big Ben, but they also think of our red post boxes, our black cabs and our rural pubs. Our truly unique rural pubs are the pillars of our local communities, serving as meeting points for old friends, destinations for wedding receptions and hubs for our community.

Does my hon. Friend recognise that, for many rural locations, the rural pub is the last standing business in the village? It is the post office, the village store, the job club, the parent and child club and the club for the elderly and lonely. I have even seen, through Pub is the Hub, a barber in the lounge of a pub. It cuts people’s hair during the day and serves them drinks in the evening. Does my hon. Friend agree that when the Government impose extra fiscal pressures on pubs, what they lose is probably worth far, far more than the revenue they think they are gaining?

I could not agree more. That is exactly why we are here today. I am really concerned about the core of our communities being hollowed out by Government interventions. For elderly people in particular, a good pub lunch with great drinks and warm food can be a staple of the weekly routine. It is therefore no wonder that two thirds of adults believe that their local pub is vital to combating loneliness and social isolation. On the back of my hon. Friend’s intervention, I gently ask the Minister whether he recognises that losing a rural pub has a huge impact on our rural communities. Where are those people meant to go?

Dr Thomas Thurnell Read from Loughborough University has conducted some fascinating research into the social value of pubs in local communities. The project looked at the impact of pub closures on communities and made it very clear that the loss of a pub, as my hon. Friend the Member for Kingswinford and South Staffordshire (Mike Wood) said, is so much more than just the loss of a business. Dr Thurnell Read made it clear that the closure of a pub echoes throughout the entire community, impacting friendships, identities and vital local support networks in ways that cannot be captured by data alone.

As traditional community infrastructure such as banks, village halls and post offices also come under pressure, pubs are more important than ever as anchors in our rural communities. For rural areas, some pubs now act as more than just a place to meet and socialise. They have essential services such as micro post offices, prescription drop offs, wi fi hubs and barbers, as my hon. Friend mentioned. They even house part time library shelves.

Research by the Rural Services Network has found that for every £1 invested in the provision of services and activities in the pub, an average of £8.28 of social value is created. It found that the diverse new services offered by pubs in local communities have lasting positive impacts on the overall wellbeing of individuals and their families, as well as on reducing loneliness, improving mental health and giving people greater independence.

Having spoken at great length about the value and importance of rural pubs, I am really concerned about the Government’s intervention and the lack of support for this vital industry. Some of our best pubs are in the Chancellor’s crosshairs. Labour has hit rural pubs with increased taxes and a litany of new burdensome legislation that is killing them off. The pub and brewing sector is among the most highly taxed of any business sector, with around £1 in every £3 spent in the pub going back to HMRC.

One of the most egregious taxes is the Government’s national insurance raid on our businesses. Having spoken with representatives of the UK’s beer and pub sector, there is no doubt that Labour’s rise in national insurance has had a huge impact on rural pubs. Just last week, Simon Emeny, the chairman of Fuller’s, said that pubs are facing “unprecedented” pressure from Labour’s tax rises. Given the nature of pub work, the lowering of the national insurance threshold has had a deep impact on publicans. Pubs are one of the major employers of young people. The sector employs 58% of its people on a part time basis, which means that lowering the threshold has forced pubs to reconsider their hiring practices.

The concerns about taxes that the hon. Member is raising have really affected Jack, the owner of the Ye Olde Poppe Inn in Tatworth, and Buddy, the owner of the Flying Fish. Does the hon. Member agree that we need to lower VAT for pubs?

The hon. Member makes an interesting point. When publicans speak to me about taxes, they talk about their turnover either increasing or staying stable but the costs going up. The Government have to set out what they will do to improve the fiscal landscape for pubs, and for the hospitality industry more broadly.

A lot has been made of Lord Milburn’s report on NEETs—those not in education, employment or training—and the rise in the number of 16 to 24-year olds in that category. Has the Minister considered the impact of these tax rises on pub specific jobs? Some 51% of people working in pubs are under the age of 24, meaning that many are likely to be balancing working in the pub with other part time commitments such as school or university. These new employment costs mean that publicans will think again about hiring staff on a part time basis, driving many people into worklessness. The national insurance rise has had the single most damaging effect on the Saturday job.

In addition to the crippling jobs tax, pubs are also suffering because of stifling increases in business rates. These policies threaten to be a huge—maybe even the final—nail in the coffin of many pubs that are really struggling. Analysis from UKHospitality has found that, by 2027-28, the average pub’s business rates will be £4,500 higher than they are today, rising to an astonishing £12,900 within three years, even with the reduced multiplier and transitional relief. I asked one of my staff members how much they paid for a pint of beer in one of the pubs in my constituency, and they said a pint of lager came to £7.50. That pub would have to sell an extra 1,720 pints just to offset the cost of those shocking tax increases.

The Conservatives recognise the value of our pubs. We have pledged to scrap business rates for 250,000 retail, hospitality and leisure businesses because we recognise the importance of ensuring that businesses keep more of what they earn, allowing them to invest in the community rather than sending it back to central Government. I say to the Minister that Governments do not create growth or jobs; our businesses do. This announcement formed part of our larger campaign to get Britain working again, freeing up money for businesses to hire new people, often younger and always local. It would drive new jobs and economic growth across rural areas of the UK.

Building on that, The Telegraph revealed last month that landlords will be hit with a “nice pub tax” under new guidelines. It found that HMRC has ordered officials to levy higher business rates on pubs that are in attractive locations or based in character properties. That is a complete disaster, and could mean that many pubs are forced—

It is important to note that the article in The Telegraph on the changes for rural pubs was about the fact that we published, with full transparency, the guidance used to value pubs that was signed off under the previous Government. This Government are cutting pubs’ business rates by 15% this year, freezing them for the next two years and reviewing that very guidance. We respect the press, but that article was fake news, and I do not think it should be repeated in this place.

I love the Minister’s passion, but I have not finished yet, and I encourage him—[Interruption.]

Order. Can I make sure that we all understand that lots of Members want to speak? If you start debating with the Minister now, we will lose time. Please respect that, and I encourage you to come to the end of your speech.

I will speed up, Mrs Hobhouse, but I encourage the Minister to wait until I have finished. The litany of regulation, such as in the Employment Rights Act 2025, and the taxes that the Government have raised have had a huge impact. Labour is waging war on our rural pubs. Those publicans can feel it, and we can all see it.

I know that we are all looking forward to England’s first world cup game against Croatia this evening, and along with all Members, I wish them the very best. We have some of the highest alcohol duties on a pint of beer. I do not want to broach the subject of the EU but, while I am not a natural fan of closer alignment, it seems that Europe is in a better place on this, so I ask the Minister to comment on that.

In conclusion, Madam Deputy Speaker—[Interruption.] Sorry, Mrs Hobhouse; hopefully you will be Madam Deputy Speaker one day. In conclusion, I say to the Minister that the litany of measures taken by the Government have affected Saturday jobs and had a huge impact on young people. He has shown a lot of passion, but I encourage him to show bravery—and perhaps England fans will chant his name tonight.

I encourage everybody who wants to speak to bob. I intend to call the Front Benchers at about 3.28 pm, which gives everybody else an informal time limit of four minutes. If Members do not stick to that, I will have to put on a formal, and shorter, limit, so please respect each other. I thank Saqib Bhatti for sticking very nicely to his time limit.

