Business Rates

Business rates hike will hit pubs warns Young’s CEO

By Sara Hussein

- Last updated on GMT

Business rates may have an impact on pubs
Business rates may have an impact on pubs

Related tags: National living wage, Business rates, Business rates revaluation, Milton keynes, Business rates in england and wales

An “exceptional” rise in business rates will have a detrimental effect on pubs, Young’s chief executive officer Patrick Dardis has warned. 

In a statement this week (Wednesday 9 November) Dardis said that, due to the Government’s business rate revaluation that comes into force in April 2017, the company is likely to see £1.8m added to its annual cost base.

The “uncertainty” over Brexit and “cost pressures”, including the national living wage and the apprenticeship levy, were also “challenges” Dardis highlighted in the company’s interim reports for the 26 weeks to 26 September 2016.

No control over increases

Pubs in London​ would be most likely to suffer from the business rates revaluation by an average of 25.6% over the next five years.

Meanwhile the rest of the country will be subject to an estimated 9.2% increase according to business rent and rates specialist Commercial Valuers and Surveyors (CVS).

The Eight Bells in Bletchley, in Milton Keynes Buckinghamshire, may be forced to shut due to the rise in business rates it will face.

Operator Tony Kelly told The Morning Advertiser ​(MA​): “We're looking for a reduction. We've got to potentially pay £32,000 by 1 January. We only received a letter from the council two weeks ago.”

When Kelly and his colleagues, Dan Barry and Wayne Bell, took the site business rates were only £18,000, but increased after the pub underwent minor refurbishments two years ago.

Barry, added: "We're fighting our case, business in the area do not have to pay as much as us."

He added: "We know we can't make the first payment (Thursday 1 December), we are totally stuck." 

Meanwhile the local community have shown overwhelming support for the pub on social media. 

A spokesperson from Milton Keynes Council said: “We have no control over the process of valuation or any increases that might occur, that is the responsibility of the Valuation Office Agency (VOA).”

The licensees are currently awaiting a final decision from VOA officers after a meeting this week. 

The MA ​has contacted the VOA and is waiting for a reply.

‘Uncertainty and volatility’

Despite the “uncertainty and volatility in the economic climate”, Dardis said: “We will continue to stick to our winning strategy and grow our premium business by investing in our existing estate, acquiring new pubs and developing our people.”

In its interim report, revenue in Young’s managed estate was up 7.6% in total and up 5.4% on a like-for-like basis, with an adjusted operating profit of 5.7%.

Dardis added that the introduction of the national living wage in April 2016 added roughly £1m to wage costs and is expected to add an estimated £2m for the full financial year.

Drink sales were up 8.4% in total and 6.4% on a like-for-like basis, while food sales rose 6.9% in total and 4.0% on a like-for-like basis.

In the hotel business, the company saw the opening of 12 new boutique bedrooms at the Hand & Spear, Weybridge, Surrey, at the start of the period. 

Related topics: Legislation

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