Andy Burnham heaped more pressure on Rachel Reeves to provide financial aid for ailing hospitality businesses, saying the whole rate system needed ‘rebalancing’.
The Greater Manchester mayor, a former Cabinet minister and possible challenger to Keir Starmer, said changes were needed as part of wider reform that includes revaluing council tax.
His remarks to the Institute for Government (IfG) conference came as the Chancellor resists mounting Cabinet pressure to offer business rates support to the wider hospitality sector.
The Treasury signalled a major U-turn on pubs last week following warnings hundreds could be forced to close after a big hike in rates.
But industry chiefs say that other sectors such as cafes, restaurants and hotels will also be hit hard, along with music and theatre venues and independent shops.
They warned six such venues will close every day in the next year without support – a total of more than 2,000.
‘I would support relief for the high street,’ Mr Burnham said today, suggesting it could be funded by greater taxes on web retailers.
‘What is needed is a root and branch review of land and property taxation overall, and business taxation linked to that… business rates I think are in need of rebalancing.’
It came as the boss of a Government agency warned that more than 5,000 pubs are set for sharp jumps in business rates after their property tax valuations doubled following the Budget.
The Manchester mayor, a former Cabinet minister and possible challenger to Keir Starmer, said changes were needed as part of wider reform that includes revaluing council tax
Despite more than 2,000 pubs facing closure amid business rate hikes, Rachel Reeves remains resistant to mounting Cabinet pressure to offer support to struggling hospitality venues
Jonathan Russell, chief executive of the Valuation Office Agency, confirmed a significant increase in the figures used to calculate property taxes for pubs at Parliament’s Treasury Select Committee on Tuesday.
It comes after weeks of criticism from pub bosses, industry chiefs and politicians over changes to business rates in the Budget announced in November.
In the Budget, the Chancellor announced a reduction in the multiplier used to calculate business rates payments for UK businesses.
However, the Treasury also confirmed that it would phase out Covid-era discounts for retail, leisure and hospitality businesses, which mean property taxes for these firms are cut by up to 40 per cent.
Ministers confirmed a £4.3 billion fund to help provide transitional relief as these discounts phase out, but this will only run until 2029.
Alongside these changes to business rates calculations, businesses will also see their taxes impacted by new property valuations.
Valuations based on calculations from 2024 will take effect when the new financial year begins in April.
While some properties have seen their valuations fall, most businesses in the hospitality sector have seen valuations jump due to a rebound in trade following the coronavirus pandemic.
On Tuesday, Mr Russell said 5,100 pubs have seen their properties’ rateable valuations rise by at least double.
He said that pubs have seen valuations jump by an average of 32% but stressed that around 15% have seen their valuations fall.
Mr Russell said: ‘There has been an increase but if you go back to the 2017 list, the rateable change between 2017 list and 2026 list is about 8%.
‘There was an obvious blip linked to Covid, which had an impact on trade and rentable evidence, so that had an impact on valuations.’
Kate Nicholls, chairman of UK Hospitality, said: ‘A whole hospitality problem needs a whole hospitality solution.’
The average hotel will see its business rates bill increase by £28,900 in the first year and by £205,200 in total over three years, the trade group said.
The average pub faces paying £1,400 a year more initially and £12,900 over three years.
UK Hospitality is calling for ministers to quadruple the level of discount applied to business rates to the maximum possible for hospitality firms.
One Government source yesterday indicated that Downing Street is pushing for a wider package to avoid having to make further debilitating U-turns.
‘There is a view that we want to do it once and get it right,’ the source said.
Business Secretary Peter Kyle, who will discuss the issue with the Chancellor this week, also hinted support should not be restricted to pubs.
He told the BBC the Government had been ‘in listening mode for some time’ on the issue, and that talks were held with the hospitality industry in Birmingham last week.
Mr Kyle said conversations with the Treasury had been ‘vigorous’ but ‘collegiate’. But the Treasury insisted there are still no plans to extend help on business rates to other sectors.
A source said hotels and restaurants may benefit from wider licensing reforms, but help on rates would be ‘pub specific’.
East Thanet MP Polly Billington, chairman of Labour’s group of coastal MPs, said ministers are having ‘genuine conversations with us’ about support for small hospitality and retail businesses.
It came as Labour was accused of a ‘wanton desire’ to destroy pubs.
A leading brewery boss said business rates reform piled further pressure on a sector already being battered by higher alcohol duty, minimum wages, National Insurance, VAT, corporation tax, green energy levies, packaging taxes and inheritance tax.
Richard Bailey, chairman of the Independent Family Brewers of Britain, said: ‘The measures taken by this government to increase tax and the burden of law on landlords and pubs will decimate this beloved and critical sector.
‘You can only assume from the Government’s recent actions and policy decisions that there is a wanton desire to wipe them out, destroy employment and vandalise our communities.’
He said that going to the pub is ‘becoming increasingly unaffordable’, adding: ‘Your local may not even be open every day due to ever-increasing taxes and legislation.
‘Pubs are being used as a whipping boy by His Majesty’s Revenue and Customs and the Treasury, who are deaf to the voices of industry that warn of hardship, closure and cultural obliteration.’
Some 1,500 pubs banned Labour MPs from their premises after the Budget. Mr Bailey, also chairman of Daniel Thwaites brewery, said: ‘This political leadership appear to have completely lost sight of the vital role that pubs play – or maybe they really don’t care.’