Hospitality business rates will quadruple when relief ends in spring

The hospitality industry has warned of a £900 million hit in the spring unless the chancellor reforms business rates in the budget.

Bosses of some of the UK’s biggest pubs and high street venues said that without government action the tax would quadruple when business rates relief ends on March 31, costing the sector an additional £914 million.

Heads of 170 hospitality businesses and the trade body UKHospitality have called on the Labour government to act on its manifesto pledge to reform business rates.

In a letter to Rachel Reeves, the group said that the budget was the chancellor’s “last chance” to prevent business rates bills from quadrupling in just over five months’ time.

“We propose that your government introduces a new lower, permanent and universal multiplier for the hospitality sector, to be adopted across all nations of the UK,” it added.

The 170-strong group includes the chief executives of the pub groups Greene King and JD Wetherspoon, as well as the heads of high street venues such as Caffè Nero and IHG Hotels.

Hospitality bosses also said that the current cap on business rates relief “has acted as a disincentive to growth” with many venues deciding that expanding to a second venue is not worth the cost.

The hospitality sector has previously warned that without reform of the business rates system the rise in bills could lead to higher levels of business failures as well as cuts to investment.

The group added that the current tax system “discourages people from running high street businesses” when the government should be encouraging growth and investment.

Business rates relief was introduced in the spring budget of 2020 to ease the impact of the coronavirus pandemic on the hospitality sector. It has remained in place as the industry recovered from the effect of public health restrictions and rising costs.

Kate Nicholls, chief executive of UKHospitality, warned that the quadrupling of business rates bills would lead to “more venues shutting their doors for good” and increase vacancies along the UK’s high streets”.

She added: “Further closures will be so detrimental to the government’s growth agenda and put a dent in our sector’s ability to create places where people want to live, work and invest.

“If we don’t want to lose out on vital investment, job creation and regeneration of our high streets, then the chancellor needs to act to introduce a lower level of business rates for hospitality at the budget.”

UKHospitality added that while the government was coming under fiscal pressure, investment in the industry could be supported through “rebalancing the sectoral burden” of business rates. Hospitality was paying more than its fair share, considering the level of economic activity.

Other trade bodies including the British Retail Consortium have made similar appeals to Reeves. The consortium said the impact of high business rates could be seen on high streets across the country, “with shops shut, jobs lost and a social as well as economic cost”.

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