I recognise the crucial role that pubs play in the social and economic life of our community here in Cheltenham, and the devastating impact of COVID-19 on pubs, clubs, brewers, and cider makers.
The closure of pubs has been difficult for our community and the Government is rightly providing significant support for hospitality businesses. It is reassuring that the Chancellor has unveiled further economic support for retail, hospitality and leisure businesses, including pubs, in light of the current lockdown restrictions. New one-off top-up grants have been announced, worth up to £9,000 per property, to help businesses through to the spring.
The new one-off grants come in addition to billions of pounds of existing business support, including grants worth up to £3,000 per month for closed businesses, and up to £2,100 per month for impacted businesses once they reopen. And for those businesses not eligible for the grants, a £594 million discretionary fund is being made available by the Government.
All of this comes as part of a package of financial support for Cheltenham that is nearing the £300m mark. The furlough scheme has been extended until April in response to new national restrictions, and to give people and businesses across the whole United Kingdom the certainty they need over what will be a difficult winter. Under the extension, the Government will pay 80 per cent of wages up to a cap of £2,500, with employers paying employer National Insurance Contributions and pension contributions only for the hours the employee does not work. Flexible furloughing will be allowed in addition to full-time furloughing.
It is also important to note that the temporary reduction of VAT to 5 per cent is being extended by a further three months to the end of March 2021. The Chancellor will also defer VAT repayments through a new scheme until March 2022. Businesses are also being given more time to access crucial loans alongside a more flexible repayment scheme for existing ones.
I should also mention that these new measures follow a robust package of support introduced since the start of the pandemic. No pub or other business in the hospitality sector will be required to pay business rates this year. The total value of the business rates waiver in Cheltenham alone is around £30m. HMRC has also made it easier to claim back the duty on any beer thrown away as a result of pub closures.
Whilst I am not in the position to pre-empt the Spring Budget, I know that all taxes, including business rates, are kept under review; and I have been reassured by my colleagues in the Treasury that they are aware of the calls for a VAT reduction on alcohol.
Turning to beer duty, in 2013, the Government took the decision to end the beer duty escalator, and beer duty has been frozen or cut several times since then. Duty on spirits has been frozen over the past two years. As a result of these changes, a typical pint is cheaper than it would have been had these measures not been introduced.
I welcomed the announcement that for only the second time in 20 years every alcohol duty has been frozen, meaning that this freeze covers duty on spirits, beer, wine, and cider.
There is a broad recognition of the need to reform the current duty system to support the alcoholic drinks and pubs sector in the longer term, and on 1 October, a call for evidence for reform of Alcohol Duty was published. I look forward to studying the results once they are published.
Finally, as you know, the Prime Minister has confirmed that he will set out the Government’s strategy for the “gradual and phased” easing of lockdown in the week beginning February 22. That assessment will be based on progress in vaccinating the most vulnerable groups in society by mid-February, and then giving the jab time to take effect. The Government will also need to take account of the data regarding the effect of the vaccine on spreading infection. I will ensure that my Ministerial colleagues are aware of the points that have been raised and I will continue to push for the reopening of pubs as soon as it is safe for them to do so.
