UK’s small brewers call for chancellor to think again on business rates

Brewers have joined calls for the chancellor to reconsider changes to business rates that it says could be “the difference between closure and survival” for pubs.

In an open letter to Rachel Reeves, the Society of Independent Brewers and Associates, which represents about 700 beer makers, said it wanted to “express our deep concern at the impact of last week’s business rates decisions on the hospitality sector”.

Many hospitality businesses are already battling lacklustre trade as consumers rein in spending on non-essentials amid higher household bills, food price rises and tax increases.

In her budget last week, Reeves announced she was introducing “permanently lower tax rates for over 750,000 retail, hospitality and leisure properties”, paid for with higher rates on the UK’s biggest businesses, including tech companies such as Amazon.

The package included £3.2bn in transitional relief and an expanded small business support scheme to help companies affected by rate rises.

Large retail businesses expressed relief at the fact the business rate changes were less onerous than expected. But hospitality firms have since argued they will take a big hit from the changes, forcing them to rein in investment and hiring.

They say measures announced in the budget to protect businesses – as Covid-era support comes to an end – were insufficient to offset rises linked to the increase in rateable value of their properties.

The independent brewers say that once the revaluations are taken into account and the transitional relief unwinds, pubs will typically pay 76% more in business rates by 2029 when large online tech firms would pay only 16% more.

They wrote in their letter: “The promises made seem to be at odds with the reality that community pubs now face. With pub closures at a new high and having lost more than 100 breweries in the past year, the hospitality sector is in a fragile state.

“These changes to business rates could be the difference between closure and survival for businesses that operate as the beating heart of communities and bring people together when society needs it most.”

The brewers called on Reeves to either delay revaluations of their properties or increase the discount for pubs.

Many pubs face a big increase next year in their rateable value –an important part of their business rates calculation which for pubs is based on what a supposedly “efficient operator” could earn rather than actual income.

This contrasts with the situation for many retailers whose rateable value will fall because of poorer custom on high streets.

Kate Nicholls, the chair of the trade body UKHospitality, said: “The government promised in its manifesto that it would level the playing field between the high street and online giants. The plan in the budget to achieve this is quickly unravelling, and will deliver the exact opposite.”

Nicholls has previously said the swathe of extra costs including the business rate rise, higher minimum wages and more duty would “simply all be passed through to the consumer with higher prices at the bar”.