The case against punishing the hospitality sector through business rates is gaining momentum. The government is under increasing pressure to reverse recent tax changes. Chancellor Jeremy Hunt’s November Budget cut business rate discounts to the ground, from 75% to a measly 40%. Beginning in April 2024, companies need to prepare for zero rebates whatsoever. This decision has sparked an unprecedented storm of vitriol from landlords and pub owners. It follows the latest revaluation of property valuations by the Independent Valuation Office, which recently increased valuations by around 20%.
Rachel Reeves, the Shadow Chancellor, had already pointed out that this government has recently raised taxes on pubs and hospitality. This decision was made to alleviate some financial stress for these businesses. The later moves on business rates have led to deep disappointment and a sense of betrayal within the sector. Reeves did stress providing for struggling businesses and said more conversations would be required to work through their concerns.
“I want to support our pubs; I want to support our high streets. That’s why we made the change to the rates. But I recognise that many paths are still struggling and we’re working with them.” – Rachel Reeves
This past week, over 1,000 pubs around England chose to stand up against this. They finally kicked Labour MPs from their property to oppose the government’s business rates policy. This year, this act of defiance is indicative of the frustration venue owners are experiencing. They feel that they do not have enough institutional support, especially in today’s all-pervasive economic climate.
Our hospitality and tourism industry is already facing enormous challenges. Dame Caroline Dinenage, who has been vocal on this issue, stated, “Venues, clubs and cinemas up and down the country are already struggling for survival.” The perfect storm of surging operational costs and lost in-person business has put so many of these institutions completely underwater.
Jon Collins, chief executive of LIVE, pointed out that while pubs receive attention from policymakers, other sectors face similar challenges without adequate support. He urged the government to ensure that live events and arenas are not overlooked in any potential revisions to business rates.
“If the government is preparing a U-turn on business rates for pubs, it must not leave live events and arenas behind.” – Jon Collins
Similarly, Huw Edwards, chief executive of ukactive, expressed his concerns regarding the lack of support for gyms and leisure centres. He cautioned that failure to maintain these critical facilities would lead to dire outcomes. This disregard could lead to increased costs to consumers and possible workforce job losses.
“Failure to provide a business rates support package to gyms, pools and leisure centres will lead to higher prices, reduced services, redundancies and in some cases the loss of gyms from our communities,” – Huw Edwards
Andrew Goodacre, the chief executive of the Independent Retailers Confederation, condemned the move. He urged that independent retailers are hurting from the same issues and have been shut out from discussions on further assistance. He even floated the idea that they would need to follow the lead of pubs and prevent MPs from entering their premises.
“Perhaps independent retailers need to follow the pubs’ example and start banning MPs from their premises too,” – Andrew Goodacre
BRC chief executive Helen Dickinson condemned the recent changes to business rates. She contended these changes were merely cosmetic and don’t address the industry’s more fundamental problems. She urged more systemic changes instead of stopgap measures.
“This latest announcement looks like another sticking plaster on a broken system rather than the more fundamental reform required.” – Helen Dickinson
As these negotiations go on, it’s hard to say how the Administration will be able to avoid this bubbling cauldron of anger from all sectors. More recently, pub and venue owners have been vocalizing the need for action. They will soon come under significant further pressure to introduce radical reforms that address the fundamental flaws in the business rates system.