It is a pleasure to serve under your chairmanship, Mrs Hobhouse. I congratulate the hon. Member for Meriden and Solihull East (Saqib Bhatti) on securing the debate. As someone who used to represent the industry, I understand the challenges that our pubs have faced not just over the past two years, but over a decade of changing attitudes and behaviours that mean many of us do not go to the pub as often as we used to. I am sure that, were it not for our service in this place, many of us would be enjoying a pint or two while watching England this evening, benefiting from the extra licensing hours that the Government have allowed to celebrate the world cup.

I will not be as cynical as others—or maybe I will be—by mentioning a variety of pubs in my constituency that residents should visit tonight. Whatever happens tonight, and whether they go to the Golden Cross or the Coach and Horses in Harvington, or the Old Bull or the Bulls Head in Inkberrow, I hope that they spend their money in the local pubs in our villages. In Inkberrow, Feckenham and Hanbury, the local is often the last community asset standing. It is the place where people gather, older residents find connection and the social fabric of our villages is woven. In my constituency, many of them have become temporary post offices.

I thank the Minister for his engagement during the business rates process. I was one of the Labour Members who darkened his door with concerns and recommendations for change. It is not lost on me that those changes represented £400 million extra for pubs. I thank him for his honest engagement throughout the process, which all Back Benchers should welcome. I also welcome the 15% business rates discount and the frozen multiplier, which are worth nearly £1,650 for the average pub. However, the sector warns that deeper structural reliefs are needed, and that, without further change, 15,000 jobs could be lost over the next couple of years. That is the reality I hear from licensees across my constituency.

I gently suggest some things that the Minister might want to consider for the future. First, the business rates methodology review must reflect the unique trading model of rural wet led pubs, which is not the same as that of urban pubs. Secondly, we must expand draught relief—and go further where possible. Thirdly, we must strengthen protections for assets of community value, and make it easier for communities to take over vulnerable pubs through co operative models. For anyone who is not aware, Pub is the Hub does incredible work and deserves more support.

Our pubs are not just peripheral amenities; they are institutions. If we allow them to disappear, we lose not just businesses but the hearts of our communities. It is so hard to start a new business right now for a variety of reasons, including, as has been mentioned, changes in people’s behaviours and attitudes towards spending money or enjoying a drink. I fear that, if we lose some of the rural pubs in our communities, we will lose many other businesses that rely on them. I thank the Minister for his co operation, support and engagement throughout the process, but there is a lot more work to do to keep those businesses in our constituencies safe.

It is a pleasure to speak with you in the Chair, Mrs Hobhouse. I congratulate the hon. Member for Meriden and Solihull East (Saqib Bhatti) on securing this important debate.

I will begin by mentioning two people I represent. Becky runs the Red Lion in Eynsham. She met the Under Secretary of State for Business and Trade, the hon. Member for Halifax (Kate Dearden), at my invitation earlier this year. That followed a question in the House, so some Members present, including the Minister, who is smiling, may already know Becky’s story. Her turnover is up, but her profits have vanished. She said that there is “no living to be made any more”

from her rural pub. Think about what that means: the customers are still spending, yet she is squeezed to the point of asking herself whether to carry on at all.

Donna runs the Oxfordshire Yeoman in Freeland. She has faced the uncontrollable in the last few months: a washout summer, when summer trade is the very thing that a rural pub banks on to survive the winter. Stacked on top of that, she has faced the entirely controllable: a 50p minimum wage rise, soaring energy bills and rising water bills, all landing at once.

When landlords are counting every penny and customers are counting every penny on the same evening, that is not a market finding its level but a trade being hollowed out from underneath. Consider the scale of the loss: 161 pubs closed across England, Scotland and Wales in the first quarter of this year alone, which is more than two a day. Those closures took roughly 2,400 jobs with them. There is a huge difference between losing a pub in a city and losing one in a village. When an urban pub closes, a community loses an option, but when a rural pub closes, a community loses its social space, which almost never comes back. The rural pub sits alongside the church and the village hall as part of the fabric of some of our smaller communities. Such closures represent a loss of identity and cohesion in communities such as mine. We should ask, “Why is the rural pub more exposed?” They tend to have lower footfall, they tend to face higher energy and supply costs, and it is far harder for them to diversify their income. Running costs across hospitality are up around 43% since 2019, and one third of those businesses are operating at a loss.

I would like to turn to what might actually help. First, there is VAT and energy. Becky’s case is one of simple fairness. Why should British hospitality pay roughly double the VAT of comparable European countries? The Liberal Democrats would cut VAT on hospitality by 5% until April 2027 now—not after yet another review—and remove the main renewable levy from energy bills, taking more than £90 a year off the typical bill, funded by a windfall tax on the banks. Taken together, that is £270 back in the pockets of the average household over 18 months, allowing them more opportunity to buy a pint or a meal in their local pub.

Secondly, there is the issue of business rates. In January, the Government discounted 15% of the planned rate hikes for pubs, but Becky’s rateable value was hiked phenomenally before the freeze arrived, locking the damage in. The relief does nothing for shops, restaurants, cafés and the wider high street. Our ask is straightforward: the Government must deliver the full 20p discount promised to all retail, hospitality and leisure businesses. In the interim, they should keep the 75% relief and freeze the small business multiplier.

Before I end my remarks, I wish to refer briefly to the role of small breweries in our communities, such as Tap Social Movement in Kidlington, Little Ox in Freeland or Twisted Tree in Tusmore. Those small and medium sized enterprises in the community combine a passion for independent brewing with a commitment to creating local jobs. However, in addition to the impact of pub company ties on landlords, the large brewers are locking small breweries out of our village pubs. Fewer than 40% of local pubs are open to small, independent breweries. Will the Minister encourage Ministers in the Department for Business and Trade to consider that barrier to market access? As part of the current pubs code review, will they consider a guest beer arrangement in England and Wales similar to that in Scotland?

It is a real pleasure to serve under your chairship, Mrs Hobhouse. I give big thanks to the hon. Member for Meriden and Solihull East (Saqib Bhatti) for raising this issue. As always, I will give a Northern Ireland perspective on the issues.

I speak for the small villages, the crossroads and the tight knit rural communities where the pub is not merely a commercial business but a vital community hub. It is the village town hall, the local meeting place and the frontline defence against rural isolation; it is a cornerstone of our £2 billion tourism economy. However, those historical institutions are hanging by a thread, suffocating under a mountain of unsustainable operational costs.

We have heard the warnings loud and clear from the industry’s frontline. I pay special tribute to Colin Neill MBE, the chief executive of Hospitality Ulster, who I have met on numerous occasions. All Members in the Chamber have probably met him—I know that the Minister has. Colin has been a tireless champion for our publicans, masterfully making the case both at Stormont and here in Westminster. He has warned the Government in no uncertain terms—forgive me for being graphic, Minister, but we must be factual in presenting this case—that our local hospitality sector is in deep distress as a result of the cumulative impact of soaring energy bills, skyrocketing national insurance contributions and upcoming business rates revaluations. Colin has rightly pointed out that the current tax burden is squeezing the very life out of local employment. Hospitality Ulster data shows that nearly half our operators have been forced to reduce staff numbers. We are looking for economic growth and job creation, but we have lost them—this is a full blown crisis.

