Pubs Code: Guest Beers

Motion made, and Question proposed, That this House do now adjourn.—(Martin McCluskey.)

19:16:00

In 1916, during the great war, the Government introduced the famous “Carlisle experiment.” Concern about the intoxicating effects of Carlisle’s pubs on nearby munitions production resulted in the state ownership and control of the pubs and beer trade in my constituency from 1916 to 1973. How great, Members may ask, was the concern that it warranted the nationalisation of Carlisle’s pubs and breweries, including those of my own great-grandfather? A few short miles up the road from Carlisle lay His Majesty’s Factory Gretna. Regarded as the greatest munitions factory on earth in the first world war, it was where the cordite, nicknamed the devil’s porridge, was mixed. More a town than a factory, it stretched 9 miles from Mossband in my constituency to Eastriggs in the constituency of the right hon. Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell), the same distance as between this House and Wembley stadium. At the heart of this gargantuan site were 30,000 workers who lived in two purpose-built townships. The factory and the townships had their own independent transport network, power source and water supply system, but not pubs. For that the workers had to walk into the small town of Gretna, where the number of pubs could not cope with the demand, and so they would board the train to nearby Carlisle where pubs were so plentiful that it was said that one could swing from the door of one public house to the door of the next without touching the ground. Thirsty at the end of a long shift and doubtless relieved to have survived another day mixing cordite, evening-shift workers would often bribe the train driver to ensure they would arrive early enough to get the drinks in before closing time. Meanwhile, in anticipation of their arrival the barman of Boustead’s bar near Carlisle station would line up 500 shots of whisky. Drunkenness ensued. With the landlords away fighting for King and country, the elderly and the widowed who were left running the pubs, along with a depleted local police force, were powerless to control the drinking. The result was a fourfold increase in alcohol-related offences in the city, high numbers of absenteeism and low levels of production at the Gretna factory. The scale of the problem was so severe that it was thought to be the major contributing factor in the shortage of shells on the frontline. Something had to be done. The Munitions of War Act 1915 had given the newly formed Ministry of Munitions additional powers over factories and factory workers. A central control board was established with the power to control the sale and consumption of alcohol in areas, such as Carlisle, where the excessive consumption of alcohol was believed to be having an adverse impact on the war effort. With the Munitions Minister David Lloyd George already having declared drink to be the greatest deadly foe that Britain faced, Carlisle’s pubs and breweries were nationalised in June 1916. Some 138 out of 321 licensed premises were closed, with the remainder remodelled or rebuilt. The first state management pub, the Gretna Tavern, opened just a month later in July 1916. Members might be interested to know that the very last state management pub, the Border Reiver, opened in July 1971, just four days before the Licensing (Abolition of State Management) Act was passed. For almost 60 years, all of Carlisle’s public houses were completely tied to the state-run brewery in Carlisle. The beer was brewed at a reduced level of alcohol, its advertising was tightly controlled and specified by Whitehall, and the architectural design, both external and internal, was overseen by a state-appointed architect. Consumer choice, it is fair to say, was severely limited. Following privatisation, the pubs were sold in large job lots and snapped up by the major breweries of the day, meaning that even to this day the majority of our pubs in Carlisle are owned by large pub-owning businesses where the beer supply is tied to them. Today, pub landlords continue to face restrictions on what they can buy, sell or serve, meaning that they cannot always provide what their customers demand. For the small local independent breweries—including Great Corby, the Carlisle Brewing Company, West Walls Brewing Co. and the Old Vicarage brewery in my constituency—getting their locally produced beers sold in a local pub remains a challenge.

I will give way first to my hon. Friend.

I, too, have brilliant independent breweries in my constituency, such as Renegade and Double-Barrelled. They make a huge contribution to our local economy and, importantly, make a great pint. Will my hon. Friend join me in welcoming the Government’s determination to improve access to the market for independent brewers and to get great local beers into our pubs?

I do welcome that, and I thank my hon. Friend for her intervention.

I commend the hon. Lady for bringing forward this debate. I spoke to her beforehand to ascertain what she was trying to achieve. Strangford has had a resurgence of alcohol production, including the microbrewer Ards Brewing Company, just a few minutes away from me on the Carrowdore Road in Greyabbey. It is a necessity that small brewers can sell in their local pub, and I believe it was a mistake not to allow exemptions for smaller breweries. I support the calls to allow these exceptions. Does she not agree that we must do what we can to let the wonderful craft breweries have a shot in the local market?

