Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Ministers are exploring options for concessions to defuse a growing row with pub landlords over rising business rates.
In the strongest signal yet that the government is being forced to soften the blow to the hospitality industry from November’s Budget, a Downing Street spokesman said Treasury ministers were in talks with the sector “to make sure we can work this through”.
The spokesman added: “Whilst we don’t provide running commentaries on ministerial meetings, that engagement continues.”
One industry source said they had been given a strong impression there was “movement” within government on the issue of business rates, while cautioning that they were still in the dark about the type of concessions offered.
“Resolving this crisis will depend on exactly what is offered and how soon — any solution needs to focus on the root of the problem — rates and tax burden,” they added.
A second industry source suggested the government could address the issue by providing greater transitional relief on hospitality business rates for the next four years, cut duty on draught beer, or give a specific discount to the multiplier — a crucial component in calculating rates — for hospitality.
The hospitality industry had been expecting a 20p discount to the multiplier in the Budget but received just 5p for every £1 of tax paid, the benefit of which was wiped out by the increase in pubs’ rateable values.
Emma McClarkin, chief executive of the British Beer and Pub Association, said “the clock is ticking” for many pubs that would not survive unless their bills come down. “This is why it’s heartening that the government is in listening mode and seems willing to deliver on their promise to support pubs and deliver meaningful reform for them.”
Sacha Lord, chair of the Night Time Industries Association, said he was hearing “from good sources that the Treasury is now looking” at the issue of business rates. He added that, with local elections looming in May, “mass pub closures are the last thing the government needs right now”.
A second industry source said Labour MPs had been lobbying ministers after being “acutely aware of the growing backlash”. More than 1,000 pubs have banned Labour MPs after changes in the Budget meant that landlords are facing sharp increases in their business rate bills over the next three years.
Earlier this week Sir Keir Starmer admitted that pubs would “struggle” because of an increase in their property rate values. The prime minister said that the government was looking at ways to help the industry, including licensing reforms. However, pub bosses quickly dismissed the olive branch and said that longer opening hours did not address the burdens of higher costs.
Pub landlords have also criticised the government’s plans to lower the drink drive limit in England and Wales as part of a broader safety strategy designed to reduce road deaths.
The strategy also includes minimum studying periods for learner drivers, more regular roadside eyesight tests by police and mandatory eyesight and cognitive testing for pensioners.
The British Beer and Pub Association warned that further restricting drink driving could damage rural pubs without decent public transport or taxi services.
But Lilian Greenwood, transport minister, said people could still have a fun night at the pub but urged them to drink non-alcoholic beverages, have a designated driver or travel to the pub by other means.