Labour MPs are urging party leader Sir Keir Starmer to reconsider planned reforms to business rates, citing concerns about the potential for widespread pub closures when Covid-era business rate relief ends in April. The pub industry fears significant financial strain as the current 75% business rate discount, implemented during the pandemic, was reduced to 40% in Chancellor Rachel Reeves' November budget and is slated to expire entirely.
Rachael Maskell, Labour MP for York Central, raised the issue during Prime Minister's Questions, calling for an urgent review of the proposals to "avert a crisis" on the High Street. Prime Minister Rishi Sunak responded that the government was in discussions with the industry to explore further support measures.
The government has attempted to offset the reduction in discounts by lowering the "multiplier" used to calculate business rates. However, a simultaneous readjustment of the rateable values of commercial properties by the Treasury means that many businesses could face higher overall bills despite the lower multiplier. The specific impact will vary depending on the location and assessed value of each property.
The current system of business rates is based on the estimated rental value of a property. Critics argue that the system disproportionately burdens brick-and-mortar businesses compared to online retailers, who often have lower property costs. The temporary Covid-era relief provided a crucial lifeline for many pubs and hospitality businesses, which were particularly hard-hit by lockdowns and social distancing measures. The ending of this relief, coupled with rising energy costs and inflation, is creating a challenging economic environment for the sector.
Industry representatives have warned that without further government intervention, hundreds of pubs could be forced to close, leading to job losses and a decline in community hubs. The British Beer and Pub Association (BBPA) has been lobbying the government to extend the current level of relief or implement alternative measures to support the industry. The BBPA estimates that the average pub faces an increase of thousands of pounds in business rates from April, potentially pushing many into financial distress. The situation remains fluid as the government continues to engage in discussions with industry stakeholders.
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