Reeves confirms ‘temporary support’ for pubs amid row over misleading claims
Rachel Reeves has confirmed “temporary support” for pubs in a climbdown over the business rates row, as a chief tax official claimed the Treasury was warned about the damaging impact of tax reforms after ministers claimed they had been in the dark about the changes.
The Chancellor confirmed on Wednesday that she will roll out more “temporary support” for pubs struggling with higher business rates and the end of Covid-era financial support.
This comes as the government’s top property tax official has claimed he warned the Treasury about the business rate hikes which sparked a furious row with the hospitality industry before the Budget.
Jonathan Russell, the head of the Valuation Office Agency, said he was “very clear” with the Treasury about the impact of business rate revaluations which led to soaring bills for thousands of pubs, despite the business secretary insisting he was not aware of the potential impact.
The average business rates bill for a hospitality firm is set to soar by 94 per cent in three years due to property value reassessments and the end of pandemic-era cash support.
Russell told the Treasury select committee that his agency’s briefings, while not predicting the impact on individual properties, provided a “sectoral level” overview of the impact of business rate reforms.
He said: “That data will include pretty much every classification of sectors in England. It will show at sectoral level what the impact of revaluations will be.
“Some of them will have gone up in the region of doubling — about 13 per cent, about 5,100 pubs. It’s based on evidence.”
Russell appeared to hit back at business secretary Peter Kyle’s claims his government could not have predicted the impact of these reforms and only became aware following the outrage which saw thousands of pubs slam their doors shut to Labour MPs.
Kyle told Times Radio: “We didn’t have access to that information before making these decisions. Now, I heard and we heard, and this government is a listening government, straight away that there were some businesses that were really impacted.”
While the Budget cut business rates for some retail and hospitality firms, revaluations of property values meant pubs are still due to pay higher rates, with trade body UK Hospitality estimating a £1,400 rise in the average bill next year.
Morning Wire analysis found pubs in the Square Mile will see their rateable value – which determines the bill paid by landlords – climb by an average of 16 per cent, or £16,836, next year.
More temporary support for pubs
After announcing the new temporary support, the Chancellor insisted pandemic-era aid “does need to be unwound” but signalled the speed of this withdrawal will be slowed.
This new support, due to be clarified “in the next few days and weeks”, follows the £4.3bn fund which had been put in place at the Budget to help pubs swallow higher business rates – which have more than doubled for some businesses.
Reeves told the BBC: “We do recognise that for some pubs there is still a big increase, and so we’re working pretty intensely at the moment. Again, I want to make sure that we get this right.”
“We’re trying to bring down that borrowing level. That’s what has meant that inflation and interest rates are starting to come down.
“But we want to support our pubs. We want to support our high streets, and we’re doing that.”
Following initial reports that the government would offer support for pubs hit by business rates, the British Beer and Pub Association (BBPA) hailed a “huge win” for landlords.
It said: “This could save locals, jobs, and means publicans can breathe a huge sigh of relief.
“The BBPA has worked closely with ministers on a pub specific solution that would ensure that bills are reduced in line with the government’s previous promises to pubs.”
A HM Treasury spokesperson said: “As Covid-era valuations and reliefs came to an end, we responded with the Budget’s £4.3bn support package that helped cap businesses’ bills. We’ve since met with stakeholders and individual businesses, and we are determined to support the Great British Pub with further support.”