The government has unveiled extra support on business rates for pubs in England, after weeks of criticism that changes announced in the Autumn Budget last year will lead to company closures.
The government has been forced to act because a Covid-era discount for retail, leisure and hospitality firms is being removed and properties are being revalued, which will lead to significant increases in business rates for many firms.
In the Budget Reeves announced a £4.3bn support package including rates relief but that’s not enough to offset the big rise in bills.
Speaking in the House of Commons on Tuesday, Dan Tomlinson, exchequer secretary to the Treasury, said it will carry out a review of the pub revaluation methodology.
While the review takes place, the government will provide support for pubs and music venues for the next three years. Pubs and music venues will get 15% off their business rates bills, then bills will be frozen in real terms for a further two years.
Tomlinson said this is worth £1,650 for the average pub next yeer with around three quarters of pubs seeing their bills either fall or stay the same.
Details for the new relief is here.
Relief will be awarded to pubs that meet all of the following characteristics:
- is open to the general public,
- allows free entry other than when occasional entertainment is provided,
- allows drinking without requiring food to be consumed, and
- permits drinks to be purchased at a bar.
For these purposes, the meaning of pub does not include:
- Restaurants, cafes, nightclubs, snack bars
- Hotels, guesthouses, boarding houses
- sporting venues
- festival sites, theatres, concert halls, cinemas
- museums, exhibition halls
- casinos
Business groups have called for the support to cover a wider range of businesses but today’s announcement only applies to pubs and music venues.
Tomlinson did however say the government will review how hotels are valued and announced that a high street strategy will be launched later in the year to cover how all high street businesses can be supported.
Other changes announced today are allowing pubs and other licensed venues to open after midnight for Home Nations’ games in the later stages of this summer’s Men’s FIFA World Cup. The government will consult on allowing them to open late for other big events such as Eurovision.
The chancellor also announced £10 million of funding for the Hospitality Support Fund over three years, up from £1.5 million for one year announced last April, to help pubs provide extra services for local communities, including creating community cafes, village stores and play areas.
Follow SMEWeb’s coverage of business rates across the UK here
Reaction to extra business rates support for pubs and music venues
Emma McClarkin, CEO, British Beer and Pub Association, said:
“We are pleased the government has listened to our concerns, and those of publicans, consumers and MPs who rallied to defend our locals. This pub specific package will stave off the immediate financial threat posed by accelerating business costs and will help keep the doors open for many.
“This additional support will provide certainty for tens of thousands of pubs, with many seeing their bills frozen or falling and there will be a sigh of relief from landlords across the country.
“We will now work closely with government to establish a transformative long-term plan that works for all pubs through permanent business rates reform to ensure they remain at the heart of communities.”
“On wider reforms, these announcements show a real commitment by government to cut the regulatory burdens that have stifled pubs. This will make it easier for locals to remain at the heart of high streets and help keep people in jobs, communities connected and drive growth.”
Tina McKenzie, policy chair, Federation of Small Businesses, said:
“The government has passed up a critical chance to back struggling high street businesses.
“Although this news will bring a welcome, temporary reprieve for pub and music venue owners, small firms across the rest of the hospitality, leisure and retail sectors – from your local greengrocer, hairdresser and café to the nail bar or florist – will be incredibly disappointed to not have been thrown any type of lifeline. It’s worrying that the government repeatedly fails to recognise the difficulty that these businesses are in.
“Losing the previous 40% discount, on top of April’s revaluation of the rateable value of premises, and changes to the formula behind the bills, will take a heavy toll on small firms, threatening jobs and our high streets. A typical small bakers or dry cleaners will face a 52 per cent increase in its business rates bill over the next three years.
“The government has the power to apply the full business rates relief already built into the system across the sectors, yet it has used this moment to exclude wider hospitality, retail and leisure. It also has the opportunity to raise significant extra revenue from the largest business premises, but has instead decided to impose the biggest increases on small high street bakers, gyms and restaurants.
