New modelling by hospitality trade body, UKHospitality, indicates that 2,076 hospitality businesses are ‘set to close’ if steep business rates increases outlined in the Autumn Budget go ahead without further government support. It comes after reports that publicans and business owners began to ban local MPs from their premises in protest. This figure equates to a staggering six closures per day, including 963 restaurants, 574 hotels, and 540 pubs, with pressure disproportionately affecting neighbourhood locals and independents.
According to UKHospitality, if measures are not taken before the budget takes effect this April, the average hotel will see their business rates bill rise by £28,900 next year, with rates increasing to £205,200 in the next three years - a 115% surge. The average pub, meanwhile, is expecting a 15% hike next year (roughly £1,400), jumping to 76% over the next three years (up by £12,900).
Sharp uplifts in rental values at the latest business rates revaluation mean prime city-centre locations face far steeper increases than the national average. In Holborn and St Pancras, Keir Starmer’s constituency, hospitality businesses are forecast an average rise of £96,430 over three years, while Rachel Reeves’ constituency of Leeds West and Pudsey is expected to see a lower, though still unsustainable, increase of £12,297.
No matter their location, according to UKHospitality, current rates will disproportionately affect neighbourhood restaurants and local hotels, which operate on thinner margins with less capacity to absorb rising costs.
Chair of UKHospitality, Kate Nicholls, says: ‘Hospitality is one of the nation’s biggest employers and has an incredible potential to grow and create jobs, but the money coming in the front door is simply not enough to offset the rocketing costs of doing business. All of this undermines the Government’s objectives to grow the economy and help more people back into work.’
Alongside industry groups, UKHospitality is continuing to call on the government to up discounts on rates from 5p to 20p. Early reports suggest that the government is considering relief. While details remain hazy, multiple credible outlets are reporting that a U-turn could be on the horizon, stating that the Treasury began working on a package of support over the Christmas break and is preparing to revisit or soften business rates increases for hospitality. As yet, it is not known if there will be business rates relief in the form of additional support, or whether there might be alterations to how the rateable value is calculated.
With current closure rates already sky-high, suspicions remain that it might be too little, too late for some.
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