**Review Launched into Business Rates Calculation for Pubs and Hotels**
A comprehensive review into the calculation of business rates for pubs and hotels in England and Wales has been initiated, with the potential for significant reforms to the existing system. The Treasury has appointed business rates expert Jerry Schurder to lead this review, which is expected to provide insights and recommendations by March 2027. The government is actively seeking input from landlords, hoteliers, and business owners to ensure a broad range of perspectives is considered.
The move comes in the wake of growing concerns from the hospitality sector regarding the financial pressures stemming from business rates. Recently, Andy Burnham announced a 20% reduction in business rates for pubs, social clubs, and live music venues in England, set to take effect in April. This decision follows ongoing debates about the fairness of the current business rates system, particularly for pubs, which have argued that they face disproportionately high rates bills compared to other types of businesses.
The British Beer and Pub Association (BBPA) has highlighted the struggles within the sector, reporting that 161 pubs closed in the first quarter of this year alone, resulting in the loss of approximately 2,400 jobs. Rising business rates are cited as a significant challenge, alongside increased costs associated with National Insurance and minimum wage hikes.
James Murray, the financial secretary to the Treasury, emphasized that the review aims to "rethink valuations" to establish a more equitable system for the future. Emma McClarkin, the chief executive of the BBPA, welcomed the review, stating that the current business rates burden has severely impacted the ability of pubs to remain operational.
Currently, pubs are valued for rates differently than retail establishments. Instead of solely considering the physical space, valuations are based on a metric known as Fair Maintainable Trade, which means that as a pub's turnover increases, so does its rates bill. This has been a point of contention for many in the industry, who argue that the system does not reflect the realities of their business operations.
Schurder, who previously served as the business rates policy lead at advisory firm Newmark UK, will also contribute his findings to the next rates revaluation scheduled for 2029. His appointment has been positively received by various stakeholders, including Craig Beaumont from the Federation of Small Businesses (FSB), who noted the importance of Schurder's expertise in addressing the complexities of business rates.
While the review has garnered support, there are calls for broader reforms to the business rates system. Beaumont suggested that the government should consider increasing the rates relief threshold for small businesses to alleviate the financial burden on smaller enterprises. Tom Ironside from the British Retail Consortium echoed this sentiment, stressing the need to ensure that the interests of retailers are not overlooked during the review process.
Political responses to the review have varied, with Shadow Chancellor Sir Mel Stride criticizing the timing of the initiative, suggesting it is too late for many hospitality businesses already struggling under the weight of tax increases and regulatory pressures. Liberal Democrat Treasury spokesperson Daisy Cooper also called for urgent reforms, including an emergency VAT cut and a reversal of recent job tax changes that have adversely affected the hospitality sector.
In recent years, the government has made adjustments to business rate discounts, particularly in response to the COVID-19 pandemic. Last year, it was announced that discounts would be scaled back, leading to concerns about significant increases in rateable values for pub premises. Following backlash from the hospitality industry, the government implemented a 15% discount for pubs and music venues earlier this year, with the new 20% discount announced in July building on that support.
However, there remains some confusion regarding eligibility for these discounts, particularly concerning larger live music venues. Further clarification on which businesses qualify for the relief is anticipated in Chancellor John Healey's upcoming Budget announcement this autumn.
As the review progresses, stakeholders from the hospitality sector are hopeful that it will lead to meaningful changes in the business rates system, allowing pubs and hotels to operate more sustainably and contribute positively to the economy.