A south-east England publican says he faces an annual bill increase of £62,000, despite Chancellor Rachel Reeves pledging to introduce the most favourable tax framework for hospitality businesses since 1991.
Phil Thorley, proprietor of Thorley Taverns, said 17 out of 18 ofn his venues will experience higher business rates when the new measures begin.
Ms Reeves had announced support for pubs, restaurants and small retailers through increased levies on large commercial properties, including distribution centres run by online retailers.
However, operators across the hospitality sector report that the expected savings have not materialised.
Government officials say that standard independent pubs will save £4,800 a year under the reforms. Many operators argue that their real-world calculations show significant increases instead, adding strain to businesses already under pressure.
Business rates are determined by a property’s rateable value, which reflects its estimated annual rental price.
The Government introduced reduced multipliers for about 750,000 retail, hospitality and high street venues, but the reductions have been smaller than many businesses anticipated.
At the same time, a large number of operators have seen rateable values rise sharply. The end of a 40 per cent relief introduced during the coronavirus crisis will further increase liabilities from April.
South-east England publican warns of £62,000 annual bill hike, despite Chancellor’s pledge of most favourable hospitality tax framework since 1991
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Analysis by tax consultancy Ryan indicates that typical small retailers face 42 per cent higher bills, restaurants will see 45 per cent growth, and pubs will shoulder the largest rise at 66 per cent.
Transitional relief will offset some of the increases, but most operators are expected to face substantial additional costs. Mr Thorley told BBC Radio 4’s Today programme that rateable values at most of his sites had “gone north”, leading to a 27 per cent rise in the rates paid by his family business.
He said the increases jeopardise the financial stability of his pubs. Manchester bar owner Elaine Wrigley said the chancellor’s statements amounted to “smoke and mirrors” after her venue’s rateable value increased from £69,000 to £97,000.
Despite reduced multipliers for hospitality settings, she faces a 15 per cent increase in her rates bill.
Most pubs are expected to face substantial additional costs as a result of the Budget
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PA“She may well have said it’s the lowest rate and the best support but it’s from the highest base,” Ms Wrigley said.
The Atlas Bar has raised its prices four times in a year, but management remains concerned that further increases would deter customers.
“We’re at a point now where we feel like we can’t put any more on to our customers, so subsequently our margins are being reduced and being squeezed which is not helpful,” she said.
Operators across the country report similar challenges as they weigh affordability against customer retention.
Night Time Industries Association chairman Sacha Lord described the changes to business rates as a “stealth tax” on high street firms.
He said that while the Budget initially appeared positive for hospitality, the full implications became clear in the hours that followed.
“Once this kicks in in April, we are expecting to see more closures than ever before, including during the pandemic,” Mr Lord said.
He described the outlook as the most severe warning yet issued by industry leaders.
The concerns emerge as operators continue to absorb the effects of measures introduced in October’s Budget.
These include higher employer national insurance contributions and increased minimum wage requirements for staff.
Mr Thorley said the combination of pressures could deliver “the death knell to the British pub”.
He predicted reductions in employment, cuts to investment and fewer entry-level opportunities for young workers within the sector.
Mr Thorley said the changes will mean less jobs for young people
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The Treasury defends its approach, pointing to a £4.3billion support package intended to protect pubs, cafés and restaurants through business rates constraints.
A Government spokesperson said: “This comes on top of cutting the cost of licensing to help more offer pavement drinks and al fresco dining, keeping our cut to alcohol duty on draught pints and capping corporation tax”.
Mr Thorley said his “small little family company” will still face an additional £62,000 charge under the changes.
He warned that further rises in minimum wage costs would mean “less employment, less investment, less training in the people that we’ve got, and less jobs for young people”.
Sector representatives say the gap between ministerial assurances and operators’ experiences has created uncertainty for businesses navigating rising costs.
Many fear that continued financial pressure will threaten the long-term viability of pubs across the country.