Pubs Win Government Support After Business Rates Backlash
UK pubs to receive £1,650 business rates relief under a new government package, easing costs amid rising bills and sparking debate over hospitality support.
The government has announced that pubs and music venues in England will receive a 15% discount on their business rates bills from April, with no increases for two years.
Treasury minister Dan Tomlinson said the three-year package would be worth £1,650 to an average pub in 2026-27.
This follows a backlash after the November budget, which saw many businesses facing significant increases in their business rates bills, leading to more than a thousand pubs banning Labour MPs from their premises.
UK Hospitality has warned that hotels, restaurants and other businesses in the sector are also at risk and has called for the support package to be extended.
The government says the package will cost £80m in the first year, with the cost for the following two years to be assessed by the Office for Budget Responsibility (OBR).
Tomlinson said pubs are the "bedrock of many communities" and the government wants to "go further" to support them after a decline of around 7,000 venues since 2010.
Asked why the Treasury had made several U-turns on key policies, Chancellor Rachel Reeves said the government "listens when people raise concerns".
She added: "We look at the detail and try to make sure we get it right."
The government has also promised a review of how pubs are valued by the Valuation Office Agency (VOA) ahead of the next revaluation of premises in 2029.
Shadow Chancellor Mel Stride dismissed the announcement as a "sticking plaster" and asked: "Is that it?"
"After weeks of telling our local pubs that help was on the way, this is all they've got." He said the measures would "only postpone the pain" and warned that "thousands of businesses are despairing as their bills are soaring."
Liberal Democrat Treasury spokesperson Daisy Cooper said that even with the financial support, pubs were still facing higher business rates bills, and that it "did nothing" for other high street businesses.
She called on the government to extend business rates relief for all retail, hospitality and leisure businesses and introduce an "emergency" VAT cut for the hospitality sector for a year.
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Chris Tulloch, managing director of Blind Tiger Inns, said the measures were "neither a rescue package nor a lifeline." He runs 23 pubs across the North West of England, including in Burnley, Manchester and the Wirral, and employs 250 staff.
"It's almost like the government is saying to pubs, 'We were going to shoot you and now we're not going to'."
"It's not making things better, it just means things won't get quite as bad quite as quickly."
Over the past 24 months, his profit margins have fallen by around 25% due to rising labour costs and business rates, despite his pubs seeing increased footfall and revenue in recent years. He says this is all down to rising costs such as National Insurance contributions.
He says the latest relief means his costs will still increase despite the discounts.
Tulloch would like to see a complete overhaul of the business rates system because "the current hospitality crisis is worse for us than Covid," when many venues had to close to prevent the spread of the virus.
He says that due to the higher costs of daily operations, pubs are currently limiting investment in their businesses.
He says this means that problems in the industry will only worsen in the future as the government discounts come to an end. "Pubs won't expand, they'll employ fewer staff, and they'll make less profit," he says.
Business rates are devolved in Scotland, Wales and Northern Ireland. This means each nation will receive a proportionate amount to decide what to do with it.
UK Hospitality, which represents the wider sector, said the measures "address a serious challenge facing pubs".
Chair Kate Nicholls said: "The reality is that we still have restaurants and hotels facing significant challenges from budgets that are constantly under pressure."
The British Beer and Pub Association (BBPA) said it would "avert the immediate financial threat posed by rising business costs and help keep the doors open for many".
BBPA chief executive Emma McClarkin says owners across the country will "breathe a sigh of relief", but the organisation's focus will now be on longer-term reforms to business rates.
Hospitality sector owners had warned that despite changes in the Chancellor's November budget, they were still facing increases in their business rates bills from April. This is because, although the government reduced the multiplier – a figure used to calculate how much businesses pay in rates – many pubs, restaurants and hotels are still seeing their bills rise because their properties have been revalued, and the new valuations were often significantly higher.
In addition to the increase in property valuations, small retail, hospitality, and leisure businesses, which had been receiving business rates relief since the pandemic – a relief that was reduced from 75% to 40% in November – will no longer receive this relief from April.
Industry body UK Hospitality has warned that without a support package, the average pub's business rates bill will increase by 76% over the next three years.
The government had already announced a £4.3 billion fund to help businesses as the rates relief is gradually phased out.
The government said that Tuesday's additional package means that three out of four pubs will see their business rates bills either decrease or remain the same next year.
In a further attempt to support struggling pubs, the government is also planning to allow them and other licensed premises to stay open beyond midnight during the men's World Cup this summer when the home nations' teams are playing.
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