Apols, here we are:
Rachel Reeves is under growing pressure from restaurants, shops, cafés, hotels and music venues to rethink an impending rise in business rates as the chancellor prepares to announce a limited package of relief that will apply only to pubs. Reeves has decided to provide greater support for pub owners who have been facing big jumps in rates over the coming years following her November Budget, according to people familiar with the situation. The announcement, which is expected within days, will also include changes to licensing to allow later hours and more pavement drinking.
It will be the latest of a series of U-turns by Sir Keir Starmer’s government, following the prime minister’s decisions to change tack over the removal of winter fuel payments, an attempt to cut billions in disability welfare payments and higher inheritance tax on farm estates. But there have already been questions as to why only pubs have been singled out for help. The chancellor announced in the Budget a scaling back of business rate discounts over the next three years which — along with big upward adjustments to property values used to calculate rates — has left many businesses with the prospect of much higher bills.
Kate Nicholls, chair of the lobby group UKHospitality, says ‘The entire hospitality sector is affected by these hikes’ © David Cotsworth/UK Hospitality Kate Nicholls, chair of UKHospitality, a lobby group, said: “The entire hospitality sector is affected by these hikes — from pubs and hotels to restaurants and cafés.” Alex Reilley, executive chair of hospitality group Loungers, said the pub industry had been facing an “extinction event” from the threat of rate rises but that the majority of his 250 bars, cafés and restaurants would not qualify for support. “The way pubs are assessed as separate to the rest of the hospitality sector is ludicrous,” he added.
Simon Wood, a MasterChef winner, chef and restaurant consultant, told the FT that it was inevitable there would be more restaurant closures. He said the current environment made it “financial suicide to consider opening a restaurant — you either do it because you have very deep pockets or it’s a vanity project. “Politicians don’t understand the wider hospitality sector and food industry — the low margins and the work it takes. But there are plenty of MPs happy to have their photo pulling a pint, that they aren’t going to pay for.”
Shadow business secretary Andrew Griffith says Labour has been ‘wrong to attack pubs’. Andrew Griffith, Conservative shadow business secretary, said the Budget was “falling apart” and that Labour had been “wrong to attack pubs”. “But this humiliating about-face does nothing for shops, restaurants, hotels and markets, which all face a more than 50 per cent increase. This is not the stability Rachel Reeves promised — it is a recipe for economic disaster,” he added.
Various businesses have spoken out against the changes to the business rates system, arguing that they would cause huge jumps in payments over the next three years. But the loudest campaigning has been by pubs. Andy Lennox, a landlord who has spearheaded a campaign to ban Labour MPs from pubs, said: “We will continue the ban of Labour MPs unless this is for the whole hospitality sector. Many of us own restaurants and pubs, and we’re in this together. We will not give up.”
At least 30 Labour MPs had expressed concern about the impact of the Budget on the sector. Emma McClarkin, chief executive of the British Beer and Pub Association, welcomes any move to look again at business rates. Emma McClarkin, chief executive of the British Beer and Pub Association, said the government’s decision to “look again at business rates increases is potentially a huge win for pubs across the country”, and could mean “publicans can breathe a huge sigh of relief”. The increases in costs for hospitality businesses stem largely from higher “rateable values” — estimates of a premises’ annual rent used to calculate rates — which have risen considerably since the last pandemic-era valuation, especially for pubs. In some cases, rateable values have doubled or trebled, although a typical increase is about 30 per cent.
Businesses are also facing the withdrawal of Covid-19 support, which offered 40 per cent relief on rate bills.