I agree with the hon. Gentleman. I have visited and spoken to brewers in my constituency, and they tell me that they just want the chance to compete on a fair basis.

The Society of Independent Brewers shows that 75% of beer drinkers believe it important that pubs offer a range of craft beers from small breweries, such as Glastonbury Ales and Fine Tuned Brewery in my constituency. Does the hon. Member agree that small breweries should be included in the new lower hospitality rate, so that they no longer need to pay 40 times more a pint in business rates than large breweries?

I thank the hon. Member for that intervention. I will come later in my speech to other points that the Society of Independent Brewers and Associates is campaigning on. I will make a little more progress. Recently in Cumbria, the Carlsberg Marston’s Brewing Company closed Cumbria’s principal brewery, Jennings in Cockermouth, and brought to an end 200 years of local brewing. The need to create opportunities for local breweries to sell their local beer to local drinkers in Carlisle is, therefore, more pressing than ever.

I thank my hon. Friend for securing this important debate. I have two fantastic breweries in my constituency—Tractor Shed and Ennerdale Brewery—which are not that far from Carlisle, despite the state of some of the roads and rail. Would it not be fantastic if more Cumbrian breweries found a route to Cumbrian pubs for their fantastic beer?

I agree with my hon. Friend. From March next year, pub tenants just 700 yards from my constituency will be able to open up a direct relationship with local breweries such as those that my hon. Friend referred to and have beer from small independent breweries served to their customers. The Scottish pubs code, championed by the Labour MSP for West Scotland, who brought it forward as a Member’s Bill, is due to be introduced in 2025. It is similar in many respects to our own pubs code, which governs England and Wales, but for one crucial element. In regulating the relationship between tied pub landlords and tenants, it aims to promote fairness and equitable treatment within tied pub lease agreements. It also allows Scottish pub tenants to enter into a guest beer agreement whereby the tenant can sell at least one beer in any format—including cask and keg —chosen by them at a price they determine. They can change that as frequently as they wish. The beer must be of a brand where less than 5,000 hectolitres—I am reliably told that is about 875,000 pints—was produced in the previous production year. That means that it is beer from small local breweries that qualifies and not that from the larger breweries. That will empower tenants, allowing them to respond to their customers’ requests, and support small local breweries. Introducing a guest beer agreement in the rest of the UK could be worth £28 million to local breweries. It would widen consumer choice, help landlords and support small local businesses, so I am delighted that the Chancellor and Ministers have been watching developments in Scotland closely and promised in the Budget last month a consultation on ways to encourage small breweries to retain and expand their access to UK pubs. The consultation provides an opportunity to maximise consumer choice and support local businesses by enabling more guest beers. It is an important development, and it shows that the Government want local community businesses to have the opportunity to compete, grow and expand. As we have heard, 78% of the beer sold in our pubs comes from just five global brewing companies. In comparison, our 1,700 small breweries represent only about 6% of the market. That needs to be urgently reviewed to ensure that there is a level playing field where small businesses can compete fully. On that point, I congratulate the Society of Independent Brewers and Associates on the launch of its new “indie beer” campaign, which seeks to make it easier for beer drinkers to identify beer from independent breweries in pubs, bars and shops as demand for local beer rises across the UK. Research shows that most beer drinkers are unaware that the mass-marketed craft beer brands that we see in our pubs across the UK are in fact owned by global brewers. A good example of that from my own county is Wainwright beer. Inspired by the chronicler of our famous Cumbrian fells, the name Wainwright is synonymous with the county of Cumbria, and that leads many visitors to believe that they are sampling a locally brewed beer when they come to Cumbria; in fact, it is just one of a range of beers produced by the global beer company Carlsberg. The majority of beer consumers say that they want to buy beer from genuinely independent local breweries. I believe that SIBA’s campaign will help many more do just that. These issues are wider than just the tenanted pub market, with small breweries facing restrictions in the leased, managed and free house pub markets as well. Perversely, many free houses are not free at all when it comes to beer. Sole supply contracts with global breweries are prevalent, restricting and determining what beers can be sold. Increasingly, these global breweries are also using proprietary equipment in pubs, which prevents a local brewery from even being able to connect their casks to the pub and offer their products to the landlord at all. Publicans, brewers and beer consumers in my constituency hope that the Minister will be able to start the consultation process as soon as possible. I wonder whether the Minister may be able to offer some clarity on when that might commence, so that all interested parties can have the opportunity to provide their insights and experiences. It would also be appreciated if he could confirm that this will include issues experienced right across the UK, including in England, Wales, Scotland and Northern Ireland. Will it also look at the whole pub market, including tenanted, leased, managed and free houses? Will it include both keg and cask draught beer, which is predominately sold in our pubs? Finally, will the Minister look closely at the Scottish guest beer agreement to see whether its provisions could be included in our own pubs code for England and Wales, perhaps as part of the statutory review of the pubs code, which I understand is due next year? Should the Minister ever find time in his busy diary, I would like to invite him to visit my constituency to meet some of my local breweries and to join me for a drink—albeit not a locally brewed one—in the Border Reiver, the last pub in Britain to have been designed, funded and built by the UK Government.

