Burnham accused of ‘piecemeal’ business rates reform
Andy Burnham has been accused of taking a “piecemeal” approach to business rates instead of committing to Labour’s manifesto pledge to replace the tax system.
The government has launched a review into how business rates bills are calculated for pubs and hotels, but industry bodies have urged the Prime Minister to commit to wholesale reform of the “complex and outdated business rates system”.
The Treasury said on Monday that it has launched a review of the property valuations which determine the business rates bills paid by hotels and pubs.
Jerry Schurder, dubbed a “business rates expert” by the government, will lead the review, which ministers said would make valuations “fairer” for these businesses.
Hospitality business leaders have ridiculed the current system of valuing pubs and hotels. Some, according to the Times, have warned that rural venues are subject to a “nice pubs” tax because the system counts features like waterfront views and play areas towards their value.
This comes on top of Burnham’s announcement last month of a 20 per cent cut in business rates bills for pubs, social clubs and live music venues.
Rates reform ‘urgently needed’
The British Chambers of Commerce (BCC), one of the UK’s leading trade bodies, criticised the government for limiting this review to pubs and hotels.
Jonny Haseldine, the group’s head of business environment policy, said: “While it is welcome for the pubs and hotels we represent, this review of valuations should be wider, and cover every sector.
“The full reform of business rates, promised by the government at the last election, is urgently needed. This continued piecemeal approach to reform is the wrong approach.”
The review will not consider the rates paid by retailers, despite warnings that high street shops are being saddled with huge bills.
The British Retail Consortium, which represents leading retailers like Tesco, Marks & Spencer and Waterstones, welcomed the appointment of Schurder, who it said has “deep expertise in this area”.
“[But] it’s vitally important that the needs of retailers are not overlooked as retail represents five per cent of the economy but pays 20 per cent of the business rates bills,” Tom Ironside, the trade body’s director of business and regulation, said.
Restaurants will also be snubbed by the review, which comes as a report on Monday found that the UK’s top 100 restaurant groups say profits fell by 44 per cent to £204m in the last year.
Rising employment costs and business rates have made it “far more difficult” for these firms to turn sales into profit, according to consultancy group UHY Hacker Young.
The Real Rates Reform Alliance, which has urged Burnham to replace business rates with a new system, said it was “disappointing” that the review is “narrowly focused” on pubs and hotels.
“We cannot keep tinkering with business rates one sector at a time; any lasting solution for pubs and hotels must be part of a wider overhaul,” said Ros Morgan, the group’s chair.
Tax online sales, Burnham urged
The Alliance has called on the government to cut business rates for bricks-and-mortar businesses by 37 per cent, funded by a two per cent levy on online sales.
“This would help to dramatically reduce the burden on businesses with physical premises,” Morgan said.
In his campaign for the Makerfield by-election, Burnham had supported hiking tax on warehouses to pay for business rates cuts for high street firms. This has been opposed by some retailers, who say that higher taxes on warehouses would push up prices in the high street shops they supply.
Labour’s 2024 election manifesto pledged to “replace the business rates system, so we can raise the same revenue but in a fairer way”.
“This review should be used as an opportunity to move beyond piecemeal reliefs and start designing a business rates system fit for the modern economy,” Morgan said.
The UK government said it is committed to making the business rates system fairer. Financial secretary to the Treasury James Murray said: “Last month we announced tax cuts for pubs to give them the breathing room they need. Today we’re going further with a rethink of valuations – so that we can build a fairer system for the future.”