Ministers have launched a consultation on reforming Britain's business rates system, but campaign groups argue that minor adjustments will not suffice and a complete overhaul is necessary. The current system, some businesses contend, penalizes successful hospitality firms while favoring online retailers operating from warehouses.
The consultation, led by tax expert Jerry Schurder, will specifically review the calculation of business rates for pubs and hotels. Schurder is expected to deliver his recommendations to the Treasury by March 2027, with any proposed changes slated for implementation in 2029, coinciding with the next valuation of commercial properties. Financial Secretary to the Treasury James Murray stated the review aims to foster a fairer system for the future.
However, business representatives are urging the government to move beyond incremental relief and enact more radical reforms. Jonathan Lawson, CEO of Butcombe Group, which operates 120 pubs, explained that under the existing methodology, pubs face increased rates as their turnover rises, a mechanism that does not apply to the revenue calculations of large online businesses. Bricks-and-mortar businesses are pushing for the government to fulfill its election pledge for a significant shake-up to create a more level playing field with online competitors.
Ros Morgan, chair of the Real Rates Reform Alliance, a coalition advocating for rates reform, criticized the consultation for being too narrowly focused on pubs and hotels. "We cannot keep tinkering with business rates one sector at a time," Morgan stated. She emphasized that any sustainable solution for the hospitality sector must be part of a broader reform that includes ensuring all businesses, including online entities, contribute their fair share.
Jonny Haseldine, head of business environment policy at the British Chambers of Commerce, echoed the sentiment, calling for urgent and comprehensive reform rather than a continued piecemeal approach. Allen Simpson, chief executive of UK Hospitality, expressed concern that the current plans would not address the immediate financial pressures faced by businesses due to rising rates bills, noting that high street firms experienced significant increases last year. Simpson indicated that businesses would look for support in the upcoming Budget.
Shadow Chancellor Sir Mel Stride commented that the review's timing is "far too late for a sector this Labour government has already done its best to kill off."