‘Sorely needed’ 20% biz rates cut ‘brilliant start to PM’s tenure’

Announced this morning (Thursday 23 July), the Government estimated the reduction will benefit nearly 32,000 venues, saving the typical pub about £1,100 in the next financial year.

The change will be funded by reviewing reliefs for ‘businesses that do not make a positive contribution to local communities, such as vape shops’, according to the Government.

Prime Minister Andy Burnham, who came into premiership earlier this week, said: “For too long, Governments had stood by while cherished venues have disappeared from our local high streets. So today, I am changing that.

“This Government will back the businesses that people want to see in their communities.

“I said I would protect pubs and local high streets - the beating hearts of our communities - and that’s what we will do.

“What we’re announcing today is just the start as we work to bring back hope across the country.”

Furthermore, the Government said this was just one step of its plans to back communities and high streets while wider business rates reform will be addressed at the Budget.

The British Beer & Pub Association welcomed the move, describing it as a “sorely needed discount”.

Sorely-needed discount

CEO Emma McClarkin said: “For years and years, pubs have paid a disproportionately higher rate, which has ground down their ability to keep the doors open, so we’re delighted that after working with Andy Burnham’s team prior to his election as Labour Party leader, he has swiftly acted on our concerns and provided new backing to our nation’s pubs as he promised.

“The local has and always will be more than just a place to get a pint; it creates jobs, it’s our nation’s living room, it’s the anchor of the high street, so this sorely-needed discount will be celebrated by pubs up and down the country.

“We now look forward to working with Government to deliver permanent business rates reform so we can keep the pub in its rightful place; at the heart of our communities.”

Fellow trade body UKHospitality also welcomed the move and urged the Government to deliver on wider rates reform to support to whole hospitality industry.

Chief executive Allen Simpson said: “This is good news and a welcome first step from a Government that understand the value of hospitality to jobs, growth and local communities.

“The Prime Minister is right to say this should be just the start. Restaurants are struggling just as much as pubs, while hotels are due to see their business rates bills increase by an average of 110%, the highest in the sector.

“After years of rising costs and tax increases that have hit investment and employment, the industry now needs a meaningful, sector-wide solution. While today’s announcement will provide welcome support for pubs, clubs and live music venues, they only account for around a fifth of hospitality jobs. The rest of the sector now needs to see the same ambition.

“We look forward to working with the Government at the forthcoming Budget to deliver the wider businesses rates reform it has promised and create a fairer system that enables businesses to invest, create jobs and grow.”

According to global tax firm Ryan, the move was a “significant package” when combined with previous support.

Practice leader for Europe and Asia-Pacific property tax Alex Probyn said: “The headline 20% discount only tells part of the story.

“Taken together with the support already announced earlier this year, this represents a significant package. ”

Moreover, Probyn welcomed how the Government had stepped away from funding the policy through higher business rates on warehouses.

“Most distribution warehouses support manufacturers, supermarkets and wider UK supply chains rather than online-only retail, and have already seen substantial increases in business rates over the last two revaluation cycles. Avoiding further tax increases on a sector operating on tight margins reduces the risk of higher costs ultimately feeding through to consumers,” he added.

The move was a “brilliant start to the Prime Minister’s tenure”, according to the Campaign for Real Ale.

Desperately-needed reform

Chairman Ash Corbett-Collins said: “Our business rates system is grossly unfair to pubs and social clubs, bricks and mortar businesses that are also vital social institutions for their communities and desperately needs reform.

“As always we need to see the details at the Budget, but another year of rate relief will provide vital breathing space to publicans in England, while the work to review the rating system for hospitality businesses presumably continues.”

The inclusion of clubs in the measure was particularly significant for the late-night economy, according to the Night-Time Industries Association.

CEO Michael Kill said: “Having worked closely with the new Prime Minister’s team over recent weeks, it is encouraging to see a positive outcome from genuine engagement with the sector. The inclusion of clubs alongside pubs and live-music venues is particularly important and demonstrates a broader recognition of the vital economic, cultural and social contribution made by the night-time economy.

“The announcement of a 20% business-rates reduction across England from April next year is a significant and welcome intervention. With a typical pub expected to save around £1,100 annually, and the Government committing approximately £100m a year to the policy, this has the potential to provide meaningful relief to businesses facing sustained cost pressures.

“This is the third major policy announcement in as many days from the new Government. Together, these interventions have undoubtedly begun to shift confidence across the sector and created renewed optimism that our concerns are being heard.”

He also outlined the need for clarity about further details on wider reform for venues.

Kill added: “We are still awaiting the full details and eligibility criteria, which are expected to be announced at the autumn Budget. We will also seek clarity on the proposed exclusion of the largest live-music venues and continue to press for the final scheme to provide the broadest possible support.

“The Government is undoubtedly making the right noises. We look forward to continuing this constructive dialogue and ensuring these commitments translate into tangible and inclusive support for businesses throughout the night-time economy.”

While the cut for pubs, clubs and live music venues was welcomed by tax and consulting firm RSM UK, the organisation called for widespread reform across the hospitality industry.

Head of leisure and hospitality Saxon Moseley said: “A shot of relief for pubs, clubs and live venues as the Government announce a meaningful cut to business rates. Pubs are at the heart of our communities, and this social value has been acknowledged with today’s planned measures to attempt to stem the flow of financial distress.

“However, a thriving high street is more than pubs, clubs and live venues and excluding restaurants and hotels creates confusion around eligibility and further complexity and nuance in the tax system.

“There is no doubt that this will look to offset some of the significant rate burden in the short-term, but what is needed is widespread rate reforms that instils fairness across the hospitality industry to make it cheaper for businesses to operate – making the high street a more attractive place to invest.”