Is there a pub business rates U-turn on the cards?
The UK government is rumoured to be preparing a business rates overhaul for pubs following pleas from the hospitality sector were made to the Prime Minister earlier this week. db looks at how the industry is responding with a mix of hopefulness and caution.
Treasury officials have since declared that they have recognised the financial difficulties facing many pubs and are prepared to do something about it to preserve them for the future. The move follows pressure from operators and more than 1,000 pubs barring Labour MPs from their pub venues entirely. Added to this, db recently highlighted the challenges faced by the beer, pub and hospitality industry, from business rate hikes through to the new one-pint driving rule, have been met by extreme concern from across the sector.
Uncertainty
Speaking about the situation, CAMRA chairman Ash Corbett-Collins explained: “Doing nothing and letting pubs go to the wall was never going to be tolerated by pub goers, publicans or MPs. The government must urgently end the uncertainty and announce the extra help and permanently lower bills our locals were promised and need to survive and thrive.”
Highlighting the importance of addressing the issues, UKHospitality chair Kate Nicholls said: “The entire hospitality sector is affected by these business rate hikes – from pubs and hotels to restaurants and cafes. We need a hospitality-wide solution, which is why the government should implement the maximum possible 20p discount to the multiplier for all hospitality properties.”
According to reports across the national press, the government is expected to reduce the “multiplier” – which is essentially the percentage of a pub’s rateable value which is used to calculate business rates bills.
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That also follows an “upward revision of the rateable value of pub premises, which will lead to an average rates rise of 76% for pubs and 115% for hotels over the next three years”.
Consequences
Speaking to db, John Webber head of business rates at Colliers said: “We are pleased to hear the treasury is reported to be backtracking and is taking on board the cry from the pub sector about how punitive business rates rises are going to be when the new list comes into force next April. Based on massive increases in rateable value and a smaller multiplier-that was just not small enough, the current policy would lead to some pubs facing over 100% rises in their business rates bills over the next three years. This would do nothing to halt the rate of closure of pubs we are seeing across the country. However, it beggars’ belief that the government did not think about the consequences of its policies when it introduced them, when it set the multiplier levels and when it totally removed RHL (retail hospitality & leisure ) from the sector. A proper impact study should have been carried out then.
The Society of Independent Brewers and Associates (SIBA) CEO Andy Slee said: “It’s welcome news that the government appears to have finally accepted that vital changes are necessary to help our much loved community pubs. The planned alterations to business rates would have had a devastating impact on our pubs and breweries.”
Acting in good faith
But, Slee warned: “While common sense seems to have prevailed, it is essential that the government now acts in good faith to ease this financial pressure in the short term and reassure the sector that a meaningful long term solution to business rates will be sought alongside a proper plan to maintain our pubs into the future.”
Looking at the bigger picture and the effects on UK businesses trying to remain afloat amid recent challenges, Webber suggested: “If the government acknowledges business rates are too high for the pub sector, what about all the other sectors seeing steep rises- such as independent retailers, restaurants, hoteliers, and offices and industrial occupiers too? Rather than bringing in fundamental reform, the government used its Budget to inflict a 10.2% increase on business rates bills on UK plc next April, increasing the tax take from £33.6 billion to £37.1 billion. This is unsustainable given all the other costs UK businesses are facing.”
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