Hospitality Sector in Crisis After Budget Announcement
Chancellor Rachel Reeves is facing accusations of imposing a stealth tax on the UK's hospitality industry, despite public promises of support in the Budget 2025. While her speech in the House of Commons pledged permanently lower tax rates for over 750,000 retail, hospitality, and leisure properties, business owners are now confronting staggering increases in their bills.
The Broken Promise of Lower Rates
Earlier this year, the government granted itself the power to significantly discount business rates for high street firms. However, Chancellor Reeves has implemented a reduction of just 5p in the pound, a mere quarter of the full 20p discount it was authorised to apply. This decision has been labelled a betrayal by trade bodies that had lobbied for the full relief.
A Treasury spokesperson defended the move, pointing to a £4.3bn support package that they claim will cap bill rises. They stated a typical independent pub would pay around £4,800 less next year than they otherwise would have.
Despite this, the reality on the ground tells a different story. The problem is twofold:
- The government has provided only a fraction of the available business rates relief.
- Simultaneously, the government-assessed value of commercial properties has skyrocketed, effectively wiping out any discount.
Pubs and Hotels Facing Financial Ruin
The human cost of this policy is becoming clear. Sam Caroll, a pub owner near Hull, has seen the assessed value of one of his properties surge by 64% in just three years, from £67,000 to £110,000. He told Sky News that even with packed pubs, breaking even is difficult, and there is a continual question of business viability.
He starkly described the government's transitional relief scheme as getting f***** slowly, instead of getting f***** overnight.
Analysis by UK Hospitality reveals the devastating scale of the increases over the next three years:
- An average pub will pay an extra £12,900 in business rates.
- An average hotel will see its bill soar by a staggering £205,200.
By 2028/29, business rates for pubs will have increased by 76% and for hotels by 115%. In contrast, distribution warehouses used by online giants will see an average rise of just 16%.
Calls for a Lifeline for High Streets
The situation has prompted sharp political criticism. Liberal Democrat deputy leader Daisy Cooper wrote to the chancellor, stating that small business owners have been pushed to tears and accusing the government of breaking its promise by imposing a stealth tax on treasured high street businesses.
Kate Nicholls, Chair of UKHospitality, said the government's plan is unravelling and will deliver the exact opposite of a level playing field with online giants. She urged the chancellor to revisit the decision and implement the full 20p discount to provide the sector with a much-needed lifeline.
With the combined pressure of rising business rates, increased employers' national insurance, higher energy bills, and the rise in the minimum wage, the future of many beloved local pubs and hospitality venues hangs in the balance.
