Business rates bomb leaves pubs on the brink of ruin

Rachel Reeves has been warned that pubs and other venues will close if the budget does not address concerns over business rates, alcohol taxes and workers’ rights.

As she weighs up her options, hospitality bosses urged the Chancellor not to hit the sector as it recovers from crises such as the pandemic and rising energy prices.

Avoiding a nearly £1bn rise in business rates next April should be top of the to-do list on October 30, according to a high-profile Labor adviser, as well as UK Hospitality bosses and Greene King.

Sacha Lord, president of the Nighttime Industries Association, which represents hundreds of pubs, nightclubs and bars, urged an immediate extension of business rates relief.

“Without this, landlords will see unsustainable cost increases, many of them in the region of over £30,000, which is simply unbearable,” said Lord, an adviser to Greater Manchester Labor mayor Andy Burnham.

If the pace of venue closures continues, unemployment will skyrocket and the UK’s status as a cultural tourism destination will be “stolen by other global cities”, Lord added.

Business rates are a local tax based on the value of a commercial property, meaning stores pay a premium compared to online giants like Amazon.

With the help, hospitality and leisure businesses have reduced their bill by 75 per cent, capped at £110,000 per business.

During the pandemic, there was 100 percent relief between 2020 and 2022, and then 50 percent the following year. It was then extended until 2025.

But the relief will end on March 31, hitting hospitality businesses with an extra bill of £928m.

“The dangers of failing to act are serious, whether you are a pub, a seaside hotel or a play center for children and families,” added Kate Nicholls, director of UK Hospitality, which has 750 members.

Greene King chief executive Nick Mackenzie said: “We urge the government to start delivering on its promise of a comprehensive rates reform to create a system that does not unfairly burden hospitality.”

The Labor Party has promised reforms, saying the system “disincentivises investment, creates uncertainty and places an undue burden on our high streets”.

In his manifesto he promised to replace business rates to make the system fairer.

But companies are concerned that the reforms are insufficient and come too late in the face of closures. High Street employers want a lower, permanent rate.

Employers are also concerned about the government’s plans for workers’ rights. Some say introducing day one entitlements, such as sick pay, could hit jobs and growth.

This week, 80 brewers and pub bosses, including Greene King and Heineken, urged Reeves not to increase alcohol taxes. Pubs would have to increase prices, leading to a loss of customers, closures and job losses, the British Beer and Pub Association said.

He called on ministers to freeze beer duties next year and gradually reduce rates.

“Thousands of pubs and breweries across the country now have nothing left to give,” he said.