Soaring Business Rates: A £62,000 Burden for Pub Owners

The Weight of Rising Business Rates

Phil Thorley, owner of the Thorley Taverns pub group, carries the heavy burden of a £62,000 annual increase in business rates for 17 of his 18 locations. This dramatic rise comes despite government assertions of support for the hospitality sector. I find this deeply concerning, as it reveals a glaring disconnect between policy intentions and real-world outcomes.

"What it means to a small little family company like ours is that our actual payable rates is going to be going up by some 27%," said Thorley during a recent interview.

Government Promises vs. Reality

Rachel Reeves, the shadow chancellor, committed to the lowest business taxes for pubs, restaurants, and retail since 1991. Her strategy involves increasing levies on higher-value properties, ostensibly to balance the burden. However, the fallout of these changes seems severe, particularly for establishments already struggling to survive post-pandemic.

The government claims its adjustments would save independent pubs an average of £4,800. Yet, the experience of pub owners like Thorley suggests these promises may not translate to effective relief. Instead, many are faced with increased operational costs just as they begin to recover from the pandemic's devastating impact.

Increasing Financial Pressure

The previous Covid-era 40% discount on business rates, which many pubs relied upon, is set to phase out in April. Current calculations show that numerous pubs will see their business rates bills escalate significantly. For instance, a recent analysis by tax advisory firm Ryan estimates an average 66% increase in business rates for pubs alone. Such steep hikes are reminiscent of a 'stealth tax,' eroding margins and threatening jobs.

A Wider Impact on the Hospitality Sector

Thorley is not alone; other business owners are voicing similar concerns. Elaine Wrigley, who operates the Atlas Bar in Manchester, noted her bar's rateable value surged from £69,000 to £97,000, leading to a 15% increase in her business rates.

Wrigley expressed frustration at government reassurances, calling them "smoke and mirrors":

"She may well have said it's the lowest rate and the best support, but it's from the highest base."

It's a sentiment I wholeheartedly agree with; the disconnect between governmental assurances and the financial realities businesses face is alarming.

Implications for Employment

As hiring costs also rise due to increased national insurance contributions and the minimum wage, the hospitality sector could experience reduced employment opportunities. Thorley warns that further hikes in the minimum wage will mean less investment in staff training and fewer jobs available for young people.

Rising Sentiment of Despair

Statements from industry leaders express a growing sentiment of despair. The Night Time Industries Association chairman Sacha Lord predicted more closures in the hospitality sector:

"Once this kicks in in April, we are expecting to see more closures than ever before, including during the pandemic."

Such warnings are troubling, indicating that merely providing nominal support is far from sufficient.

Civic Response and Future Outlook

Calls for reform are becoming louder. Shadow Business Secretary Andrew Griffith stated that the government had previously contemplated deeper discounts that could genuinely aid businesses. He criticized the current trajectory that may lead to even fewer jobs and lower economic growth.

The Liberal Democrats have joined in the chorus of concern, urging the government to throw the struggling hospitality sector a lifeline. With Treasury spokeswoman Daisy Cooper noting that these changes could force more high street businesses to shut down, it's clear that a reassessment of the situation is crucial.

Conclusion: A Crossroads for the Hospitality Sector

In conclusion, the voices of those on the ground echo a stark reality. As the government contemplates adjustments that it suggests are beneficial, pub and hospitality owners are feeling the squeeze of rising costs amidst insufficient support. Moving forward, we must ensure that policy reflects the lived experiences of those it intends to help. The time for substantive action is now, before these businesses become casualties of mismanaged policies.