Our rural pubs face a unique structural disadvantage compared with the rest of the United Kingdom. In Great Britain, pubs have benefited from various configurations of business rates relief, but publicans in Northern Ireland face the terrifying prospect of massive hikes in their rates bill—a move that Colin Neill has warned would be the “ruination” of our hospitality industry and, by extension, a severe blow to the Northern Ireland economy. Furthermore, our traders are forced to compete on an uneven playing field with the Irish Republic right across the border, where the Government have previously used targeted VAT reductions to protect their hospitality trade, to our disadvantage in Northern Ireland.

We cannot stand idly by and watch our rural heritage be wiped out by fiscal inertia. The sector accounts for four of every five tourism jobs in Northern Ireland, so we cannot deny or ignore that it is critical. If the Department for the Economy is to meet its growth targets—the Minister will want to encourage Northern Ireland to grow and meet them—it needs a thriving hospitality sector to anchor it, so, alongside my DUP colleagues and the Minister back home, I call on the Chancellor and the UK Government to co ordinate directly with the Stormont Executive on delivering a targeted and ringfenced package of fiscal interventions.

We need three things: a reduction in the hospitality VAT rate to lower the structural burden on food and drink operators, energy cost reform to protect rural businesses that do not have the footfall of Belfast establishments, and a reformed, reality based rates system that treats hospitality as an economic driver to be supported, not as a cash cow to be milked until it is dead, which is what I see happening.

The hospitality sector is asking for the chance to survive and grow, and I echo that sentiment. I ask the Government to give our publicans the breathing room that they deserve—especially for rural pubs that cannot work on economies of scale—and to deliver the fiscal support that rural economies desperately need, before the lights go out for good in rural pubs. I thank the hon. Member for Meriden and Solihull East for bringing this issue to the Chamber. I hope that the Minister can give us the answers that we desperately need.

It is a pleasure to serve under your chairmanship, Mrs Hobhouse. I congratulate my hon. Friend the Member for Meriden and Solihull East (Saqib Bhatti) on securing such an important debate. I also thank Rajan Sehmi from my office for his support in preparing my notes.

We all know how much pressure rural pubs are facing, but I will highlight some of the many positive stories that my constituents have told me about their impact on our community. I recently met Bob from Kings Langley, whose young daughter Abbie is living with stage 4 cancer and is in a wheelchair and on 24-hour oxygen following a double lung transplant. Bob told me about Debbie and Ady, the landlords of the Unicorn in Abbots Langley, who have gone above and beyond to support Abbie and her family and ensure that the Unicorn remains a safe and welcoming place for her.

The Unicorn has organised events specifically for Abbie, including a “sip and paint” party at which 12 of her friends painted a portrait that now hangs proudly in their family home. Knowing that Abbie is a Robbie Williams fan, the Unicorn arranged a tribute act to perform. Unfortunately, Abbie had to go into hospital that day, but Debbie was able to stream it for Abbie on a video call. When Bob later organised a skydive in support of the Hospice of St Francis, which cares for Abbie and of which I am proud to be a patron, the Unicorn hosted a fundraising event that raised more than £1,400 for the hospice. Debbie has shown us that rural pubs are so often a source of friendship, support and hope for families facing the most difficult circumstances.

The hon. Gentleman makes an extremely important point about the wonderful charitable work that many of our rural pubs do. I would like to place on record my gratitude to the Black Lion in my constituency and also the Crossings Inn. The Black Lion does wonderful charity work, and the Crossings is the hub whenever there is a power cut in that particular area of Cumbria, which is sadly quite prone to them. On that point, I congratulate the Countryside Alliance on its “Rural Oscars”—both the Crossings and the Black Lion were northern finalists, and I am delighted to say that the Black Lion, as the winning pub for the north, is through to the finals. Will the hon. Gentleman share my congratulations to the Black Lion and all the other finalists on the excellent work that they do, and wish them the best of luck in the “Rural Oscars”?

It is my absolute pleasure to do so—to be a bit cheeky, I think some of the blackouts might come a bit more frequently with this Government’s policy on energy prices.

More widely across South West Hertfordshire, another constituent from South Oxhey told me about the Dick Whittington, which hosts free sandwiches on Wednesdays, a weekly OAP afternoon and a family Easter egg hunt. Other constituents in Kings Langley praised Pete, the landlord of the Saracen’s Head, and his staff for always being community focused and creating a welcoming atmosphere. Michelle told me about the Coach & Horses in Rickmansworth: for decades, the pub has put on a complimentary lunch for the Watford Mencap pancake race that she organises and that I have had the honour to open for several years now, raising vital funds for those with learning disabilities.

I have had the privilege of visiting those pubs in my pubs tour last year and hearing directly from publicans across South West Hertfordshire, but it was moving to hear from constituents about their favourite pubs. Some of the top key words mentioned were, “staff”, “atmosphere”, “community”, “welcoming”, “local” and “family”, but specifically “community.”

It is probably worth mentioning what is sold in the pubs. Although we speak about beer a lot, a third of drinks sold in hospitality are spirits. Many people prefer gin and tonic to a pint. Pubs and the distilleries that supply them are suffering from excise duty increases of 17% in the last three years.

I recently met Kate Nicholls from UKHospitality, whom many in this Chamber will know. She said that pubs are choosing to close on quieter days and operate shorter hours, making it more difficult to maintain exactly that community that we have been speaking about in this debate, where the pubs operate as the beating heart of our villages.

In conclusion, the Conservatives would introduce a permanent 100% business rates relief for hospitality, retail and leisure, capped at £110,000 per business, funded through £47 billion of savings by cutting the ever increasing welfare bill and the civil service. Publicans in South West Hertfordshire have been telling me that this Government are wringing pubs for cash instead of treating them as places we need to protect. That is especially true in our rural communities, in which the word “community” so often depends on the pub.

It is a pleasure to serve under your chairship, Mrs Hobhouse. I thank the hon. Member for Meriden and Solihull East (Saqib Bhatti) for securing this important and timely debate. I want to put on record that I am an officer of the all party parliamentary group for hospitality and tourism.

In my constituency, pubs are a central part of our local economy and job creation. The rural pub is the beating heart of village life. Domestic and international tourists alike flock to our array of historical pubs and alehouses to drink a crisp pint in a picturesque setting, and it goes without saying that we locals like them very much too. I have many such pubs in my constituency—too many to name—all fantastic places to eat, drink and socialise.

That reality is threatened, however, by the monumental challenges faced by all hospitality businesses in recent years. The local pub, once a staple of every town and village, is now an endangered species. In Stratford on Avon treasured, long standing pubs are on the brink of closing. In rural, often isolated areas, the village pub is the only community infrastructure still standing after the school, the post office and the local shop have all closed. It is where quiz nights and coffee mornings are held, and where social life happens. Despite their social and economic value to the community, our rural pubs are firefighting on all fronts.

One such pub is the Golden Cross in Ardens Grafton, a cherished 18th century, family run pub situated in the heart of the pretty south Warwickshire countryside, within easy reach of the town of Stratford upon Avon, and with views of the Vale of Evesham and the Cotswolds. A more perfect setting for a profitable pub could not be imagined but, almost with the feeling of inevitability, it closed its doors for the very last time earlier this month. That has been a heartbreaking decision for the owners, who did everything they could to avoid closure; but with rising operating costs, increased wage bills, higher national insurance contributions, escalating energy costs and supplier price increases, they simply had no other choice but to say goodbye to the business that supported the livelihoods of their families and community life.

