Call for business rates u-turn to be expanded – Daily Business

A Treasury u-turn on increases to business rates for pubs has prompted calls for a wider review and will pose questions for the Scottish government ahead of next week’s Holyrood budget.

Chancellor Rachel Reeves is pledging changes to the rates calculation for pubs but there are calls from across the economy for similar help as well as urgent reform of the rates system.

The move follows pressure from landlords and industry groups, while more than 1,000 pubs banned Labour MPs from their premises.

In her November Budget, Ms Reeves scaled back business rate discounts that have been in force since the pandemic from 75% to 40% – and announced that there would be no discount at all from April.

A third of firms (34%) questioned by the British Chambers of Commerce said they are worried about business rates. This is the highest level since the BCC started asking the question in the spring of 2017. 

Companies cite cost pressure from business rates as a key reason for increasing prices and delaying expansion of their premises. 

While the Government has indicated it is considering a rethink on business rates for pubs, BCC research shows the disquiet goes much wider. 

The hospitality, manufacturing and logistics sector face the highest levels of concern, but business size is also a factor, with anxiety over rates highest for firms with 10 to 49 employees (43%). 

This follows BCC data from February 2024 which found that 27% of surveyed businesses said they had scaled back or cancelled plans to upgrade or open premises as a direct result of business rates costs.  

In Scotland, there is already concern about business rates divergence which sees many firms paying more, or not benefiting from discounts available to similar premises in the south. A campaign to halt the forthcoming business rates revaluation has been supported by dozens of businesses and trade groups.

Kate Shoesmith, director of policy and insights at the BCC, said:  “The Chancellor recognised in the Autumn Budget that the current system for business rates is broken and holding back growth. But it is becoming increasingly clear that the changes she set out are not balanced and leave some sectors over-exposed. 

“While news of a carve out for pubs is welcome, there are many other smaller hospitality companies facing an existential threat. Meanwhile at the other end of the scale, airports and hotel chains are expected to pay millions more.”

In England, the BCC wants an uplift in the level of transitional relief to offset the huge upswing many firms are facing in their rateable values come April. 

“The Government must then deliver the more ambitious root and branch reform of the whole system promised in their manifesto,” said Ms Shoesmith. 

“To fix business rates it should move to annual revaluations, to remove the steep jumps in bills caused by longer gaps, and it must adopt a single flat rate multiplier of 40p.”

See also

Sarwar giving SNP budget a ‘free pass’