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The Chancellor has expressed deep concern over the burden that rising business rates are placing on pubs. While she indicated that measures to ease the impending rate increases for pubs are imminent, she appeared hesitant to extend similar support to other segments of the hospitality industry. Rachel Reeves assured that an announcement aimed specifically at mitigating the effect of these business rate hikes on pubs would be made in the near future.
When questioned about whether cafes, small hotels, or independent restaurants would also receive assistance, Reeves emphasized that pubs remain the “biggest concern.” She highlighted that pubs suffered significantly throughout the pandemic and are now facing particularly steep rises in business rates. Many businesses have warned of financial difficulty with the end of Covid-era relief scheduled for April, coinciding with a revaluation of premises for tax purposes.
The government has already committed £4.3 billion to aid businesses as these relief measures are phased out. Reeves confirmed that there would be “additional support coming” for pubs before the new business rates take effect. She stated, “I think most people would accept that now the pandemic is over, some of that temporary support does need to come away,” adding, “But it’s about the speed at which you do that.” Despite calls for broader assistance from various sectors including shops, pharmacies, hotels, and music venues, as well as from both Conservative and Labour politicians, Reeves maintained that pubs are currently the main focus of government support due to their particular vulnerability.
Business rates are levied as a tax based on the “rateable value” of a business’s premises, a figure reassessed every five years. As these Covid-era supports end, the rates are set to increase sharply over the next three years. Jonathan Russell, chief executive of the Valuation Office Agency, revealed that pubs have seen an average valuation increase of 32%, with more than 5,000 pubs experiencing their rateable value doubling or more. While government ministers suggested they did not have full data on individual impacts before the Chancellor’s November Budget, Russell disputed this, stating his agency provided clear information to MPs in advance.
Looking ahead, the government is anticipated to revise the calculation method for pub business rates to ensure more moderate rises. Nevertheless, UKHospitality has warned that these increases will affect the entire hospitality sector, potentially causing many venues to close. Their analysis projects an average 115% rise in rates for hotels over the next three years, surpassing the 76% estimated increase for pubs. Other trade groups representing independent retailers, pharmacies, and leisure facilities have also expressed concern; the National Pharmacy Association forecasts a potential 140% hike in rates, and leisure centers could face increases of around 60%, yet these sectors have reportedly been excluded from additional support discussions
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