Before I call the Minister, I have been updated on the recent wedding this weekend of the hon. Member for Inverclyde and Renfrewshire West (Martin McCluskey). I congratulate him, and I understand that his husband Ben has been waiting quite some time to see his new husband. That is some pressure for the Minister.

19:31:00

May I start by extending my own congratulations? I also congratulate my hon. Friend the Member for Carlisle (Ms Minns) on securing this debate and on a very engaging and well-informed speech. It took us through an interesting period in her constituency’s history. I was unaware of the nationalisation of pubs in Carlisle. If that is a suggestion that she wishes to put forward for our next manifesto, she will be aware of the policy-making processes and how to do that. Unfortunately, at this stage I cannot confirm that we have any plans to nationalise pubs—that probably will not come as a surprise to anyone. Before I go on to address my hon. Friend’s points, I will say a little more about the industry more generally, because it plays a critical role in supporting local communities in every corner of the UK. The interest that we have had in this debate shows how important pubs are. They are not just any other local business; they are a part of our history, culture and heritage, and they are a huge employer. The wider hospitality sector employs around 2.2 million people.

The Minister is making a very important point, because whether it is the Carlisle Brewing Company in the hon. Lady’s constituency or Kinver Brewery in mine, our family breweries play an important role in providing that diversity of product and high-quality beer that is particular to our local communities. Does the Minister recognise the devastating impact of the Chancellor’s changes to business property relief in the Budget on the future of so many family breweries across the country?

I will go on to some of the very positive things that were announced in the Budget to help breweries and small businesses in particular. There are about 154,000 businesses in the hospitality sector, generating revenues of around £52 billion per annum. They create vibrancy in communities, support wider social objectives, provide accessible jobs, support community cohesion, and provide welcoming spaces for those who feel isolated and want to enjoy the company of others. It is an important fact that over 80% of the beer consumed in the UK is brewed here—not in the Palace of Westminster, but in the UK—while UK brewers also export over 1 billion pints of beer annually to over 100 countries, according to the British Beer and Pub Association.

I thank the Minister for giving way, and I thank my constituency neighbour, my hon. Friend the Member for Carlisle (Ms Minns), for securing the debate. Although we might not be brewing beer in this place, we do consume some of it. In the spirit of shameless plugs that we have all participated in this evening, I would like to point out that my local brewery, the Keswick Brewing Company, is serving Keswick Gold down in the Strangers Bar. If it is slightly easier than travelling up to Cumbria, I wonder if the Minister would like to join us for a pint at some point.

I absolutely do thank my hon. Friend for that intervention. He has obviously heard that I am quite easily tempted into Strangers. It is a very important part of the facilities that the Strangers Bar offers Members the opportunity to serve guest beers. It is a great opportunity to plug great local businesses. Small independent brewers often reflect their local area in their products, from locally sourced ingredients to their marketing, branding and style. The resurgence in brewing in the UK over the last decade has strengthened awareness among the general public of local beers, whether it is the new-style craft beers or independent breweries resurrecting well-loved local beers that had been lost in the consolidation of larger breweries.

The Minister is quite right about the importance of local brewers. Stoke-on-Trent’s own Titanic Brewery serves a wonderful pint of plum porter in Strangers now and again. It is not just about the products they sell, although if they were able to access guest beer lines they could grow their business and create more jobs; it is also about the story they tell about the history of who we are. Titanic is so-called because Captain John Smith was from Stoke-on-Trent. That is often missed in our cultural storytelling: breweries are doing a great job of exporting who we are and what we are around the country and around the world.

