U-turn on Business Rates 'a sticking plaster', says Colliers

The government’s announcement that it will be handing out support to pubs battling against rocketing business rates, whilst welcome in the near term, has been declared “a sticking plaster, doing little to help the wider pub sector longer term- unless the Chancellor is serious about reform,” according to business rates experts at Colliers.

Based on massive increases in rateable value as a result of the 2026 Revaluation, together with a smaller business rates multiplier announced in the November Budget -a multiplier “that was just not small enough”- the Government’s policy was leading to some pubs facing nearly 100% rises in their business rates bills over the next three years.

However, following the widespread backlash, the Chancellor has announced an £80 million business rates support package for pubs and live music venues worth an average of £1,650 for the average pub in 2026/7. Having spoken to a government representative we understand the full package is worth £300 to £400 million, with £80 million for year one alone.

All pubs and live music venues will receive an extra 15% cut to new business rates bills from April followed by a two-year real-terms freeze ( i.e. just inflationary increases). This will come on top of support measures announced at Budget. We have been advised by a government representative that the relief will not be capped or limited by subsidy control.

Additionally, the Government has advised there will be a review into the method used to value pubs for business rates purposes ensuring that any changes will be implemented for the 2029 revaluation. 

The Government also announced a new High Street Strategy which will be published later this year to help ensure retail, leisure and hospitality businesses can thrive. There will also be a review into how hotels are valued for business rates in the longer term.

According to John Webber, Head of Business Rates at Colliers, “The Government’s backtracking on its business rates policy announced in the Budget is certainly welcome on the immediate front. Pubs and live music venues have been given a reprieve, at least for the three years duration of the new list.

“However the fact that the government has had to make such a big U turn shows how a poorly thought-out its business rates policy is and unless the government is serious about reforming the current system, looking at both methods of valuation and the multipliers, this volte face solution “purely kicks the problem down the line.”

“We have long been saying the current rateable values for pubs, upon which business rates bills are calculated are just too high. The methods of valuation for pubs are overcomplicated comprising of rent and turnover but not considering increased costs. And some VOA valuation methods require closer examination. Kicking the issue down the road to 2029 without proper reform could still leave many pubs uncertain of their longer-term future.”

Webber added,  “And whilst the government acknowledges business rates are too high for the pub sector why has it ignored all the other businesses in the RHL sector, such as shops, restaurants and hotels?  Hotels have been badly impacted by the revaluation and are seeing average RV rises of 76% across the country, with bills for some rising by over 150% in the three years of the list?  Although the government recognises there is a problem and has said it will examine the valuation methodology for hotels by 2029, in the near term it is offering no support. This is a kick in the teeth for the hotel industry and rather suggests they will have to suck up these incorrect values for the next three years.

“The new announcement shows that when the government claimed it was putting the whole RHL sector on a permanently affordable basis through its business rates “reforms”, it got it wrong.” U turn number 13 has been lucky for a few. It seems only he who shouts loudest gets listened to.”

The government has stated that venues including cafes, restaurants, hotels, nightclubs, sporting venues, theatres and casinos will not be eligible for relief.

Webber concluded, “Whilst pubs and live music venues have been given a reprieve, this is unsustainable for everyone else given all the other costs UK businesses are currently facing.”