Graham writes to Minister in support of our local pubs

Posted on 6 March 2017 (Permalink)

Here is the letter which Graham has sent with fellow MPs to the Secretary of State:

We are writing to you to express our ongoing concern about the impact of the forthcoming revaluation and the structure of business rates on the pub and licensed hospitality sector.

We believe the industry is already unfairly disadvantaged by the way that business rates are levied, in the form of a property tax. Pubs and restaurants are unique in that the link of rental value to turnover means that many SMEs are trading from large, higher banded properties, providing a comfortable community amenity. This is reflected by the fact that the pub sector pays more than five times than if rates were comparable to turnover – an overpayment of around £500 million.

The revaluation will further this disadvantage, with pubs and restaurants receiving a 15% and 23% increase in rateable value respectively, being the only sector to see an increase in every region. Half of all pubs and restaurants will see an increase in bills, with average bills rising by a fifth. Analysis shows that 2,700 pubs will receive an increase in their bills from April of over £5,000 per annum, which is incredibly difficult – indeed in many cases impossible - to absorb.

The revaluation means that fewer businesses than ever are classified as small and there are 51% more premises in the “large” bill banding, resulting in many businesses seeing increases in year one. The revaluation has further had the disadvantage of penalising those who have invested in their businesses, bringing growth and jobs to local areas – business rates should not act as a disincentive to investment. We understand that measures introduced by the Government, including the extension of small business rate relief (SBRR) and transitional relief but we believe more needs to be done.

Immediate measures are necessary. Having spoken to industry representatives we believe a number of specific measures could be introduced to alleviate the unfair burden on the sector.

  • Transitional relief for first year bill increases needs to be capped at 12.5% for all pubs and licensed hospitality, or the definition of large businesses should be doubled for the sector, to reflect that more businesses trade from larger properties.
  • Government should also urgently consider a sector-specific relief to recognise the current imbalance in the business rates system.
  • There must be no restrictions on appeals.

The risk of not acting is business closures, lost jobs, amenities and communities, and the further demise of the Great British High Street.

The system needs to be reformed so that investment in properties is not penalised, at the very least this should mean that there are no upward revaluations as a result of capital expenditure during a revaluation period. There need to be more frequent revaluations to avoid the major upheaval that we are seeing as a result of this revaluation, to a maximum of every three years. A broader debate about business taxation is also necessary, in light of the growth of online retail and the changing dynamic of business operations, with an ever-increasing call for funding from a diminishing amount of trade being carried out through physical properties.

We must all realise that the current system is no longer fit for purpose, and needs a genuine, independent review and root and branch reform. We hope that you will now commit to properly look into this and commission a review. We believe that there needs to be a more appropriate way of taxing pubs and one that properly incorporates the unique social value to communities.  

As supporters of the Great British pub in our constituencies and nationally, we would like to meet to discuss this with you as a matter of urgency. We urge you to listen to publicans, pub owners and the many pub sector organisations who are all united that remedial action is needed now to prevent huge rises in rates and the inevitable damage they will do to many pubs.

We look forward to hearing from you.