‘We’ve Been Lied To’: Hospitality Betrayal Over Business Rates
The Chancellor, Rachel Reeves, presented a 5p reduction in business rates for the retail and hospitality sectors as a major victory, a sign that the government was listening to the struggles of high street businesses. However, this supposed piece of good news in an otherwise bleak Budget has quickly soured, with business owners discovering the announcement concealed what industry leaders are branding one of the biggest stealth taxes in years.
As landlords, hoteliers, and publicans across the country used the government's own online tool to calculate their new bills, initial relief turned to outrage. They found that for many, the 5p cut to the multiplier was completely negated by sharp increases in the rateable value of their properties. The result? Far from paying less, a significant number of businesses will face a substantially higher overall bill when the changes take effect in April 2026.
The Devil in the Detail: How a Cut Became a Hike
The business rates system in England is a tax on commercial properties, functioning similarly to council tax for homes. A business's bill is calculated by applying a multiplier (a percentage) to the rateable value of its property—an estimate of its annual rental value.
In her Budget speech, Chancellor Reeves proudly announced that the multiplier for retail and hospitality would be cut by 5p, taking it to its lowest level since 1991. To pay for this, the government said it would increase the rates on larger commercial properties valued at £500,000 or more, specifically targeting the warehouses used by online giants.
Yet, the reality on the ground tells a different story. For Leon Burton, Managing Director of Pub Grill Co, which runs six pubs across the North West and Midlands, the new system is a disaster. “Hospitality has been lied to,” he states. “And the public has been gaslit on the support that the government claims it is giving hospitality.”
Across his venues, the average rateable value has surged by 40 per cent. One property saw a catastrophic 224 per cent increase, from £22,500 to £73,000. Consequently, despite the lower multiplier, Pub Grill Co will be £85,000 worse off every year.
A Sin Tax on Community Business
Sacha Lord, Chair of the Night Time Industries Association and a former Labour donor, echoed the fury, calling the move a “stealth tax”. His initial optimism during the Chancellor's speech quickly evaporated. “When she announced it yesterday, she did it in such a positive manner. I sat back and thought, ‘This is great. She’s kept her word.'” The subsequent calculation revealed a starkly different outcome.
Allen Simpson, Chief Executive of UK Hospitality, conducted his own investigation to see if the promised rebalancing from ‘clicks to bricks’ was materialising. He input details of various businesses into the government's calculator. The findings were damning:
- A hotel outside London faced a 41 per cent rates rise.
- A pub in Northamptonshire was hit with a 291 per cent hike.
- An Amazon warehouse, by contrast, saw an increase of just 6.4 per cent.
Simpson summarised the situation bluntly: “It’s a sin tax on community business. And it’s going to unravel.” He added that the government's centrepiece for business tax, intended to rebalance the burden, was, in technical economic terms, “shit”.
Real-World Consequences: Job Losses and Price Rises
The fallout from this rates overhaul comes on the back of an already brutal period for hospitality, which suffered heavily from last year's National Insurance and minimum wage increases. The sector, the UK's third-largest employer, accounted for half of the 200,000 job losses since last October.
Faced with an additional £85,000 annual bill, Leon Burton confirmed he will be forced to review staffing levels, reduce recruitment, and consider cutting opening hours. Critically, he also stated there is “no doubt” his business will have to raise prices for customers—a move Simpson agrees is inevitable, meaning the cost will ultimately be passed onto the public through more expensive pints and meals.
Sacha Lord predicted the fallout would be “incredibly difficult,” leading to closures and job losses at a faster rate than ever before. He warned it could become the “family farm tax for hospitality,” referencing a past political crisis. For Leon Burton, the solution is more emphatic. He believes the Chancellor has broken her promise to be pro-business and pro-high street, concluding, “She needs to resign.”