I thank my hon. Friend for his intervention. That is a really important point. It is an essential part of our culture and a real selling point for us around the world. When people come here, they want to visit a traditional English or British pub, and we have a different style in every part of the country. The point made earlier by my hon. Friend the Member for Carlisle about some of the larger breweries now mimicking the local brands is an interesting development, which shows that imitation is the best form of flattery. More generally, we know there are challenges for the hospitality sector, which is still struggling to recover from the pandemic. The subsequent cost of living crisis has compounded the challenge for pubs, increasing costs and the ability of businesses to repay debts. This is an ongoing struggle. Our system of business rates is particularly unfair on high street businesses. It disincentivises investment, creates uncertainty and places an undue burden on our high streets. That is why the Government are undertaking a review of the business rates system, to ensure that all businesses are paying their fair share, recognising and addressing the fact that high street businesses, including pubs, have shouldered the majority of the burden for far too long. In her Budget, the Chancellor announced that the Government are freezing the small businesses multiplier for 2025-26 to protect small properties from inflationary bill increases, and that retail, hospitality and leisure businesses will receive 40% relief worth up to £110,000 per business. This support package alone is worth over £2.2 billion over five years. It was also announced in the Budget that the Government would reduce the alcohol duty on draft products. This will reduce businesses’ total duty bill by up to £100 million a year and increase the duty differential between draft and non-draft products from 9.2% to 13.9%, so that a pint in the pub attracts less duty than the beer in the supermarket. The Government will also increase the cash discount provided to small brewers and producers for non-draught products and maintain the current cash discount provided to small producers for draught products. This in effect increases the relative value of small producer relief for both draught and non-draught products. Jobs, too, lie at the heart of our plans, backed by the Employment Rights Bill, which had its Second Reading earlier this month, and local growth plans will be a cornerstone of the place-based approach. We have heard already about the importance of pubs in the local economy. Turning more specifically to the guest beers consultation announced in the Budget, the Chancellor said that the Government will consult on ways to ensure that small brewers can retain and expand their access to UK pubs and maximise drinkers’ choices, including through provisions to enable more guest beers. At this point, let me echo the support for the work done by the Society of Independent Brewers and Associates and the Campaign for Real Ale in championing beer drinkers’ choice and pursuing the case for more independently produced beer in pubs. We will work closely with both those organisations, but also with the wider hospitality sector, to identify barriers to market access for small brewers and how they might be addressed. I want to ensure that we have a clear understanding of the current position, and of what interventions may be necessary and the impact of those interventions. We want to find the right solutions to help small brewers gain access to the market, but to do that we will need to understand all the issues and ensure that any interventions are proportionate, that they address the problems, and that they do not result in unintended consequences. For instance, we will want to develop a good understanding of the extent to which tied tenants use existing flexibilities, by, for example, buying beer from small brewers through their pub companies on payment of a tied release fee. We will want to understand whether managed and retail pub chains could or do offer local beers, to understand the scope for increasing the provision of local beers in other licensed premises such as restaurants and hotels; and to understand the barriers preventing local brewers from gaining access to more pubs, and the reasons for those barriers. There are a range of issues that we will want to consider as part of the consultation. I can respond to my hon. Friend’s questions about what we would consider by saying that we are ruling nothing out at this stage, and that we intend to take a holistic view of the sector. The next statutory review of the pubs code is due to take place next year, but it is only one part of the picture, as it applies to only about a fifth of all pubs in England and Wales. As has been mentioned, there is to be an interesting development in Scotland, whose pubs code will include a guest beer provision. That does not necessarily mean that the provision will automatically be transported to England and Wales, but it also does not mean that we would not be interested to see how it pans out—although, as it will not be introduced until March 2025 at the earliest, we will need a bit of time to understand how it works. We will be able to consider that as part of the consultation, and we will, of course, consult formally on all the options available to us to increase small brewers’ access to the market. It is important for us to get a handle on the complexities of the market before we undertake the consultation. We will work with SIBA and CAMRA and will engage with a range of stakeholders in the pubs and wider hospitality sectors before consulting on options. In response to the questions about when this will happen, I can say that we will try to get on with it as soon as we can, but we do want to undertake that work before launching the formal consultation. We understand the points that have been made and the good intentions behind the suggestions that we have heard, but we want to ensure that this works for the industry as a whole. Let me end by thanking my hon. Friend for initiating her first Adjournment debate. I look forward to working with her on these issues in the coming months, and I will certainly be taking up her offer of a drink—although, owing to diary constraints, I will probably do so on premises closer to the Chamber than to her constituency. Question put and agreed to.

19:43:00