Pubs welcome business rates U-turn, but hospitality warns it doesn’t go far enough

The hospitality industry has tentatively welcomed the government’s plans to introduce support for pubs and music venues on business rates, but warned that it is unfair and does not go far enough to support the sector.

The government yesterday announced it would give pubs and music venues a 15% discount on their business rates bills from April, with no increases for a further two years. This followed industry backlash on its plans to cut Covid-era business rate discounts from 75% to 40%, with no discount at all from April 2026m, which was announced in the Budget in November.

The U-turn follows government officials admitting they had not anticipated the financial impact of the changes to business rates that were announced, with the three-year package thought to be worth around £1,650 for the average pub.

Andy Slee, chief executive of SIBA called the new measures “good news for pubs and brewers” which would allay some of their worst fears.

“At the heart of revitalising hospitality is a rebalancing of the tax burden between online and high street businesses and pubs, and as such it is welcome to see recognition from Government that the business rates system itself will be reformed over the next couple of years.

He add saying it looked forward to working with the government “to find a more equitable long-term solution to allow pubs and independent brewers to thrive.”

The news was also welcomed by Nick Mackenzie, CEO of Greene King, who said it would offer “some much-needed relief to pubs, and recognises the important role they play at the heart of communities across the country”.

“This package gives reassurance to publicans by easing some of the considerable cost increases due to come into effect in April,” he said.

Not enough

However, the overwhelming consensus is that in only applying the rate relief to pubs and music venues, the disproportionately affect restaurants, high street shops and their suppliers, and as such, do not go far enough.

Miles Beale, chief executive of the Wine and Spirit Trade Association, said the measures would come as a “bitter disappointment” to those in the retail, hospitality and leisure sector who had been left out. Restaurants and high street retailers faced “the same survival pressures”, he said, calling it “a double blow” for producers, wholesalers, retailers and many hospitality businesses and their supply chains after the rise of alcohol duty on 1 February.”

“Why single out specific sectors when all business types are suffering?” he asked.

UKHospitality said that while pubs will feel “some respite”, urgency is needed to deliver on the government’s intention to tackle sector’s rising cost of doing business.  “Pace and urgency” was necessary to deliver the reform “desperately needed to reduce hospitality’s tax burden, drive demand, and protect jobs and growth”.

“We will work with the Government over the next six months to hold their feet to the fire to deliver this,” UKHospitality chair Kate Nicholls promised, adding that “the devil was in the detail”.

“The reality remains that we still have restaurants and hotels facing severe challenges from successive Budgets,” she said. “They need to see substantive solutions that genuinely reduce their costs. Without that clear action, they will face increasingly tough decisions on business viability, jobs and prices for consumers. Those are costs borne by us all, and I hope the Government delivers on its promise to support the whole hospitality sector.”

Commercial real estate company Colliers’ business rates team branded it a “sticking plaster” for the sector, saying it created a distorted market, after failing to address issues for bigger pub chains or high business rates for hotels and other hospitality venues.

Meanwhile, the Federation of Small Businesses argued that the new rates package left struggling high street firms “stranded” without a lifeline. Policy Chair, Tina McKenzie, said it was worrying that the Government repeatedly failed to recognise the difficulty that smaller high street shops are in”.

She argued that losing the 40% discount, on top of April’s revaluation of the rateable value of premises, and changes to the formula behind the bills, “will take a heavy toll on small firms, threatening jobs and our high streets”, with a typical small shop facing a rise in business rates of 52% over the next three years.

“With more cost pressures due to hit in April alongside the rates rise – from energy standing charges to employment costs – this situation is becoming unsustainable for many,” she said. “Some are having to put the brakes on expanding and developing their business, while others are being forced to lay off staff or even close their doors for good. The Treasury must look again at the Spring Forecast to provide substantial help for these struggling small firms.”

National policy

There have also been calls for the devolved governments to provide a support package to pubs in Scotland and Wales to protect employment and local communities.

UKHospitality Cymru called on the Welsh Government to use new funding to help hospitality in Wales, calling the business rates system “broken and … in danger of breaking hospitality businesses in Wales.”

“Welsh hospitality faces an April cliff-edge because of huge rates hikes, totalling a colossal £122 million increase over the next three years,”  David Chapman, executive director of UKHospitality Cymru said.

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