Elsewhere in my constituency it was only through the intervention of local residents and of the charity Plunkett UK that the Fox at Loxley was saved from the same fate and became a community owned pub. When will the Government intervene to save our pubs and our wider hospitality industry? The Government’s policies should be providing the platform for our pubs and hospitality businesses to thrive. The emergency pub relief has been eaten up by cuts in relief and steep increases in rateable values from April 2026. Business rates must be reviewed and made fairer.

For a Government who claim that their main objective is economic growth, it boggles the mind that they thought the way to achieve that was to increase employer national insurance contributions—a measure that disproportionately impacts hospitality, raising costs for part time staff and hitting small and medium sized businesses the hardest. That is why I and my Liberal Democrat colleagues have been calling on the Government to exempt hospitality small and medium sized enterprises from the employer national insurance contributions increase, and to cut the VAT on hospitality businesses by 5%.

In other countries of Europe, the hospitality sector has 10% VAT, which means that it can grow and employ more people. Rural pubs are among the providers of first jobs for our young generations, forming the foundation of a working life where they learn so many skills each day.

I do not know what evidence the Government need to see before they believe that our pubs are at crisis point and that another U turn is necessary. I hope that the Minister will take the Golden Cross in my constituency as firm evidence that the current situation is entirely unsustainable for our pubs and that Government intervention is needed now to save our pubs from extinction.

It is a pleasure to serve under you, Mrs Hobhouse. I congratulate the hon. Member for Meriden and Solihull East (Saqib Bhatti) on securing this timely and important debate.

Pubs are not just places to grab a drink, as anyone who has grown up in a rural town or village knows. They are where we meet our neighbours, where people check in on us when we are having a rough time, and where a young person gets their first job and learns how to show up for work. They are woven into the fabric of this country, so when I say that the pressure on rural pubs is serious, I do not mean it lightly.

A constituent whose family runs a rural pub recently got in touch to tell me that they are on the precipice when it comes to staying afloat as a business. They are not complaining about thin margins or a bad few months; they are talking about whether they have a future at all. Rising costs, business rates, national insurance and wages—it is coming from every direction at once.

Viv has run the Lansdown Arms on Station Street in Lewes for 23 years. A few months back I invited her to Parliament to meet the Hospitality Minister, the Under Secretary of State for Business and Trade, the hon. Member for Halifax (Kate Dearden). Viv told us straight out that she does not know how much longer she can keep her business going. Her rateable value has gone up by £22,250, meaning roughly an additional £1,600 that she has to find every month. So many pubs in my constituency of Lewes are in similar positions. Those crippling policies are the difference between keeping staff on or cutting their hours, and between fixing the kitchen or leaving it and hoping for the best.

We all know that, once a rural pub closes, it almost never comes back. In 2020 there were 75 pubs in my constituency; that number was down from 95 in 2011, or a 21% decrease in under 10 years. At that rate, 50 years from now there will be no pubs at all left in Lewes constituency. We are seeing that situation play out in the village of Plumpton right now. Local people are trying to buy the Fountain Inn themselves. Stuart Wallis and the Fountain Inn Community Benefit Society have pulled together nearly £300,000 in pledges. Her Majesty the Queen, who grew up nearby, has thrown her support behind the campaign—but, honestly, should people have to crowdfund to save one of the last pubs in their area? That should not be where we are.

There are bright spots; the Steamworks at Glynde station is a great example. It is in an old station building, which I was proud to play a very small part in turning into a proper local hub as well as a pub, and it shows what is possible when people are given a bit of support and a bit of breathing room. Today I will meet with the famous Harvey’s Brewery, which is based in the heart of my constituency, in the town of Lewes. It is a family brewery that has been part of our county of Sussex for generations, quietly underpinning pubs, jobs and local identity in a way that is rarely talked about. From the Long Man Inn in Wilmington just down the road to the Eight Bells in Jevington, which won best pub in Sussex in the 2026 BRAVO—Brighton Restaurant Awards Vote Online—awards, the overall picture is worrying, and the Government need to take it seriously.

The Liberal Democrats are calling for an emergency VAT cut for hospitality—pubs, restaurants and venues—until April 2027. On business rates, the promised reform has not worked for a lot of pubs. In some cases it has made things worse. We need proper relief to be maintained for retail and hospitality while a genuinely fair system is designed, not a rushed patch that leaves pubs worse off than before. On national insurance, we cannot automate a pub. We cannot replace the person behind the bar, the chef out the back, or the young person doing their first shift on a Friday night with an app or a machine. Hospitality is people powered, and the rise in employer national insurance has landed hardest on exactly the kind of small local businesses that deserve support, not another squeeze. Pubs are also often stuck in an expensive tie that does not give them the flexibility to be competitive in the modern market.

I am not asking for anything complicated. I am asking the Government to listen—to Viv at the Lansdown Arms and to the locals, and indeed Her Majesty the Queen, trying to save the Fountain Inn in Plumpton. These places have served their communities for generations. It is time the Government returned the favour.

May I say what a pleasure it is to contribute to this debate under your chairship, Mrs Hobhouse? I am reminded of my youth in Bath, where I first attended pubs such as the Assembly Inn—but, since the subject of today’s debate is rural pubs, I shall move quickly to discussing my constituency. I want to refer in my contribution to Chickpea Group, which was founded just seven years ago by a brother and sister team, local people, with one of their school friends. They have gone from selling a few pizzas in the back of a pub in Wilton in my constituency to having now more than a dozen establishments across Hampshire, Dorset and south Wiltshire. I spoke to Jordan Davids this morning to get to the heart of what she feels about the challenges that exist in that thriving business, and she said to me that essentially it has grown and prospered because of the support of locals and despite some of the changes made in recent times.

As a former Treasury Minister, I empathise with the significant challenges involved in balancing the books. I sat in that position in years past, when lots of easy solutions were offered, with sincerity, but I recognise that sometimes there is a gap relating to the complexity in delivering and the reality on the ground. Chickpea Group has grown two to three new venues every year, and it has told me that the issue is the combination of a number of factors.

In my experience, it is very difficult for Treasury officials to evaluate the combined impact of increases in the national living wage made in one domain and one set of decision making, the threshold changes and rate increases for national insurance, then the behavioural effects of employment rights and then the ongoing challenges of energy costs, before we get into the incredibly complicated issue of business rates. However, that is the reality for the person on the ground, running one of the establishments in my constituency—the Grosvenor Arms, the Pembroke Arms, the Queen’s Head, the Silver Plough and the establishments in the market square in Salisbury; they have to deal with all those things together.

The Minister will, no doubt very professionally and skilfully, explain the end of the reliefs and what the Government have put in, with a new lower multiplier, but he must also come to terms with the fact that it is in the fusion of all those factors that the individual business owner is finding great difficulty at the moment. I stand here to applaud the success of Ethan and Jordan Davids and their original business partner Tommy Tullis in moving forward through difficult times. I acknowledge that it was not all great under the previous Government, either; but we have got to the point at which we need a rational analysis of all the factors that are making life difficult for rural businesses. Colleagues have mentioned all the other factors particular to a rural location. It needs a thoughtful intervention from the Government to look at the behavioural effects and honestly deal with a problem that is not going away and is, my constituents tell me, very severe for the future prospects of their business and others like it.

It is a pleasure to serve under your chairship, Mrs Hobhouse. I congratulate the hon. Member for Meriden and Solihull East (Saqib Bhatti) on securing this debate. Ely and East Cambridgeshire is a very rural area, and in many of my villages the pub is the only place left for local people to gather, meet and socialise. According to the Campaign for Real Ale, we have lost or are at risk of losing 609 pubs since January this year, and 60 of those are definitely lost forever because they have been demolished or converted.

