In its latest report, entitled Levelling the Bar: Reforming Outdated Business Rates for Pubs’ Survival, the APPBG describes the current business rates system as an 'outdated tax' that 'presents a clear and present threat' to pubs’ livelihoods.
Coming ahead of the Chancellor's Spring Statement on Wednesday (23 March), the report calls on the Government to urgently address business rate iniquity in the system, saying it is threatening the future of pubs and their communities while online giants continue to swerve the taxman.
According to the report, the average pub pays 3% of its turnover in rates alone, with some paying up to 10%. Meanwhile, online retailer Amazon paid a total of 2% tax on its 2020 turnover of almost £21bn. In response, the MPs recommend the introduction of an online sales tax so that the burgeoning digital sector bears its fair share of the tax burden, with the funds raised used to reduce the costs borne by bricks and mortar high street businesses.
It also calls for a new and specific rates multiplier for pubs that's closer to the 1990s level of 32p per pound of rateable value, to reflect the wider contribution that pubs make in sustaining and investing in their communities.
“British pubs are at the heart of the community,” says Mike Wood MP, chair of the APPBG.
“Never more so, than since the pandemic, when their fundamental place in society has been pivotal.
“The onus of business rates falls disproportionately on pubs in a valuation system mired by complexity and opacity, where online giants are not paying their fair share.
“Urgent action is needed, and I call on the chancellor is his Spring Statement… to help us level the playing field and turn back the clock on years of stealth increases to business rates, which threaten to bring a sector so critical to economic and social recovery to its knees.”
Elsewhere, the report also notes that rates relief and other Covid support have been ‘lifesavers’ for community pubs during the pandemic, but cites data from the British Beer and Pub Association (BBPA) that one in 10 publicans now believe their business is unviable. It goes on to warn that if support is withdrawn without a reform of the business rates system, around 20,000 UK pubs may be at risk.
With rising utility costs squeezing the life out of pubs, the report says the Government should help ensure their survival by increasing small business relief to include more community pubs to benefit. It also calls for greater transparency and Valuation Office Agency resources to support the current system of valuation for pubs.
In response to the APPBG’s report, Emma McClarkin, chief executive of the BBPA, reiterates that business rates reform is needed to create a fair system which accounts for how the economy functions in the modern day.
“The current business rates system places disproportionate burden on pubs and brewers which is stifling their recovery and return to sustainable growth,” she says.
“We welcome this timely report from the All-Party Parliamentary Beer Group following our submission to its inquiry, and hope its recommendations are seriously considered by the Chancellor ahead of this week’s Spring Statement.
“Pubs and brewers are at the heart of our communities and will help to foster social cohesion as we reconnect and recover from the pandemic, and so now it is critical that our sector receives the support it needs so we can deliver jobs and additional economic value across the UK, to ensure the entire country is levelled up.”