Phil Thorley, the owner of Thorley Taverns, is raising alarm over significant increases in business rates affecting his pub group, which operates 18 venues across the UK. In fact, Thorley is getting hit with higher rates on 17 of his sites. He calculates that these new changes, which Chancellor Rachel Reeves unveiled in the last Budget, will cost him an additional £62,000 albatross around his neck.
The changes to business rates will enormously benefit thousands of companies. This includes all but 10,000 of the high street retail and hospitality firms. The government intends to set these rates based on a much lower proportion of the rateable value of premises. Many in the industry believe this adjustment does not adequately alleviate the financial strain on establishments such as pubs and restaurants.
Elaine Wrigley, owner of Manchester’s Atlas Bar, echoed concerns regarding the government’s proposals. She denounced Reeves’ recent Budget as “smoke and mirrors.” She noted that the visible support could fail to deliver real fiscal respite to enterprises. Over the past year, her establishment has had to raise prices four times overall, Wrigley noted. Now, she fears that next increases might drive customers away and pinch profit margins.
Association chair, Phil Thorley, highlighted the dilemma in which the Trade’s independent pub-owners such as he find themselves. The rateable value has jumped by as much as 50% at the majority of his locations. This 9 percent jump has a direct and immediate impact on the annual expense to rent those homes. He stated, “A further £62,000 worth of costs onto the business, which is absolutely at its knees at the moment.”
The hospitality sector is getting ready to deal with the widespread effects of these new rule changes. According to UK Hospitality, the average pub can expect to see their costs rise by £12,900 over the next three years. By comparison, hotels might find their costs increase by an eye-watering £205,200 over the same period. This impending financial pressure has already started triggering reactions from players all across the industry.
Sacha Lord, chairman of the Night Time Industries Association (NTIA), said he was bemused at the government’s attitude. He described the increase in business rates as a “stealth tax” on high street locations. It is a dire warning he offered. Once these changes go into effect in April, we can look forward to seeing more closures than we experienced during the pandemic. Lord stated, “The result will be more closures, fewer jobs, and lower growth.”
The governing Conservative party criticized the government’s amendments, deriding them as “a bombshell.” Andrew Griffith has consistently warned that these amendments would slash job creating capital investments in half, crippling businesses and jobs across the entire industry. Griffith suggested that the government often frames its actions as positive accomplishments. These actions only mask the broader pain points affecting the hospitality sector.
In response to criticism, a Treasury spokesperson defended the government’s stance by highlighting other supportive measures introduced in the Budget. They stated, “This comes on top of cutting the cost of licensing to help more offer pavement drinks and al fresco dining, keeping our cut to alcohol duty on draught pints and capping corporation tax.”
At the same time, the Liberal Democrats have called for stronger support for the hospitality industry through this difficult time. They urged Chancellor Reeves to “throw our hospitality sector a lifeline,” emphasizing the need for urgent action amid rising operational costs.
Business such as Thorley Taverns and Atlas Bar are facing a perfect storm of increasing costs and looming bankruptcy. Stakeholders across the hospitality industry continue to raise their voices and call on government leaders to provide more transparency and guidance about how these changes will impact their continued viability.