My village of Reach nearly lost its pub back in 1999. The villagers bought it, and it is now run as a fully commercial business on a long lease, with the freehold belonging to the parish council. It sits at one end of Devil’s Dyke, so it has been renamed the Dyke’s End. It remains a very successful and popular pub.

I regularly meet my publican network and the local CAMRA group, and they tell me about what pubs do to support community events and social interaction, combat loneliness and help with mental health, as well as providing young people with their first job and training them in communication and hospitality skills. But they are really struggling financially. National insurance, business rates and energy costs come up over and over again, which is why the Lib Dems are calling for a 5% cut on VAT for pubs, action to reduce their energy costs and the replacement of business rates.

All of our communities and publicans deserve better support, but I would like to highlight two in my constituency. The Carpenters Arms in Soham was voted CAMRA’s rural pub of the year in 2024. It has an amazing array of real ales, a beautiful garden out the back and community events. It is a real part of that market town in my constituency. More recently, the Black Horse in Rampton has been voted CAMRA’s East Anglia cider pub of the year 2026. It has a whole wall full of different ciders. Hon. Members would have to visit regularly to try them all. One of them is Foxhay cider, which is made in Rampton using local apples, so the pub supports small local businesses as well.

As we have heard, these small, rural pubs are also supporting the wonderful micro and small breweries, which need people who can take small amounts and get through it quickly before it goes off, as it has a shorter life than commercial beers.

Our pubs really are the hubs of our communities, but if we continue to over tax them, we will continue to lose them, with all the impact that will have on our local communities. Will the Minister commit to asking the Government to reduce those taxes and allow our pubs to thrive?

It is a pleasure to serve under your chairship, Mrs Hobhouse. I thank the hon. Member for Meriden and Solihull East (Saqib Bhatti) for securing this debate.

The Lamb Inn in Iron Acton was built in 1690. It is believed that Mary and William of Orange stayed there. It is a real community pub that has been run by Tracey and Brendan Byrne for the last 20 years, but the Byrnes tell me they have a long list of burdens bearing down on them, including employer national insurance contributions, business rates, VAT and alcohol duty, all of which are under the direct control of this Government.

That is the reality facing rural pubs across Thornbury and Yate, and indeed the country. These are not simply places to drink; they are community anchors, spaces for the lonely, meeting points for neighbours and outlets for local breweries and farmers. Pubs in villages and hamlets without the footfall that town centre pubs enjoy, which often have higher energy costs, cannot absorb pressure the way larger operators might. When they close, nothing replaces them—the loss is permanent.

Greg and James at the Swan at Nibley have also been hit by National Highways closing a road for three years. They are looking forward to trade improving from this weekend, when the closure ends, but they say that a cut in VAT for hospitality would make a big difference to them and all pubs in our area.

The employer national insurance rises have forced publicans to make brutal choices about staffing. Those hit hardest are young people looking for their first job—the kind of formative, confidence building experience that hospitality provides. Previously, pubs were able to employ 10 to 15 young people, working a few hours a week; now they struggle to employ three. That is a dozen NEETs for every pub lost, in more than one way.

My hon. Friend is making an excellent speech. She is right to highlight the number of NEETs in this country. We probably should not call them NEETs, because so many of them are trying to find employment, education or training. They want to cut their teeth on the opportunities that hospitality venues such as rural pubs provide. Does she agree that, if we can take some pressure off those rural pubs, they will be more than willing, ready and able to bring young people into their businesses, to give them the skills to go on and do other things? Right now, with the pressure that they face from all angles, the owners end up doing all the work themselves.

I agree. The Swan has been taking on apprentices, but many pubs are unable to do so because of the challenges. There is often a lack of opportunities in our villages and, with transport issues, it can be difficult to travel to places where they can be found.

On business rates, Liberal Democrats have consistently called for a fair and more proportionate system. The Government’s partial climbdown—a 15% reduction on a planned hike, after sustained pressure from the House—was welcome but it went nowhere near far enough.

Like my hon. Friend’s constituency, mine has beautiful countryside pubs but they are struggling. Pub owners have told me that this year is worse than the covid years. They face closure, despite being the only place for communities to meet in rural areas, as in many others. Does my hon. Friend agree that we must overhaul the entire business rate system to give pubs the support they need to thrive, not just barely survive?

I absolutely agree. I could also highlight many other anomalies that affect the wider hospitality and attraction industry.

At the Horseshoe in Chipping Sodbury, I met Matthew Lewis of the Independent Pub Alliance. The ask from the pub trade is not complicated: stability, fairness and a Government who understand that these businesses are part of the community infrastructure. I urge the Minister to meet the alliance to better understand its ask, and I would be delighted to bring Matthew to meet him. My constituents value their rural pubs, as do I and my party. Will the Government show that they do, too?

It is a pleasure to serve under your chairship, Mrs Hobhouse. I thank the hon. Member for Meriden and Solihull East (Saqib Bhatti) for securing this valuable debate.

Rural pubs and breweries across the country are suffering under an excessive tax burden that is stifling investment and employment opportunities. Melksham and Devizes is home to Wadworth, a fantastic local company, which has been brewing beer in Devizes since 1875. In a recent meeting with Toby, Wadworth’s managing director, the severity of the financial situation facing the hospitality industry was made clear. The reduction of the threshold for employer national insurance contributions will cost £750,000 a year across the business, which includes 129 tenanted pubs.

Yesterday, my team spoke to the landlady of one such pub, Sarah of the Three Magpies in Seend, who said that, because of the increase in the minimum wage, rising national insurance contributions and higher training costs, she had to cut back on the number of local youngsters that the pub employs during the busy summer season. To put that in perspective, last year there were 20 members of staff at the Three Magpies over the summer; this year there will be just nine. That is 11 young people missing out on an invaluable opportunity to gain the skills, knowledge and experience to set them up for future careers.

We all saw the Milburn review’s stark warning that one in six young people could be classed as NEET within five years if no action is taken. We urgently need to review the impact of the burden on the hospitality industry on youth employment and ensure that we are not taxing future generations out of employment opportunities.

In addition to the national insurance challenges, UK alcohol duties are the second highest in Europe, pushing up prices for consumers and reducing profit margins for landlords. The Treasury’s current trajectory will suffocate Britain’s proud pub culture, with more choosing to purchase alcohol from the supermarket and drink it at home. That poses increased health risks, because at home consumption lacks the natural boundaries of a pub setting.

At a time when the cost of utilities has skyrocketed, the Government should surely be doing far more to support the UK hospitality industry, not adding to its woes. Both Toby and Sarah told us that one of the simplest ways to support our pubs would be a VAT reduction for the industry. It would free up capital to invest in either new staff or the business itself. Similarly, duty on alcohol should be reviewed, with the duty paid on a UK pint amounting to 10 times the amount paid in Germany.

We have to recognise the important role that rural pubs play. Socially, they are the beating heart of villages and help to regulate consumption, keeping evenings merry. Economically, they can be engines of growth for rural communities, providing a springboard into employment for many young people and investing in the local area. It is time the Treasury recognised that fact and significantly increased its offering of support to ensure that we can all continue to enjoy a pint down the local.

How about that for timekeeping? I thank every Member for staying so disciplined within the time limit.

