A report by the All-Party Parliamentary Beer Group (APPBG) has warned of trouble facing thousands of pubs across the UK if business rates are not reformed.
The report - released on 21 March 2022 - states that almost 800 more pubs have closed permanently in the last two years, despite the government’s Covid relief measures. That, however, may just be the tip of the iceberg - because many local pubs operate on relatively small weekly turnover, the impact of high business rates plus the removal of Covid support may be enough to force another 22,000 community pubs into closing.
‘The high fixed cost of (business) rates disproportionately hits high turnover, low margin businesses,’ the report explains. ‘Many community pubs operate on weekly turnover of £3,000-£5,000, and margins that are slender at the best of times have now been thoroughly challenged by Covid.
'The BBPA’s evidence included assessment from Europe Economics that around 22,000 pubs could be at risk of failure if they are faced with the full cost of business rates once Covid reliefs end.'
Part of the problem is that pubs pay a higher rate of tax than many other businesses, a rate that is ‘an unfair burden on bricks and mortar,’ according to the APPBG. The majority of pubs pay between 3-10% of turnover in business rates. Online retailer Amazon, meanwhile, paid just 2% in business rates on a turnover of almost £21 billion, and some industries like gambling, air transport and forestry pay less than 0.5% on average in business rates.
Chancellor of the Exchequer Rishi Sunak is due to make his spring statement on 23 March, during which he’s expected to outline updates to the government’s budget plans. The APPBG is calling for a reform of business rates for pubs, with the introduction of a ‘specific rates multiplier for pubs, closer to the 1990s level of 34p per £1 of rateable value, to reflect their wider contribution made.’
The report also suggests that a small increase in business relief would help pubs overcome the challenges of rising energy prices.
Mike Wood MP, chair of the APPBG, said: ‘British pubs are at the heart of the community. Never more so, than since the pandemic, when their fundamental place in society has been pivotal.
‘The onus of business rates falls disproportionately on pubs in a valuation system mired by complexity and opacity, where online giants are not paying their fair share.
‘Urgent action is needed, and I call on the chancellor in his spring statement next week to help us level the playing field and turn back the clock on years of stealth increases to business rates, which threaten to bring a sector so critical to economic and social recovery to its knees.’
You can read the whole APPBG report in full right here. Or if you fancy getting out and supporting some great London pubs, we've rounded up some of the best gastropubs in London!