The Treasury Committee launched the ‘Impact of business rates on business’ inquiry on 1 February 2019.
It examined how business rates policy has changed, including business rates retention, alternatives to property-based taxes, such as the proposed digital services tax, and how changes to business rates could impact businesses.
However, according to the 2019 haysmacintyre UK Hospitality Index, business rates remain a “common headache” among the hospitality sector.
A common concern
Partner in the hospitality team at haysmacintyre, Gareth Ogden, said: “This year, the tax burden on hospitality businesses was a common concern.
“Business rates remain a headache and our respondents are making the call for a fundamental reform of what is seen as an unfair system, while others are hoping for a reduction in VAT applied on food and drink sales in the sector.”
Now, the inquiry has been closed and UKHospitality has welcomed the new report but says the Government must act on it.
UKHospitality chief executive Kate Nicholls said: “We’re pleased to see the committee recognising the burden of business rates has grown and the system no longer works.
“The current system is nowhere near flexible enough and it has directly contributed to the decline of high streets.
“Hospitality businesses are at a particular disadvantage and have been arguably hammered worse than any other sector.”
Acting as a deterrent
Nicholls continued: “The current system penalises businesses who invest in their properties and actually acts as a deterrent to investment.
“We need a complete rethink of the system and an overhaul to bring it in line with the 21st century.
“We are pleased that policy-makers are listening to the concerns of businesses and acknowledging that there must now be action.
“There must be, as the committee recommends, a consultation at the soonest opportunity to identify alternatives to the current system. The incoming Government must act on this as a priority.
“We will be keeping up the pressure with recommendations to ensure fairness for hospitality.”
A positive outlook
However, the data also revealed that 90% of those surveyed have a positive outlook for the future of their businesses – despite difficult trading.
The 2019 haysmacintyre UK Hospitality Index revealed evidence of resilience in the sector with average turnover growth of respondents broadly consistent with last year at 4.2% (4.7%: 2018) and 90% of respondents optimistic for the future of their own business.
Ogden added: “It’s undeniable that conditions have been challenging for the hospitality sector this year.
“The effect of Brexit on consumer demand and food costs is causing anxiety, but it is the uncertainty over the availability of staff which is having the greatest impact.
“Despite these headwinds, and while turnover predictions are still markedly down on the heights of five years ago, we are reassured that much of the data we gathered points to a sector that remains resilient.
“Pubs, bars and restaurants are constantly improving what they offer customers, and responding positively to changing lifestyle choices and the drive for sustainable practices.”