Story Highlight
– Retailers urge government to exempt more businesses from rate hikes.
– Pubs expected to receive relief from business rates increases.
– Independent retailers feel excluded from discussions on support.
– Higher rates could lead to increased prices and redundancies.
– Critics call for fundamental reform of the business rates system.
Full Story
High Street businesses, pharmacies, and live music venues are urging Chancellor Rachel Reeves to reconsider upcoming increases in business rates that are set to impact them and pubs. An announcement from the government regarding potential concessions for pubs in England is anticipated in the near future. Pub owners have expressed strong opposition to the proposed rate hikes, with over a thousand establishments reportedly banning Labour MPs from entry in protest.
Despite the focus on pub relief, other business groups and backbench politicians are advocating for broader measures to assist various sectors that may struggle with rising costs. Anna Turley, the chair of the Labour Party, mentioned on the BBC’s Today program that the government is committed to ongoing dialogue with affected businesses. “Where businesses are telling us they are struggling and they need more support, it is absolutely right that the chancellor talks to them,” she stated.
The upcoming business rate increases are expected to be significant over the next three years, coinciding with the withdrawal of COVID-era support and adjustments in property valuations to reflect a return to business norms post-pandemic. Although the Chancellor’s November Budget provided some additional aid, many businesses claim they will still face challenges meeting the rising costs. Reports indicate that the expected relief may only extend to pubs, leaving many other businesses without similar support.
Andrew Goodacre, chief executive of the British Independent Retailers Association (Bira), expressed frustration at the lack of relief for independent retailers, which he believes face analogous challenges to those of pubs. He suggested that these businesses might consider following the pubs’ lead in denying access to MPs.
Surinder Arora, CEO of the Arora Group, which operates several hotels across the UK, denounced the idea of selective relief solely for pubs as “not right or fair.” He highlighted the significant increases in business rates for his hotels, mentioning that one establishment saw its bill rise by £12.4 million after previous discounts were decreased. “The new numbers are eye-watering,” Arora remarked, cautioning that customers would eventually bear the brunt of these costs, making it less feasible for businesses to expand.
Michael Van Clarke, founder of a premium London hair salon, condemned the current business rates system as “dysfunctional.” He noted that many service-driven businesses are still grappling with the aftermath of COVID lockdowns, calling the impending rate hikes “punishment beatings” following years of struggle.
Concerns regarding the effectiveness of the business rates framework were echoed by the British Retail Consortium (BRC). Helen Dickinson, the BRC’s chief executive, characterised the latest government proposals as mere “sticking plaster on a broken system,” rather than the comprehensive reform needed.
Jon Collins, chief executive of the live music body LIVE, insisted that any changes regarding rates must also encompass live events venues and arenas. The chief executive of the National Pharmacy Association, Henry Gregg, warned of a potential 140% increase in rates for pharmacies. Meanwhile, the lobby group representing gyms, pools, and leisure facilities cautioned about rate hikes of up to 60%, predicting dire consequences such as service cuts and job losses. Huw Edwards, chief executive of ukactive, stated that without a supportive package for these sectors, communities could face the closure of local gyms.
Business rates in the UK are calculated based on the “rateable value” of premises, with assessments occurring every five years. The last assessment in 2021 factored in COVID’s impact, while the upcoming evaluations, effective from April, show a significant increase in values. To mitigate the effects of rising rates, Chancellor Reeves announced a reallocation of tax burdens to favour smaller businesses within the retail, hospitality, and leisure sectors, ensuring larger enterprises contribute more.
The final business rates bill is derived from multiplying a property’s value by a predetermined figure known as “the multiplier,” which will be adjusted to favour smaller businesses going forward. All businesses in the affected sectors benefited from discounts during the pandemic, with the initial 75% reduction now down to 40% for the current financial year and planned to end entirely by April. Transition relief worth £4.3 billion will be introduced to facilitate a gradual increase over the following three years.
Concerns from business leaders have also resonated with politicians. Conservative MP Dame Caroline Dinenage highlighted in a letter to the Chancellor that venues and leisure facilities are facing a precarious future. She warned that the proposed rate reforms could push many businesses “over the edge.” In a recent interview, Reeves acknowledged the need for continued support for struggling businesses, stating, “I want to support our pubs; I want to support our High Streets… but I recognize that many paths are still struggling and we’re working with them.”
