Pubs and hotels could see business rates reformed after review

The Treasury has appointed business‑rates specialist Jerry Schurder to head a comprehensive review of how commercial property valuations are calculated in England and Wales, with a report due in March 2027. The review follows a recent policy move by Mayor Andy Burnham, who announced a 20 percent cut to business rates for English pubs, social clubs and live‑music venues that will take effect in April. Industry bodies such as the British Beer and Pub Association (BBPA) have highlighted the sector’s distress, noting that 161 pubs closed in the first quarter of the year across England, Scotland and Wales, costing roughly 2,400 jobs, and attributing part of the pressure to rising rates that are tied to turnover through the Fair Maintainable Trade (FMT) formula. The government has invited input from landlords, hoteliers and business owners, and the findings of Schurder’s review will feed into the next full revaluation scheduled for 2029.

The core issue driving calls for reform is the perceived inequity of the FMT‑based valuation method, which scales a pub’s rates bill with its revenue, effectively penalising successful establishments. Critics such as Jonathan Lawson, chief executive of the Butcombe Group, argue that this contrasts sharply with large online retailers whose rates are based on market rent and ignore sales volume, allowing expansive warehouse sites to pay comparatively low rates. The BBPA and other hospitality groups contend that pubs are assessed differently from retail venues, leading to disproportionately high bills that undermine profitability. Wider business voices, including the Federation of Small Businesses and the British Chambers of Commerce, have urged that any overhaul address the broader, “complex and outdated” system and consider raising the relief threshold for smaller firms, rather than delivering piecemeal adjustments.

Reactions to the review and the recent rate cut have been mixed across the political spectrum. While hospitality representatives such as Emma McClarkin of the BBPA welcomed the review as “sorely needed,” opposition figures like Shadow Chancellor Sir Mel Stride dismissed it as “far too late,” accusing the Labour government of exacerbating the sector’s woes through tax hikes and regulatory changes. Liberal Democrat Treasury spokesperson Daisy Cooper called for additional measures, including an emergency VAT reduction and reversal of recent jobs‑tax reforms. The outcome of Schurder’s review could reshape the valuation framework for both England and Wales, potentially influencing future rate relief thresholds, aligning Wales more closely with England, and setting the stage for a broader reform of the business‑rates system that affects all sectors.

⚡ Effects Interpreter