An extensive review of the business rates system for pubs and hotels in England and Wales has been announced, spearheaded by rates expert Jerry Schurder. The aim is to explore potential overhauls in how rate valuations are determined, with findings expected by March 2027. This initiative is part of a broader effort by the government to include input from landlords, hoteliers, and other business owners.
Background to the Review
The examination of the business rates comes on the heels of last month’s declaration by Andy Burnham regarding a 20% reduction in business rates for pubs, social clubs, and live music venues in England, set to begin in April. Pub operators have long argued that their business rates are disproportionately high. Concerns have also been voiced by other industries advocating for a more comprehensive reform of the entire rate system.
Impact on the Pub Sector
The British Beer and Pub Association (BBPA) notes that from January to March this year, 161 pubs shuttered across England, Scotland, and Wales, resulting in the loss of approximately 2,400 jobs. The rising business rates are contributing to an already challenging environment, which also includes higher National Insurance and minimum wage costs.
Government and Industry Responses
Financial Secretary to the Treasury, James Murray, underscored the objective of the review is to “rethink valuations” to create a fairer system long-term. Echoing this sentiment, Emma McClarkin, CEO of the BBPA, expressed that pubs have historically been burdened with hefty rates bills, making the new review both necessary and welcomed.
The current valuation method for pubs differs from retail venues, as pubs’ rates are influenced by their turnover, a measure termed Fair Maintainable Trade.
Craig Beaumont from the Federation of Small Businesses welcomed Schurder’s involvement in the review, highlighting his expertise in business rates. However, Beaumont stressed the necessity for the government to reform the broader system to better accommodate small businesses by raising the rates relief threshold.
Tom Ironside of the British Retail Consortium also welcomed the review but cautioned against neglecting retailer needs. Shadow Chancellor Sir Mel Stride criticised the timing of the review as too late and claimed recent government actions have strained hospitality businesses.
Historical Context
Previously, under Chancellor Rachel Reeves, the government retracted business rate discounts that had been available since the Covid pandemic. Consequently, pubs faced substantial increases in their rateable values, exacerbating their financial strain. Earlier this year, the government addressed criticism from the hospitality sector by introducing a 15% rate cut for pubs and entertainment venues.
The recent 20% reduction, announced in July, adds to existing assistance. However, confusion persists about which venues qualify for the relief, particularly regarding the exclusion of “very largest” live music venues. Clarification on eligibility criteria is expected at the forthcoming autumn Budget, presented by Chancellor John Healey.
Reporting based on coverage first published by bbc.co.uk.