Following a furious backlash from publicans and pub campaigners – and many pubs barring unsupportive Labour MPs – the Chancellor eventually conceded that there would be a U-turn which was finally delivered yesterday after weeks of delay. Yet the measure has been described by publicans as no more than a sticking plaster that stops the huge hikes but doesn’t address the underlying issue that pubs already pay more than their fair share – and does not deliver what Labour promised in their manifesto.  Meanwhile, the wider hospitality sector is reeling, with no additional support announced at all.

The situation for pubs in England following the announcement

Having faced huge hikes in business rates, pubs in England will now either see more modest increases or even very slight reductions versus their current rates bill, as a result of the Government’s U-turn. However, even with the additional relief, it is still a far cry from Labour’s pre-election promise that the average pub would have their business rates bill reduced by £2,600 a year. Labour’s pre-election graphics stated that “Labour would cut business rates, worth over £2.6k to the average pub”. That most certainly hasn’t happened – and indeed, some pubs will still see rates’ bills increase in April.  

The media has been reporting that pubs’ rates bills will be subject to a “15% discount” from April, however this is misleading, as the 15% actually only applies to the unaffordable bills that were due to come into effect next April, not the bills currently in place. So this is not the discount that is being portrayed, it is simply a correction to looming future overcharging. The £100 million is also not “support” – it is merely reducing the otherwise disastrous tax rise, but pubs are still overtaxed by the Government, taking more than is reasonable or sustainable from mainly low margin but vitally important local businesses. 

Welsh pubs have not been offered help by the Welsh Government, making the situation even worse for pubs and publicans there.

The unfair and unjustified revaluation remains in place and needs to be scrapped

In addition, the deeply flawed and unjustifiable revaluation of pubs’ rates has been left in place meaning higher rateable values will continue to loom over pubs in coming years – despite the reality of the very tough trading conditions for pubs.

Following the original disastrous Budget, the Campaign for Pubs wrote to the Chancellor and the Secretary of State for Business urging them to scrap the revaluation and investigate how it happened, pointing out the new values are clearly nonsensical compared to trading conditions and levels of trade for pubs.

Yet the Government has refused to scrap the new valuations, which should have happened, given the Government’s own admission that the current business rates system for pubs has lost all support and confidence throughout the sector.

Ministers have also still refused to stick to its own promises which were initially to abolish business rates altogether and then to deliver permanently lower bills for pubs, through a fairer system. The Government has committed to reviewing the methodology, but publicans fear they are unlikely to see any real change till 2029, which will be at the end of this parliamentary term. The Labour manifesto promise was to abolish business rates and deliver lower rates for pubs in this parliament. 

The Campaign for Pubs is still calling on the Government to scrap the revaluation and maintain current valuations, in preparation for a full overhaul of the system from 2027. There also needs to be an investigation into the contrived ‘Fair Maintainable Trade’ (FMT) system for calculating pub rateable values. This is a long-despised system that uniquely penalises publicans, pushing up rateable values even at a time when actual trade and turnover has fallen as a result of the cost-of-living crisis, and that also pushes up rents and TV sports bills.

Publicans now deserve absolute certainty that a fair new system delivering permanently lower bills will be in place by the next revaluation, if not before. 

Pubs are overtaxed & online retailers must be taxed the same as physical businesses

Pubs are disproportionality affected by business rates, as well as paying many other taxes, including VAT.

The dodgy FMT system has resulted in pubs as a sector paying more than twice what they should overall compared with other retail businesses as it sets pubs rateable values at a higher average rate than for other sectors. Pubs and bars in England and Wales account for just 0.4% of business turnover but pay 2.1% of the national business rates bill according to BBPA figures.

The Campaign for Pubs wants to see a new system altogether that finally levels the playing field between online retailers and physical businesses, like pubs, restaurants, cafes and shops, all of which are currently penalised yet are the fabric of local economies and high streets. The Campaign insists that real publicans are consulted on any new system and that it is not another self-serving stitch up by big businesses like the current system.

Hospitality as a whole needs support through the cost-of-living criris

The Campaign for Pubs also supports calls for lower VAT for hospitality, on all sales including alcohol (otherwise important wet led pubs would not benefit) with the Government then committing to Small Retailers VAT Relief after that, to ensure that small retailers pay permanently lower VAT than large chains.

Up and down the country, hospitality businesses work together, with pubs, restaurants, cafés and hotels all relying on each other. All need support, to ensure the UK’s tourist appeal and local services are maintained, with all of this being vital to local and national economies. 

Dawn Hopkins, Vice-Chair of the Campaign for Pubs, and a licensee in Norwich said:

“This U-turn on the business rates betrayal and the extra relief is essential, to avoid the otherwise catastrophic hikes in business rates, but is just another sticking plaster and whilst a relief,  does not address the fundamental unfairness of the business rates system to pubs and the dodgy system of valuation currently used.

“The Labour Party promised genuine reform of the whole system of business taxes and they promised permanently lower rates for pubs, so these are still two broken promises until and unless they deliver that through a new fairer system. We are deeply disappointed that the Government has left the completely flawed and unjustifiable revaluation in place, which has produced absurd rateable values that bear no relation to the very tough reality of trading for pubs.    

“Whilst we welcome a review, the fact is that Labour promised to abolish business rates, not to merely commission a review, this is kicking it into the long grass. We are therefore calling on all publicans in England and Wales to write to their MP and make it clear that the current revaluation is wrong and that the highly dubious and unfair ‘Fair Maintainable Trade’ system of calculating pub rates must be scrapped and a new system pub in place from 2027, not 2029. Without this, the issue is not resolved so we urge them to listen and deliver the genuine reform they themselves promised”. 

Paul Crossman, Chair of the Campaign for Pubs and licensee of three pubs in York said:

“We are disappointed that the Govt has not gone further on business rates and ditched the current revaluation for pubs completely while maintaining existing rateable values and reliefs for at least another year as we asked. The new valuations are the product of a flawed methodology that has now been rightly acknowledged as unfit for purpose by the Govt.

“While the further discount and freezing of bills for three years is welcome, it cannot be right that pubs are now saddled with higher rateable values going forward when they are clearly the product of a flawed system.

“Replacing this methodology with a fair new system that actively supports pubs will now be key, and it is vital that grassroots rates-paying businesses are consulted and that this time their needs are prioritised over those of the big property owning corporations that have exclusively influenced and shaped all pub-related policy in the past”.

ENDS