Rachel Reeves today insisted she is ‘working intensely’ on a pubs bailout after it emerged she was warned about the crippling impact of business rate hikes before the Budget.
The Chancellor confirmed there is ‘additional support coming’ and she was determined to ‘get this right’.
But appearing on BBC Breakfast, she suggested the package will only be ‘temporary’ – and batted away demands from Labour MPs for help to be extended to the wider hospitality sector.
She said an announcement would be coming ‘in the next few days and weeks’, raising concerns about more uncertainty for struggling businesses.
The Treasury signalled a major U-turn on pubs last week following warnings that hundreds of pubs could be forced to close after big increases in rates.
Allies of Ms Reeves suggested that the impact of revaluations had not become clear until after the Budget.
Chancellor Rachel Reeves confirmed there is ‘additional support coming’ and she was determined to ‘get this right’
However, the head of the Valuation Office Agency (VOA) told MPs yesterday that ministers were warned about the scale of the impact.
Jonathan Russell said 13 per cent of pubs – a total of 5,100 – have been hit with a 100 per cent rise in their so-called ‘rateable value’.
This is used to calculate their business rates bill – leaving publicans facing huge tax increases in yet another bruising assault on the sector under Labour.
Ms Reeves has been resisting pressure to offer support to the wider hospitality industry such as cafes, restaurants and hotels as well as theatres, music venues and shops.
A report by UK Hospitality warned six such venues will close every day this year without support – a total of more than 2,000.
It is calling for ministers to quadruple the level of discount applied to business rates for hospitality firms.
Greater Manchester mayor Andy Burnham, a former Cabinet minister and possible challenger to Sir Keir Starmer, called for a ‘rebalancing of taxation so that we help the High Street’ – not just pubs.
‘I would support relief for the high street,’ he said. ‘I think what is needed is a root and branch review of land and property taxation overall and business taxation linked to that.’
Appearing before MPs on the Treasury Select Committee yesterday, Mr Russell said pubs saw an average increase of 32 per cent in their rateable value, which is based on how much rent the property would attract.
But he also revealed that 5,100 pubs ‘would have seen their valuation doubled’.
Asked by Tory MP Dame Harriet Baldwin if he had flagged this ‘huge increase by historic standards’ to the Treasury before the Budget, he said: ‘We make it very clear there are changes in rateable value because of the work we’re doing.’
John-Paul Marks, chief executive of HM Revenue and Customs, noted that the Chancellor announced a £4.3billion relief package for pubs having received ‘data drops’ on valuations from the VOA ahead of the Budget.
In the Budget, the Chancellor announced a reduction in the so-called ‘multiplier’ used to calculate business rates.
But she also confirmed that Covid-era discounts for retail, leisure and hospitality businesses would be phased out.
Alongside soaring valuations – in part due to a rebound in trading following the pandemic – it means business rates bills are rising rather than falling.
UK Hospitality chief Kate Nicholls said: ‘This is yet another example of just how hard hospitality businesses are hit by significant increases to rateable values, which have driven staggering business rates rises.
‘The Treasury was warned, by UK Hospitality, to expect significant increases to rateable values, due to the previous revaluation being based on valuations during Covid. We laid out, in no uncertain terms, that the maximum 20p discount to the multiplier was absolutely necessary to offset these rises in rateable values.
‘Sadly, our warning was not heeded, and now the level of business rates increase over three years will be simply unsustainable for many businesses to absorb.
‘This is a hospitality-wide problem that needs a hospitality-wide solution. The Government needs to deliver the full 20p reduction to the hospitality multiplier.’