Pub rate cuts labelled as 'spin'

One in five pubs promised big cuts in business rates will actually get much smaller reductions in the short term.

More than 450 sites will not see the full benefit within five years, said property consultancy company Gerald Eve's head of rating, Jerry Schurder. He labelled the Government's £2bn rate-relief measure "a piece of astonishing spin".

In addition, one in 12 pubs overall will see rates more than double.

The Department of Communities and Local Government (DCLG) has announced a £2bn relief scheme to "limit the impact" of big increases on bills — but it also caps reductions (see box).

Schurder said: "More than 10,000 pubs will be caught out by the 'downwards surcharge' — which means that they won't be able to see their full decrease immediately, but will have to wait until at least 2011/2012."

In fact, of those 10,000 pubs, more than 450 whose rates will fall more than 30% will not see the full reduction implemented by 2015, when the next revaluation takes effect.

Schurder said the average rateable value increase across all pubs in England and Wales would be 27.6%, and 3,900 would see their assessments more than double.

Local Government Minister Barbara Follett stated: "Revaluation makes sure each business pays its fair contribution and no more — it will not raise a single extra penny for Government."

But Schurder said: "The total of assessments in England will increase by 19%, but the Uniform Business Rate [the percentage of rateable value that firms pay in rates] is not coming down in the same proportion. Next year's UBR is only a 15% decrease."

He said this 4% gap was because the Government "built in the assumption that they will lose revenue because of the appeals process".

The reduction explained

Pub X's 2005 rateable value was £50,000, but in the 2010 listing this has fallen to £40,000.

The amount the host must pay in rates should fall by £7,690, when the multiplier is factored in, from £24,250 to £16,560.

However, despite the 20% reduction in rateable value, transitional relief allows a reduction of only 4.6% (before inflation adjustment). So the host will pay £22,902 next year — only £1,347 below 2009/10.

This pub will also pay a surcharge in 2011/12. It must wait until 2012/13 for its full reduction.