“With more cost pressures due to hit in April alongside the rates rise – from energy standing charges to employment costs – this situation is becoming unsustainable for many. Some are having to put the brakes on expanding and developing their business, while others are being forced to lay off staff or even close their doors for good. The Treasury must look again at the Spring Forecast to provide substantial help for these struggling small firms.”
Kate Shoesmith, director of policy, British Chambers of Commerce, said:
“This is good news for pubs and music venues, but it does not go far enough to protect many other businesses which are under huge pressure.
“Our latest research shows that concern about business rates is its highest for at least eight years, with a third of all firms worried. In the hospitality sector that rises to 49%.
“Companies have proven remarkably resilient through years of turmoil, including Brexit, Covid, rising energy bills and geopolitical crises, but there are limits to how much they can endure.
“With new employment legislation coming down the tracks, a further inflation busting rise in the minimum wage and continuing global headwinds, the government must ease this burden.
“The Labour manifesto, in 2024, correctly identified that business rates were a disincentive to investment, created uncertainty and placed an undue burden on High Streets.
“It pledged to reform them and it is now time the government delivered on that promise.
“As a first step to fixing business rates it should move to annual revaluations, to give greater certainty around rateable value changes, and adopt a single flat rate 40p multiplier.
“These changes would provide greater transparency, simplicity and fairness ahead of a full review of the system.”
Karim Fatehi, CEO, London Chamber of Commerce and Industry, said:
“Today’s announcement that the chancellor will provide relief on business rate bills for pubs is a welcome step in the right direction and shows that the government recognises the impact that anticipated rises will have on businesses. However, it does not go far enough.
“Global volatility, weak consumer sentiment and rising operating costs continue to place significant pressure on businesses. Many London businesses will be hit by huge rate rises in April which could force some of them to close. Our latest survey found that only a quarter of London businesses expect the capital’s economy to improve in 2026. Retailers, hotels and restaurants need reassurance that they too will receive the support required to rebuild confidence and operate with greater certainty.”
Anna Leach, chief economist, Institute of Directors, said:
“The Institute of Directors welcomes today’s decision by the Government to provide targeted business rates relief for pubs, recognising the intense pressures facing this sector. This support will offer much-needed breathing space for businesses grappling with rising costs and tight margins.
“More broadly, the business rates system remains in urgent need of reform to address the disincentives to investment embedded in the current framework, and we welcome the government’s commitment to take action in this area.
“That said, stronger policy design at an earlier stage would deliver greater benefits for business confidence, planning and costs. We reiterate our call for more detailed, sector-by-sector analysis of the impacts of tax changes to be undertaken alongside each Budget. This would allow concerns to surface earlier in the process, enabling risks to be identified and addressed before they crystallise.”
Henry Gregg, chief executive, National Pharmacy Association, said:
“It’s simply outrageous that the government should offer business rate relief to pubs but ignore pharmacies that play a vital health role on thousands of our high streets.
“This increase will push some pharmacies to the brink of collapse.
“Pharmacies are essential to their communities but the government have taken a decision today to prioritise pubs over the health needs of millions of people who use pharmacies every day.
“It’s an insult to hard pressed pharmacists who are still struggling under the effects of historic NHS underfunding that simply isn’t sufficient to pay inflated business rates, medicine prices and their other bills.
“Pharmacies are not like pubs, cafes or restaurants. They receive 90% of their funding from the NHS and cannot simply increase their prices for the nations prescriptions to absorb this eye watering increase.
“Denying pharmacies the business rate support that is available to GPs and other parts of the NHS is yet another example of them being treated as second class citizens in our health service. We should treat dedicated servants of our NHS better.”
Daniel Woolf, head of policy, Enterprise Nation:
“Pubs and music venues are vital small businesses on our high streets. A 15% cut to business rates from April, followed by a two-year freeze, will give many some breathing space.
“But it’s worth pointing out that they’ve had this dramatic increase in operating costs looming over them since the Budget, along with thousands of other small firms on the same streets that are still facing sharp cost pressures and bills that are hard to predict.
“The next step should be a fairer system that keeps bills stable and makes it easier for all local businesses to plan, invest and grow.”