It is a pleasure to serve under your chairship, Mrs Hobhouse.

I thank the hon. Member for Meriden and Solihull East (Saqib Bhatti) for securing this important debate and I thank all my colleagues who gave such excellent speeches, which set out not only how much they love their pubs, but the struggles that they face. That is the important thing. I do not want to talk about how much those pubs matter to our communities or how much fun I have had in pubs over the years, because the thing that we must focus on is the big screaming problem. We need to take it seriously. Warm words go only so far right now. We have a huge problem that is hitting pubs every day, and we have to do something about it.

I will set out how big the problem is. In the first half of last year, more than 200 pubs closed in six months. That is eight a week. A year on, things are even worse. The British Beer and Pub Association said that 161 pubs closed in the first three months of this year alone in England, Scotland and Wales. That is about 2,400 jobs. Those in rural and coastal constituencies have been among the hardest hit, and according to UKHospitality, running costs for pubs have risen by an estimated 43% since 2019. One third of hospitality businesses are operating at a loss, six in 10 have cut jobs and 63% have reduced staff hours. That is bad.

Anyone knows that pubs are much more expensive than they used to be. That is hurting customers, as fewer people can afford an evening out. When a plate of fish and chips costs 15 quid, that is hardly surprising. It is obviously not because pubs are raking it in. Sadly, quite the opposite is true. Pubs are facing many of the same pressures that are hammering small local businesses across the board: spiralling food prices, high rents, sharp business rate increases, soaring energy bills, increased employer national insurance contributions and rising wages. As an entrepreneur who spent 24 years building a business, the overall situation scares the daylights out of me. I am not envious of them in that position.

I am grateful to Nick at the Old Crown in Faringdon and Tommy and Mike at the Three Horseshoes in Witney, who sat me down and talked through just how tough it is to run these businesses. The Minister is smiling at me because he is a Witney boy, so he understands.

I have spent some time in the Three Horseshoes!

Well, there you are. It is a wonderful pub, and we need to keep it open.

This is all doubly tough for rural pubs. City pubs have a much larger catchment of potential customers who are within walking distance and not car dependent, which matters with drink driving. Rural pubs are likely to rely on oil, liquefied petroleum gas or electric heating rather than the gas grid, and they have a small labour pool from which to hire. On top of all those hurdles, pubs in the countryside are much more significant to their communities, as they are typically the only pub in the village and a key hub in village life, as so many Members have pointed out.

In west Oxfordshire and the Vale of White Horse, we have fought really hard to enforce making pubs assets of community value, so that everyone understands that they cannot make a quick buck from buying a pub, turning it into a house and selling it—the cost to the community is far too great. But being a community asset alone does not pay the bills. We have to make those pubs into survivable businesses.

The changes announced in last year’s autumn Budget—the business rates revaluation and the removal of reductions that dated from the covid pandemic—led to extreme distress for publicans. While I recognise that the Government have subsequently acknowledged the crisis facing Britain’s pubs, the package of support that they announced at the start of the year, including the 15% cut to pubs’ business rates bills from April and a two year real terms freeze, was only a partial U turn, and it will still leave many pubs facing a business rates increase on top of the other cost pressures that I have listed.

From April 2026, the Horse and Groom in East Ashling in my constituency saw its business rates rise from £11,000 a year to £32,000 a year. That is an additional £22,000 that it has to find out of nowhere. It is a rural business and it is busy—when someone visits the pub, it is full, thriving and buzzing—but ironically, it does not matter if more people come through the door, because the money is leaving just as quickly due to all the additional costs. Does my hon. Friend agree that that is why those businesses need the Government to step in and support them? It is not about being busy. These are not failing businesses; they are thriving businesses that cannot make the books add up at the moment.

I thank my hon. Friend for that point. Business rates feel so unjust—so arbitrary and out of control, and appeals are virtually impossible. We all beg the Minister to put doing something about that at the top of his list, because they are so grossly unfair and really rip the heart out of running a business.

We need to pick those problems apart and work out what can be done. As announced just an hour ago by our mighty Lib Dem leader, my right hon. Friend the Member for Kingston and Surbiton (Ed Davey), getting back inside the EU’s single market would help in a number of ways. Food costs would go down if we were back inside the single market, both in pubs and on supermarket shelves. That matters: it would allow food to be sold for less, making pubs more affordable and getting more people through the door. It would also help with recruitment, as we would not need to spend thousands and waste months on visas for key staff, many of whom are from outside the UK.

Being back inside the European single market for electricity would reduce energy bills, because we would be able to buy and sell electricity when the UK or the EU had surplus energy. I am not pretending that the move would solve everything, but those outcomes would materially help. However, there are plenty more problems that we would still need to deal with.

Does the hon. Gentlemen recognise that if the level of alcohol duty is one of the big obstacles facing rural pubs, what we need to be able to do is widen the differential in the duty rates paid on beer sold on draught in pubs or licensed premises compared with bottles and cans drunk at home alone? That would be impossible if we rejoined the European Union. [Interruption.]

As my hon. Friend the Member for Lewes (James MacCleary) points out from a sedentary position, I am not suggesting that we rejoin the European Union.

Employer national insurance contributions are the single biggest nightmare. It is a tax before getting out of bed, before generating any revenue and before making any profit. It is a huge mistake by Labour, and a direct result of Labour Members straitjacketing themselves into foolish promises about not touching any of the big three taxes. It needs to be unwound.

Equally, we have strongly opposed the Government’s changes to employer NICs at every opportunity, and we have called on them to reverse the tax rise in full. We are also calling for a consultation on a new NICs band of £5,000 to £9,100, with a lower rate to better support part time workers, on whom the hospitality industry heavily relies. I have already covered business rates, so I will not go into them further.

On energy costs, the crisis in Iran has obviously made many costs, not least fuel prices, worse rather than better in the last few months. That is causing enormous pain. We would remove the main renewables levy from household energy bills, putting £270 back into people’s pockets over 18 months. That would be funded by a new windfall tax on big commercial banks, targeting the windfall interest payments they receive from the quantitative easing related reserves they hold at the Bank of England.

At the weekend, I visited an excellent rural pub in my constituency—the Olive Tree in Sutton Green—and met the owner, Nigel, and his staff. They are doing a great job running a pub in very difficult times. Does my hon. Friend agree that, if the Government want to reset their relationship with rural pubs and help them, they should consider cutting beer duty or increasing the draught discount?

Absolutely.

I will finish by saying that we need to look in the round at the massive cost pressures and changing consumer habits, from lower footfall to falling discretionary spending power, which combine to put pressure on pubs. A one off package of business rates support is one thing, but we need to get back into the single market, fix NICs, reform business rates properly, fix energy costs and give pubs and hospitality a 5% VAT break. If we do not do those things, pubs in my constituency—the land of your birth, Minister —will keep going bust. We want to avoid that.

I am grateful to my hon. Friend the Member for Meriden and Solihull East (Saqib Bhatti) for securing this timely and important debate. I will certainly take him up on that pub crawl offer in the recess. It is fitting that this debate takes place on the day of the British Beer and Pub Association’s annual reception, when we will have the opportunity to speak directly to people in the sector and, of course, about the small matter of the England game later.

