‘Squeezed from every direction’: pubs voice fury at Reeves’s business rates changes
Emma Harrison has begun to wonder how her business will survive in recent weeks.The managing director of the Three Hills pub in Bartlow, Cambridgeshire, is struggling to see how she will make a profit after examining the impact of her rising tax bill.“I’m really terrified about this coming year,” Harrison says.“We’re a well-run pub, we’ve won lots of awards, but this is going to be really hard.”Harrison is not alone.
Across the country, pubs, hotels, nightclubs, live music venues and other businesses in the hospitality sector are reeling from changes to business rates announced in Rachel Reeves’s tax-raising budget last month.From April next year, almost all commercial businesses will see their rateable value – which is used to determine the amount of tax paid in business rates – recalculated, as is custom every three years.But for pubs and some other hospitality sectors, the rise has been unexpectedly large, even with a three-year tapered relief that the government announced in the budget, designed to prevent big increases.Rob Hattersley, the managing director of Longbow Venues, a hospitality business in the Peak District, said one of his pubs, the George, was facing an increase in its rateable value from £49,000 to £205,000.This means the pub’s rates bill will rise from £24,451 this year to £88,150 by 2029.
“We cannot just pass these costs on to guests,” Hattersley says.“People are already watching their spending, and we are doing everything we can to keep prices fair and accessible.Businesses like ours are being squeezed from every direction.”The trade body UK Hospitality says the scale of these increases will force venues to cut jobs, raise prices and “in many cases close entirely”.It has calculated that small hospitality venues face a combined business rate rise of £318m over the next three years.
The rates will rise by 115% for the average hotel and 76% for a pub, compared with just 4% for large supermarkets and 7% for distribution warehouses,Whitbread, the FTSE 100 owner of the Premier Inn chain, has told investors that it faces an extra £40m to £50m bill from the changes next financial year,Business rates are a tax charged on most commercial properties, including shops, hotels, offices, pubs, factories and warehouses,They are contentious among high street companies, which have argued that premises such as warehouses used by Amazon get proportionally charged a lot less, and Labour promised to replace the business rates system in England before coming to power,While that has not happened, the chancellor announced that she was introducing the “lowest tax rates since 1991” for business rates.
Reeves said that a levy charged on properties worth £500,000 or more, such as warehouses, will enable a cap on the tax for smaller businesses so that “a typical independent pub will pay about £4,800 less next year than they otherwise would have”.Harrison says the government’s claim it was helping pubs in the budget is not reflected in the rates revaluation.“I feel like we’ve been gaslit,” she said.“Everything has gone up.[Employment costs have] gone up, overheads have gone up, minimum wage, national insurance contributions, electricity, and now you’ve got business rates.
And you can’t keep putting your prices up, we’ve seen a drop in customer numbers.”Harrison’s rates bill will rise from £12,814 to £22,626.07 by 2028, and £28,595 once all relief is removed.“I’m on a WhatsApp group with a number of pubs, and we’re all like: ‘Have we just got this completely wrong? What is going on?” she said.While shops and restaurants get a valuation based on average market rent, for pubs it is based on the “fair maintainable trade’’ that a “reasonably efficient operator” could expect to make from the venue.
As the last time this was calculated was in 2021, when the economy was still dealing with the pandemic, the valuations for many pubs have now shot up significantly,This, combined with the phasing-out of a 40% discount introduced during Covid, means lots of pubs will still receive significant increases in their business rates bill despite a tax relief,Andy Lennox, the landlord at the Old Thatch pub in Wimborne, Dorset, said its rateable value will go up by 126%, meaning the business rates bill would rise from £18,620 to £36,190 by 2028, even with the tax relief,“It’s like somebody pushed the wrong button and was meant to put that on warehouses, but put it on pubs by accident,” he says, adding that the various costs his pub already faces means his business makes just 14p out of a £5,50 pint.
In frustration, Lennox has helped to spearhead a “No Labour MPs” campaign, providing stickers that pubs can place on windows or their beer pumps telling Labour politicians that they are not welcome and barring them.The campaign made the front page of the Sun, and gained support from hundreds of pub owners, including the TV presenter Jeremy Clarkson at his pub in the Cotswolds.The Sun: You're barred #TomorrowsPapersToday pic.twitter.com/W5j9RjDPLRLennox says: “We printed 250 stickers and they’re already all gone.
We’ve got more on their way,I’ve got people springing up pretty much all over the UK asking for them,“We’re being taxed into oblivion,There is nothing left to cut, you can only put up prices so much – a burger can’t be £25 or £30,Unless something is done, there are going to be so many pub closures in the next three months after Christmas.
”William Robinson, the managing director of Robinsons Brewery, a 187-year-old business in Stockport that owns 250 pubs, said he had felt “a huge sense of disbelief” after seeing the budget and realising Labour’s promise of significant reform was not going to happen,One of his pubs in the Lake District faces a rise in its rateable value from £45,000 to £224,000,“The government really needs to revisit this and step in,They cannot just brush this under the carpet,” Robinson says, arguing that pubs are one of the biggest pulls for tourists to the UK,The prime minister’s spokesperson said the chancellor had delivered a £4.
3bn support package for pubs, restaurants, and cafes because hospitality was a “vital part of our economy”.He said: “Without this intervention, pubs would have faced a 45% rise in bills next year.We’ve cut that down to just 4%.We’ve also maintained the draught beer duty cut, eased licences rules over pavement drinks and events, and capped corporation tax.These measures show we’re backing hospitality, not abandoning it.
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