Chancellor Accused of Failing to Support British Pubs

Introduction to the Issue

Rachel Reeves has been accused of failing to support the great British pub as she promised in the Budget, with owners facing skyrocketing business rates. Speaking in the House of Commons, the Chancellor said she was supporting small businesses by introducing permanently lower tax rates for over 750,000 retail, hospitality, and leisure properties.

The Problem with Business Rates

Business rates, which are a tax on commercial property in England and Wales, are calculated using a complex formula of property value determined every three years by a government agency, combined with a national "multiplier" set by the Treasury. In recent years, small businesses have received a 75% reduction in business rates to help them cope with the COVID pandemic, and Ms. Reeves reduced this to 40% in last year’s budget.

Impact on Small Businesses

The idea was that in this year’s Budget, the Chancellor would scrap these remaining reliefs in favor of reforming the business rates system to offset this fall, while also shifting the tax burden to much larger companies. However, the Chancellor only announced a 5p discount on the pound for small retail, hospitality, and leisure businesses, rather than the supposed 20p cut that the government had given itself the power to implement.

Concerns from Pub Owners

A pub owner near Hull, has seen the assessed value of one of his two properties rise from £67,000 to £110,000 in just three years – a 64% increase. He told that there is an "ongoing question" of business viability and while he believes they can "adapt" in the short term, "at some point there will be a tipping point". Even at the moment, with bars full seven nights a week, "it’s difficult for us to break even," he said.

Government Response

A Treasury spokesman said: “We are protecting pubs, restaurants, and cafes with the Budget’s £4.3bn support package. This is in addition to reducing licensing costs to help more venues offer street drinks and outdoor dining, maintaining our reduction in alcohol duty on draft pints and capping corporation tax.”

Criticism from the Industry

Hotel entrepreneur Sacha Lord said he had “never heard such fear” in his industry. He said the business tax reform announced in the Budget was “nothing more than a stealth tax” and would mean there would be “a series of closures” early next year. “Pubs, independent restaurants, and cafes are all at serious risk of closure,” he warned.

Call for Action

Kate Nicholls, chair of UKHospitality, said: "The Government promised in its manifesto to create a level playing field between the high street and the online giants. The plan in the Budget to achieve this is rapidly unraveling and will have the exact opposite effect." She added: "We agree with his reforms aimed at creating permanently lower business rates for hospitality and we welcome the package of transition relief, but his current proposal does not deliver lower bills. A 20p discount for hospitality would do that. We urge the Chancellor to think again."