Rachel Reeves delivered a blow to beleaguered hotel and restaurant operators as she signalled that only pubs will receive any help to cope with a surge in business rate bills.
Hospitality firms as well as independent retailers say they are struggling to stay afloat after reforms in the Budget left them facing steep rises in rates – taxes paid by firms to local authorities.
The government has signalled that it is willing to help pubs – after a campaign which involved banning Labour MPs from many premises.
However, the Treasury is believed to be resistant to extending the help to the wider hospitality sector, to the fury of those running hotels and restaurants who say they have been just as badly affected by the changes.
And pubs remain in the dark over what the help will be after the government signalled two weeks ago that it was imminent.
Ms Reeves – who is attending the World Economic Forum in Davos – appeared to confirm other hospitality firms would be left out.
Asked about the policy by reporters, she said: ‘The situation that the pubs face is different from other parts of the hospitality sector.’
Rachel Reeves is attending the World Economic Forum in Davos, Switzerland
It will come as a bitter blow to firms outside the pub trade who have warned of closures and job losses if the Chancellor does not act.
Tory business spokesman Andrew Griffith said: ‘A U-turn which excludes the wider sector would be criminal.
‘Many hotels and restaurants face even higher rate rises and their viability is equally at risk.
‘Labour just doesn’t get business.’
Allen Simpson, chief executive of UK Hospitality, said: ‘The entire hospitality sector faces the same cost challenges – from eye-watering business rates hikes to the soaring cost of employment.
‘These are not challenges unique to pubs. Our hotels, restaurants and cafes, to name a few, all face their business rates bills increasing by thousands, driven by the same large increases to rateable values affecting pubs. These businesses employ six in seven people in hospitality.
‘While it’s positive there will be an announcement soon, this is a hospitality-wide problem that requires a hospitality-wide solution.
‘The Government has one chance to get this right. Without a package of support for the entire sector, I fear it will be too little, too late.’
Ms Reeves said the Budget had offered £4.3billion of support to ease the burden on firms who are losing Covid-era discounts and have also seen their properties revalued – which also affects how the rates they pay are calculated.
She said: ‘I do recognise the particular challenge pubs face at the moment and so I’ve been working with the sector over the last few weeks to make sure that the right support is in place.
‘We’ll be announcing something in the next few days – we’ve just been using this time to get the package right.’
The comments as pub bosses said they were still in the dark over what the Treasury is planning.
Chris Jowsey, chief executive of Admiral Taverns, which owns more than 1500 pubs, said his business rates bills will go up by an average of 25 per cent in April and 173 per cent over the next three years.
‘Unfortunately we haven’t heard anything of any detail yet. It’s now two months since the Budget and unfortunately we are still to hear what the actual resolution is going to be,’ he told the BBC.
He said the people running his pubs ‘are really quite concerned and anxious now because they don’t know what the future holds’.
Mr Jowsey added: ‘Unless they get some clarity and some certainty soon, it makes it very difficult for them to make decisions.’
It comes a day after leading hotel groups including Holiday Inn, Hilton and Butlins urged the Chancellor to expand the tax relief planned for pubs to the wider hospitality industry.
In a letter to Ms Reeves, more than 130 hotel bosses said soaring business rate bills are ‘the most significant challenge’ faced by the industry and that plans to offer rate relief to pubs must to extended to other firms.
They warned of closures and job losses if Labour does not act.
The average business rates bill for hotels will increase by 115 per cent over the next three years, according to analysis by UK Hospitality.
That will add £205,200 to the typical bill – and makes the sector one of the hardest hit by changes. In the letter, bosses said it was ‘critical’ the Government provides ‘a whole-sector solution’.
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