The pub industry is in the spotlight, with the Chancellor, Rachel Reeves, expressing 'particular concern' over the impact of business rates. This comes as the government prepares to announce measures to ease the burden on pubs, but leaves other hospitality businesses wondering if they'll receive similar support.
Reeves has signaled that an announcement is imminent to soften the blow of rising business rates specifically for pubs. But here's where it gets controversial: while pubs seem to be the priority, other sectors like cafes, hotels, and independent restaurants are left waiting.
During the pandemic, pubs were hit hard, and now they're facing a significant increase in business rates. Businesses are worried about their ability to pay these higher rates after the Covid-era relief ends in April. The government has already set aside a £4.3 billion fund to help businesses as this relief is phased out. Reeves confirmed that 'additional support is coming' for pubs before the new rates take effect in April. She acknowledged that some temporary support needs to be removed now that the pandemic is over, but the focus is on the speed of this transition.
However, other businesses are also calling for more help. Shops, pharmacies, hotels, and music venues, along with Conservatives and some Labour MPs, are urging for more support. When asked about assistance for other small hospitality businesses, Reeves highlighted that the biggest concern currently revolves around pubs, noting that some smaller businesses, like cafes, don't pay any business rates at all because of their size.
This move to assist pubs follows other government U-turns in recent months, including changes to inheritance tax for farms and the reversal of plans for mandatory digital ID for UK workers.
During Prime Minister's Questions, Sir Keir Starmer faced scrutiny from Kemi Badenoch about the government's approach to business rates. Badenoch urged the Prime Minister to adopt her party's policy and abolish the tax for all High Street small businesses. In response, Sir Keir stated that the government is 'working with the sector to ensure that they get the support that they need.'
Business rates are set to rise sharply over the next three years. This is due to the phasing out of Covid-era support and adjustments to property values. Business rates are a tax based on the 'rateable value' of a firm's premises, which is reassessed every five years.
Jonathan Russell, chief executive of the Valuation Office Agency, revealed that while pubs have seen their valuations jump by an average of 32%, over 5,000 pubs have seen their rateable values at least double. Business Secretary Peter Kyle claimed the government didn't have detailed information on how individual businesses would be affected before the Chancellor's November Budget announcement. However, Russell told MPs that his agency had been clear about the impact on different sectors before the Budget.
The government is expected to make changes to how business rates are calculated for pubs, resulting in smaller increases. But here's the kicker: the industry body UKHospitality warns that rate rises will affect the entire sector, potentially forcing venues to close. They estimate that the average hotel faces an increase of 115% over the next three years, compared to their estimate of 76% for pubs. The British Independent Retailers Association and the National Pharmacy Association have also voiced concerns. The latter stated that the sector could face a 140% increase in rates, while the lobby group for gyms, pools, and leisure centres said those businesses faced potential rate increases of 60%.
What do you think? Do you agree with the government's focus on pubs, or should more support be given to other struggling businesses? Share your thoughts in the comments below!