The BBPA has set out the challenges. For every £3 spent in a pub, £1 goes straight to the Exchequer. As hon. Members have said, rural pubs are at the heart of our villages as community hubs and gathering places. They play an important role in charity, as my hon. Friend the Member for South West Hertfordshire (Mr Mohindra) set out. That is certainly the case in my constituency, where more than 5,000 jobs are supported by the pubs and hospitality sector. Sadly, thanks to the Chancellor’s choices, rural pubs face ever growing pressures. When there are economic headwinds, although some are obviously beyond the Government’s control, the Government should act where they can to support our pubs.

That is what the previous Government did when we introduced a new strength based duty system, including two new reliefs: draught beer duty relief, for which my hon. Friend the Member for Kingswinford and South Staffordshire (Mike Wood) campaigned avidly, and small producer relief. Our support went further. We froze alcohol duty rates in 2023, which we extended in 2024. We also provided a 75% business rates relief scheme for pubs and hospitality businesses, which was a lifeline for thousands of rural pubs that would otherwise have faced higher bills they could not meet.

That record stands in stark contrast to this Government’s. Since the Chancellor’s first Budget in 2024, the Government have added layer upon layer of costs to a sector that operates on tight margins, where a single bad month can put a rural pub out of business. One of the Chancellor’s first decisions on business rates was to halve that 75% relief, increasing the average pub’s business rates bill from £4,000 to £9,500.

Next came the removal of the 40% relief, and then the revaluation. Some pubs are now seeing their rateable value double or triple, with the BBPA warning that 5,000 of the smallest pubs are now facing business rates for the first time. What was the Government’s response? A partial U turn of a 15% relief after a significant backlash. However, only 6% of hospitality and leisure businesses will benefit, and even then, the average pub will see its rates increase by £5,300 under Labour.

Our commitment is different. The Conservatives would scrap business rates entirely for pubs up to the £110,000 cap, benefiting 250,000 businesses overall. Our cheap energy plan would reduce costs, particularly for rural pubs, and we would not proceed with the regulatory costs in the unemployment Bill, which the Government seem so keen on. Does the Minister really believe that a 15% reduction on a hike is sufficient to help these rural pubs?

Sadly, business rates are only the start. The Government also cut the employer national insurance threshold to £5,000 and hiked the rate to 15%. I know from conversations with landlords in small rural pubs employing four or five people that the extra cost is not a rounding error; it means fewer people employed in those pubs. In February, alcohol duty was increased by the retail prices index—a £400 million cost to the sector, passed on to consumers—which the chief executive of UKHospitality said would be the final straw for some pubs.

Then there is extended producer responsibility. The BBPA has warned that the pub sector will face a hit of about £50 million because glass bottles sold in venues will be considered household waste, even though pubs already pay to have their waste commercially recycled. What is the Minister’s response to that double charging and to the rules that do not reflect how glass bottles in pubs are collected by the vast majority of premises? Taken together, those additional costs create the cumulative impact that my right hon. Friend the Member for Salisbury (John Glen) referred to, which is what matters.

Rural communities feel pub closures differently. A pub closing in a city can be replaced by one around the corner, but when a pub closes in a Norfolk village, it can be lost forever. I am grateful that the Rose and Crown in Harpley, which closed, has been reopened, but that is one positive story. There are other, less positive ones: in the first quarter of this year, 161 pubs closed—a 26% increase on the year before—and we are now on track for 500 pubs to close in the rest of this year.

A survey of 20,000 hospitality businesses—the people taking the risks; the people employing other people—tells a story: 64% plan to cut jobs and 42% will reduce their trading hours. UKHospitality and the BBPA said it together: “Hospitality’s tax burden….is suffocating the sector…more lost jobs, less investment and business closures.”

Who is paying the heaviest price? It is young people. Youth unemployment is now at 16%. For generations, a job at the local was their first job—the first foot on the ladder.

As Conservatives, we want to see those opportunities given to young people who are out of work, instead of us rejoining the single market and importing people to come and take those jobs. The Government are kicking that ladder away. National insurance hikes, business rates hikes, duty rises, EPR fees, above inflation wage rises and a potential lowering of the drink drive limit, which particularly affects rural pubs—I could go on. With this Buckaroo effect, the Government are presiding over the accelerated loss of a British institution, which is felt particularly acutely in our rural communities.

As a first step, I urge the Minister to join the all party parliamentary beer group—he will get the same fine tie that I am wearing if he does—where he will hear about these concerns. He will hear how rising costs mean that a third of venues are running at a loss and how the Government need to change course. When we were in government, we proved that targeted support works. Rather than load on more costs, the Government should support pubs with the decisive fiscal relief that the Conservatives have committed to.

Before I call the Minister, I remind him to leave a couple of minutes at the end for the Member in charge to wind up.

It is a pleasure to speak under your chairship, Mrs Hobhouse. It is some of the most impressive I have seen in Westminster Hall, as you managed to keep this unruly lot to time. I am grateful to the hon. Member for Meriden and Solihull East (Saqib Bhatti) for securing this debate and for his contribution on the importance of rural pubs.

I represent an urban seat here in London—it is at about midday on the clock from central London—but it has a plentiful supply of green belt, and I have 12 farms in my constituency, even though it is within Greater London. So I have some understanding of the situation for rural communities. I also grew up in the constituency of the hon. Member for Witney (Charlie Maynard), as was mentioned earlier. I spend every Christmas eve doing carols at the Three Horseshoes, so the owners have to look out for me this year. It is a fantastic pub. We want to make sure that pubs like that, and pubs in all the constituencies mentioned today, have the support they need.

I thank my hon. Friend the Member for Redditch (Chris Bloore) for mentioning the pubs in his constituency, including the Golden Cross—I hope that England can get a golden cross in this evening and that we can score some goals. [Interruption.] Thank you, one and all. I thank all Members for their contributions and for sharing the stories of the businesses in their constituencies. Pubs are so important to so many communities, particularly rural communities. The Government have rural rates relief for pubs that are the only pub in villages with populations of 3,000 or less. There are a couple of thousand businesses across the country that make use of the rural rate relief scheme, which covers shops as well. I encourage all Members to make sure that local businesses are aware of that scheme, which was also in place under the previous Government. I know that it is welcomed by those businesses that use it.

I will deal with the topics that were raised in turn. We are reforming the business rates system and have implemented permanently lower multipliers for eligible retail, hospitality and leisure properties, such as pubs. That is funded by a high value multiplier on the 1% of the most expensive properties, which includes large distribution warehouses used by online giants. That change will mean that the tax rate paid by the smallest businesses on the high street will have a wedge of a third compared with the tax rate paid by the online giants. That is a permanent change, not a temporary relief that will jump up and down. Those changes are worth nearly £1 billion a year for the 750,000 retail, hospitality and leisure businesses that are the lifeblood of our high streets.

Members, particularly Liberal Democrats, talked about the need for a significant change to the way that pubs are valued. As I mentioned, this Government are the first in a very long time to commission an independent review of how pubs and hotels are valued for business rates purposes. In the weeks after the Budget, we heard very clearly from businesses that they had concerns about the opaqueness of the methodology. Some who spoke about business rates for pubs mentioned the feeling of running to stand still, which Members mentioned: their turnover goes up, but then their business rates bill goes up, too. We have been clear that, as was set out in law in the 1980s, it is right for business rates to reflect rents, and we will not separate out pubs entirely. The question is: how can we best value pubs and communicate their value through the Valuation Office Agency to individual ratepayers?

