The UK hospitality industry is at a critical juncture as business rates could quadruple by spring 2024.
- Without government intervention, relief from business rates will end, costing the sector £914 million.
- 170 industry leaders, including major pub chains and high street venues, call for Chancellor action.
- UKHospitality warns of potential closures and a surge in vacancy rates across high streets.
- Reform is needed to prevent harming the government’s growth agenda and local community investment.
The UK hospitality sector is bracing for a significant financial challenge as business rates are set to increase fourfold in spring 2024. Industry leaders are urging Chancellor Rachel Reeves to act before the scheduled end of current relief measures on 31 March, which could escalate costs by an additional £914 million.
An appeal, signed by 170 prominent figures in the hospitality industry – including leaders of renowned pub chains like Greene King and JD Wetherspoon, as well as representatives from Caffè Nero and IHG Hotels – has been made to the chancellor. They are requesting an immediate reform of the tax system, particularly a lower and permanent business rates multiplier tailored for the hospitality sector across the UK.
Kate Nicholls, the Chief Executive of UKHospitality, highlighted the severe consequences if no action is taken. She foresees more business closures, leading to vacant high streets and increased economic strain. She emphasised that the budget presents a ‘last chance’ for the government to avert this financial strain that threatens the sector’s future.
The hospitality industry, comprising pubs, restaurants, cafes, and hotels, has been benefiting from business rates relief since 2020, initiated in response to the COVID-19 pandemic. However, with this relief nearing its conclusion, concerns about a staggeringly high tax burden are mounting. The letter from industry leaders also pointed out how the current cap on rates relief deters business growth, with high costs discouraging the opening of new locations.
Nicholls warned that the present tax system is having a stifling effect on the expansion of high street businesses. The call for reform is aimed at not only preventing closures but also aligning with the government’s goals of revitalising high streets and fostering investment in local communities.
The British Retail Consortium has echoed these sentiments, adding that high business rates contribute to the closure of shops, loss of jobs, and other social and economic consequences throughout the UK’s high streets.
Amidst fiscal pressures, industry experts are suggesting that rebalancing the tax burden could provide a viable solution. They argue that the current system disproportionately impacts hospitality businesses relative to their economic contribution.
The looming deadline for the planned rate increase underscores the urgent need for Chancellor Reeves to implement meaningful changes in the upcoming budget, thus preventing a crisis in one of the UK’s crucial economic sectors.
Immediate government intervention is vital to support the hospitality industry and sustain growth.