Rachel Reeves is poised to unveil a bailout package for pubs (Image: Getty)
Rachel Reeves is poised to unveil a bailout package for pubs as the industry warns of bankruptcies from rising business rates.
An announcement by the chancellor is expected as soon as Tuesday, reports The Times, with government sources signaling the support is worth around £300 million. The Treasury has been drawing up plans for relief on bills for pubs from April this year, but Reeves is said to have resisted more fundamental tweaks to the business rates system.
Pubs face 76% rates rise over three years
Dozens of MPs have raised the alarm over the imminent closure of pubs, which lobbying groups say would face a 76 per cent rise to their business rates over the next three years.
While the Treasury move risks igniting calls for other affected sectors to receive help, including hotels and restaurants, Reeves’s allies say they hope it will quell a looming backlash from Labour backbenchers.
To further cushion the impact of business rate changes, the chancellor is expected to set out plans to relax licensing rules for hospitality venues in the run-up to this summer’s football World Cup.
Industry insiders expect the support for pubs to be temporary and said any fundamental reform to the methodology or « multiplier » used to calculate the rates was likely to take longer.
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Hotels to see 115% rates increase
Reeves has sought to avoid the relief being widened as she tries to limit the tax changes in her spring statement on March 3.
However, the trade body UK Hospitality calculates that the average hotel will see business rates increase by 115 per cent over the next three years, states the report.
Business rates are a tax levied on non-domestic properties and revalued every three years. The latest set of revaluations come into force from April.
Despite the chancellor pledging to reduce business rates for high street firms, she also scrapped a Covid-era 40 per cent discount, meaning that some are facing a rise of over 100 per cent and have warned they face bankruptcy in months.
There has already been £4.3 billion of support pledged to limit rate rises, but pubs claim the unique way their rates are calculated has put them in an unfair position.
Tories brand package ‘sticking plaster solution’
The Conservatives said that Reeves would inevitably have to revisit the issue to more fundamentally help those industries worst affected but left out of the support for pubs.
Andrew Griffith, the shadow business secretary, said: « Labour is scrambling to announce this package but it’s a sticking plaster solution when the patients are bleeding out all over our high streets.
« It’s taken them weeks to make this partial U-turn on the chancellor’s budget, during which thousands of retail and hospitality businesses have been staring down the barrel of disaster. Whatever they announce, it will be too little, too late.
« Labour promised a fairer system and permanently lower rates, yet business rates are going up for the second year in a row, with bills set to skyrocket by hundreds of per cent for many independent firms.
« This is a betrayal of the high street. Only the Conservatives will build a stronger economy so that we can cut business rates for thousands of high street businesses. »
An announcement by the chancellor is expected as soon as Tuesday (Image: Getty)
Chancellor claims she was ‘blindsided’ by changes
Reeves said this month that she was « particularly concerned » about the impact of business rate changes on pubs and they remained her « biggest concern ».
The government had legislated to allow a discount of up to 20p on business rates for every £1 charged by the exchequer, but it was set instead at 5p.
Sources close to Reeves said that she had been blindsided by the valuation changes, given business rates are calculated and set by the Valuation Office Agency. However, Jonathan Russell, the body’s chief executive, said this month that it had been « very clear » to the Treasury before the November budget about the impact of the changes.
Carolyn Harris, a Labour MP and chair of the cross-party group on UK spirits, said: « Pubs are more than pints. Landlords tell me that spirits are crucial to their profitability. Amongst the higher costs pubs are facing is yet another hike in excise duty hitting their bottom line. We cannot support pubs and hospitality if the spirits sector isn’t empowered to thrive. »
