The hospitality industry is on edge as pubs and restaurants face potential closures, with thousands of jobs at risk. Industry leaders blame what they see as another letdown by Rachel Reeves, accusing her of failing to support businesses effectively.
Initially, the Chancellor had vowed to alleviate business rates for smaller companies by increasing taxes on larger properties. This move was intended to balance the competition between traditional high street businesses and online giants.
However, many small business owners are dismayed to find their bills are still set to rise. Pub operators have expressed feeling “deceived” and “misled” by Ms. Reeves’ promises.
Frustration is also mounting over the favorable changes granted to big chains, including large supermarkets and warehouses used by companies like Amazon.
Reports indicate a stark disparity: while an Amazon warehouse would experience just a 6.4% increase in its bill, a pub in Northampton could face a staggering 300% hike.
Despite Ms. Reeves’ assurances during her Budget speech on Wednesday that her policies would benefit the sector, subsequent document releases have revealed the severity of the increases many are bracing for.
Due to the complicated nature of calculating business rates bills, many publicans only discovered the horrors they face on Thursday morning after doing the maths themselves.
All firms expect to see the rateable values of their properties increase following the publication of new values by the Valuation Office Agency this week.
The Chancellor had promised to pay for a reduction in business rates for smaller firms by hiking taxes on larger properties to ‘level the playing field between the high street and online giants’
Emma McClarkin, chief executive of the British Beer and Pub Association, said: the budget ‘missed the mark by a long way’
Publican Leon Burton, who runs the Grill pub company in Staffordshire, Cheshire and Shropshire, said this is ‘not the overhaul or the relief we were promised’.
Facing a combined increase of 328 per cent across his six sites, he added: ‘Hospitality has been lied to, and the public has been gaslit on the support that the Government claims they are giving to hospitality.’
Anthony Pender, who runs the Somers Town Coffee House in Keir Starmer’s North London constituency, said he felt ‘utterly betrayed’ by the Prime Minister.
Pints could go up by between 50 and 60p due to higher costs next year, he warned.
Mr Pender told the Daily Mail: ‘There’s no ifs and buts about it, he has gone after small and medium businesses – because he won’t go after big businesses and tackle the heart of the issue.’
The boss of Greene King, one of the country’s biggest pub companies, said Labour had ‘failed to deliver sufficient support around business rates. Chief executive Nick Mackenzie added: ‘It leaves pubs with little room to invest to create jobs, grow and drive their local economies.’
A cocktail of cost hikes – including rises to alcohol duty and inflation-busting increases in minimum wages – are also set to pile on pressure.
Despite their pleas for help, the Chancellor only offered venues a small discount on one aspect of their total bill. She did this while also completely removing a Covid-era relief, which had given pubs 40 per cent off their bills.
The new measures introduced at the Budget mean small businesses – those with commercial properties with rateable values under £500,000 – will see just a 5p cut to their ‘multiplier’ that calculates the bill, a far cry from the 20p they had called for.
Emma McClarkin, chief executive of the British Beer and Pub Association, said: ‘This Budget missed the mark by a long way and did not properly back a sector we all know and love. Bills will go up, not down, despite the impression the Budget gave.’
The growing tax burden under Labour means the average pub will see their bill rise by 65 per cent, or by £6,108.66 to £15,373.59, according to the tax advisory service Ryan. The firm also dismissed Government claims that a package of support would ameliorate the hit, saying that this ‘delays the pain; it doesn’t remove it’.
Allen Simpson, chief executive of industry group UKHospitality, said Labour’s Budget represented ‘a massive tax rise’ for venues, which ‘will mean more job losses’.
High Street companies have for decades called on Governments to reshape business rates – a tax paid on commercial properties – to make the system fairer and easier to stomach. This is because brick and mortar hospitality and retail businesses have been taxed disproportionately compared to online companies operating out of big warehouses.
Publican Leon Burton, who runs the Grill pub company in Staffordshire, Cheshire and Shropshire, said this is ‘not the overhaul or the relief we were promised’
A new multiplier for large businesses – those with a rateable value over £500,000 – was set at 50.8p. That is below the current 55.5p used to calculate their bills.
This will also result in 2,040 big supermarkets – primarily Tesco, Asda, Sainsbury’s and Morrisons – enjoying a £42.9million cut in their combined bills, according to Ryan. One big retailer even called it ‘the best thing since sliced bread’.
Pub company owner Mr Burton, who employs 200 people, said rates will go up by £24,620 at one of his sites, the Lion Hotel in Brewood, as he faces a total hit of £85,000 across his six pubs.
He warned: ‘When hospitality is already struggling under the significant weight of this Government’s choices, this will accelerate closures in our communities.’
His remarks came as Ms Reeves told BBC Radio 4’s Today Programme that ‘businesses have welcomed’ the changes.
But Paul Crossman, operator of three pubs in York and chair of the Campaign for Pubs, said the sector is ‘apoplectic’ with Labour. Other landlords are working 90-100 hour weeks as they cut staff hours to manage costs, according to the Campaign for Real Pubs.