I am sure that one of the messages the Minister will have heard from pub owners is that the unique way that pubs are valued for business rates—through an assessment of their fair maintainable trade—means that if they invest in their own business, one of the first things that happens is they face a higher bill, long before they have started to repay the money that they invested. Will the Minister consider addressing that with a business rates holiday to provide space for businesses to recoup some of their investment before it is taken off them in business rates?

I love an intervention like that one. We are looking at exactly that. Last year, in a call for evidence on how we can improve the business rate system to support investment, we set out that we would look at improvement relief. At the moment, it does give a relief if a business invests, but only for a short time. That is under active review as a result of the call for evidence, where we heard that businesses were interested in the extent to which changes to improvement relief could support them and their investment decisions. I would happily receive further representations on that from Members.

Further to the comments from the hon. Member for Kingswinford and South Staffordshire (Mike Wood), the Minister will be aware of the way in which the pub industry is dominated by major pub companies, which often own tied pubs. That has a major bearing on the leasable value of many of these properties. Many publicans in my area tell me that that drives up their rates, even though they do not have full control over that, just as they do not have full control over their purchasing. Is the Minister working with the Department for Business and Trade to review that, and is he talking to the Competition and Markets Authority to review whether the pubco structure in our country is fit for purpose?

I thank the hon. Member for raising that issue; it is one that publicans in my constituency have raised with me as their MP. Of course, there are benefits to having a link with a major supplier, and I understand why many publicans choose that route, but it is clear that there are significant challenges, too. DBT has looked at this, and I am sure that conversations are ongoing with the Under Secretary of State for Business and Trade, my hon. Friend the Member for Halifax (Kate Dearden), about what reforms could be made. This is not my policy brief, so I do not want to speak too far out of turn, but I totally understand the issue. I will raise it personally with my hon. Friend. I have done so in the past, after being asked to by my constituents.

On a related point, guest beers and access to the bar for guest beers in tied pubs was mentioned. DBT has met the parties involved in the beer market access review to hear their evidence directly, and it is giving due consideration to all the evidence, along with input from competition policy experts. This is under active review by the Government, and we are committed to making sure that we can have a diverse and competitive beer market. On a personal level, I hope that the Government can look really closely at this so that we can improve competition and choice, but it is being led by my hon. Friend the Member for Halifax.

As has been mentioned, in January this year we went further to support pubs, with a further 15% off their business rates bills and a real terms freeze in business rates for pubs in the next two years of this revaluation period. That support is worth £1,650 for the average pub this year. It means that three quarters of pubs are seeing their bills either fall or stay flat this year and, as a sector, pubs will pay 8% less in business rates in 2029 than before the revaluation took effect.

Moving on from business rates, the Government recognise that pubs often serve as crucial community assets, particularly in rural communities, as the hon. Member for Meriden and Solihull East and many others have mentioned. They support local economies and communities, provide spaces for gatherings, support those in need and foster a great sense of local pride.

The circumstances around VAT in Northern Ireland, and reduced VAT across the border, are peculiar and particular to us compared with other parts of the United Kingdom. Has the Minister had chance to speak to Colin Neill, the chief executive of Hospitality Ulster, to ascertain some of the things that he feels might be a way forward? If so, have there been discussions not only with him but with the relevant Minister in the Northern Ireland Executive?

I have not managed to have that conversation, but the hon. Member is very welcome to write to me, and I am happy to consider those representations. Of course, I have heard calls from Members to cut VAT for hospitality, and I am aware that there is a campaign on that matter. I just say that cutting VAT for hospitality from 20% to 10% would cost £11 billion. A range of policy ideas have been raised, all of which involve cutting tax. The right hon. Member for Salisbury (John Glen) was right to acknowledge that there are important fiscal considerations for the Government. It is important that we manage the public finances and bring down Government borrowing, and we are forecast to have the fastest reduction in Government borrowing of any G7 economy, with our deficit falling below the G7 average for the first time in a very long time. Of course, I will listen to the representations made and the asks from campaigners, but I caution that we have to ensure that we have sufficient revenue to fund our public services in a sustainable way.

The Minister will acknowledge the distinct combined effect of a whole range of Government decisions on the rural pubs sector. While I acknowledge the need for fiscal responsibility, what work has he done to look at the net effect of all Government decisions, and at why a distinct solution is needed for this particular sector?

We consider our policies in the round, on a sector by sector basis, as well as looking at measures tax by tax. The right hon. Gentleman is right that, as politicians in the Treasury, it is important for us to push the civil servants to make sure that we look not just at individual measures in silos, but at them in the round.

There are some cross cutting measures that particularly help hospitality. For example, if a hospitality business wishes to employ a young person, aged 21 or younger, as long as their wage is less than around £50,000, the business is relieved from NI. That is up to 25 years if it hires a young apprentice. Of course, the Government are always considering the impacts of their policies on sectors as a whole.

Building on what the Minister said about employment costs, we have heard about the pressures that many hospitality businesses, particularly pubs, are feeling following the reduction to the threshold on the increase of the rates. As part of the work that the Minister is undertaking to review things in the round, could he focus on the possibility of increasing the employment allowance for smaller businesses in the sector? That could be a very welcome relief for them.

Minister, please watch the time.

Thank you, Mrs Hobhouse. We continue to look at the impact of tax policies across sectors. The Chancellor and I will keep tax policy under review in the run up to the Budget later this year. Let me make a couple more points before wrapping up in sufficient time for the hon. Member for Meriden and Solihull East to conclude.

We want to make sure that we cut the stifling red tape that is holding our pubs back across the country. At the Budget, we announced the first iteration of the national licensing policy framework. That does not sound very exciting, but it is very interesting. I have been pushing colleagues across Government on it, so that we can provide more clarity in our licensing framework to give pubs that want to open in certain ways or do certain things the flexibility to do so, to support their growth and wider economic growth.

There is the world cup game tonight, and pubs across England and Wales can soon benefit from extensions to licensing hours, as we are letting pubs stay open later for home nation games in the knockout stages. It is encouraging that Scotland did well the other day; hopefully, both teams will make it through to the knockout stages.

We are also backing pavement pints, with a commitment to make it easier for pubs to serve food and drink outside by cutting unnecessary bureaucracy. At present, many businesses are forced to reapply repeatedly for pavement licences to continue serving customers outdoors. That process can cost up to £350 each time, creating an avoidable and costly burden for businesses. I hope that the reforms we have announced will bring that to an end. Finally, in January, the Chancellor announced a £10 million package of funding for hospitality support over three years, up from £1.5 million for one year announced last April.

We understand the need to make sure that we do all we can to support pubs and our hospitality sector, particularly in vital rural communities. I thank Members for their contributions, which I will take back with me to the Treasury in the weeks and, I should hope, months to come.

After this debate, we all feel very thirsty for an ice cold lemonade.

I thank Members across the House for their moving stories of charity in their local pubs, the exciting growth stories and the stories of community. The Minister has heard very loudly the deafening calls for change. Hospitality is crying out for more breathing space. He gave a bit of hope on investment relief, but the Government need to go a lot faster and further. Not doing anything is also a decision, and it will have a huge impact, because more and more pubs will go under and unemployment will continue to rise, especially youth unemployment.

We want the Minister to be successful on economic growth. That endeavour is good for us all, but we cannot tax our way to growth. I encourage him to reflect on what has been said, and to be bold and brave. Although I will not be chanting his name tonight, I hope that he will recognise how deafening the calls for change are.

Question put and agreed to. Resolved, That this House has considered the matter of fiscal support for rural pubs.