Key Takeaways
- The UK government is planning to U-turn on changes to business rates for pubs, which were set to increase by 76% for the average pub and 115% for hotels.
- The change is part of a wider Treasury package to help pubs with licensing, opening hours, and reducing red tape.
- The decision comes after pressure from the hospitality industry and Labour MPs, with some pubs even putting up signs of protest barring Labour MPs.
- The government has committed £4.3bn in financial support for the retail and hospitality industries, but the end of business rate discounts has caused concern among pub owners.
- The U-turn is another climbdown for the government, following previous reversals on winter fuel payments and inheritance tax for farms.
Introduction to the Business Rates U-Turn
The UK government is preparing to make a significant U-turn on changes to business rates for pubs, in a move that is expected to be welcomed by the hospitality industry. According to sources, the government is set to announce revisions to the changes, which were announced in the budget in November, and were expected to have a major impact on pubs and hotels. The changes, which were set to come into effect in April, would have seen rates rise by 76% for the average pub and 115% for hotels, compared to a 4% rise for large supermarkets and 7% for distribution warehouses.
The Impact of the Business Rates Changes
The business rates changes were expected to have a devastating impact on the hospitality industry, with many pubs and hotels facing significant increases in their tax bills. Whitbread, which owns pubs, restaurants, and the Premier Inn hotel chain, estimated that it would have to pay between £40m and £50m in tax as a result of the changes. The increases were also expected to exacerbate the impact of a revaluation of property valuations, which has caused a rise in the taxable value of pubs and restaurants from their Covid-affected lows. The government’s decision to U-turn on the changes is a significant victory for the hospitality industry, which has been lobbying ministers to act.
The Government’s Change of Heart
The government’s decision to U-turn on the business rates changes comes after a wave of disquiet from the hospitality industry and Labour MPs. The pub industry has been putting pressure on ministers to act, with Keir Starmer facing concern from a series of Labour MPs. Some pubs have even put up signs of protest barring Labour MPs, in a sign of the strength of feeling among pub owners. The government’s change of heart is also likely to be seen as a response to the pressure from the pub trade, which has been working closely with ministers on a pub-specific solution to reduce bills in line with the government’s previous promises.
The Wider Treasury Package
The changes to business rates are part of a wider Treasury package to help pubs with licensing, opening hours, and reducing red tape. The package is expected to include measures to help pubs with areas such as licensing and opening hours, as well as wider efforts to reduce red tape. The government has committed £4.3bn in financial support for the retail and hospitality industries, but the end of business rate discounts has caused concern among pub owners. The U-turn on business rates is likely to be seen as a significant step towards addressing these concerns and providing more support for the hospitality industry.
Reaction to the U-Turn
The decision to U-turn on the business rates changes has been welcomed by the hospitality industry and opposition parties. Emma McClarkin, the chief executive of the British Beer and Pub Association (BBPA), said that the news was "potentially a huge win for pubs across the country" and showed that the government had "not only listened to our concerns but acted". The BBPA has worked closely with ministers on a pub-specific solution to reduce bills in line with the government’s previous promises to pubs. The U-turn is also likely to be seen as a significant climbdown for the government, following previous reversals on winter fuel payments and inheritance tax for farms.
Conclusion and Future Implications
The government’s decision to U-turn on the business rates changes is a significant victory for the hospitality industry and a major climbdown for the government. The changes are expected to have a major impact on pubs and hotels, and are likely to be seen as a sign of the government’s willingness to listen to concerns and act. However, the U-turn also raises questions about the government’s ability to make difficult decisions and stick to them. The government’s decision to U-turn on the business rates changes is likely to be seen as a significant step towards addressing the concerns of the hospitality industry, but it remains to be seen whether the changes will be enough to support the industry in the long term.
