Aimed at persuading the Chancellor to take action in next month’s Budget, and on the day that inflation hit 3%, the five bodies have labelled the looming situation a £60m business rates bombshell, equivalent to each pub paying an additional £1,500, or more.
Business rates relief for pubs should not only be extended but increased from £1,000 to £5,000, says The Association of Licensed Multiple Retailers, the British Beer & Pub Association, the British Institute of Innkeeping, the Campaign for Real Ale, and the Society of Independent Brewers.
The move would reduce the level of overpayment by about one third.
'Skewed and unfair'
They have labelled the present system ‘skewed and unfair’.
The group is also calling on the Government to switch to using the Consumer Price Index (CPI) rather than the Retail Price Index (RPI) to calculate rates at the earliest opportunity, which would lessen the impact in 2018 by £6m.
Both the CPI and the RPI measure inflation. Each aim to measure the changes in the cost of buying a 'basket' of products, but cover different items. Differences in the method used to calculate inflation rate mean that the CPI is often lower than the RPI.
The present and looming increase is further compounded by the impact of last year’s rates revaluation which continues to lead to an increase in taxes just a year on.
Further risk
Eating and drinking-out businesses, particularly pubs, have been hit hard by the latest rates revaluation. Further increases risk undermining investment and could ultimately threaten jobs, the five say.
The pub sector is already overpaying on rates by more than £500m and faces further increases in excess of £125m during this revaluation period.
In a joint statement, the five bodies said: ‘Pubs have been hit disproportionately hard by the recent business rates increase and we need decisive action urgently.
‘Pubs and other venues pay around 15p per pint in business rates. This is indicative of the skewed and unfair nature of the current system that unreasonably punishes businesses that are vital economically and important social hubs.
‘If the Government does not take steps to address this inequality and provide support for vital businesses then investment is going to continue to be undermined and jobs will be at risk. With the current political and economic instability surrounding Brexit, decisive action on business rates would be welcome and timely support.’
Bold Budget call
In a raft of demands the CBI has also called on the Chancellor to limit the business rates burden by bringing forward the switch from RPI to CPI, and to exempt new plant and machinery investments from business rate calculations.
Business rent and rates specialist CVS has also stepped into the argument calling for rate rises for pubs to be frozen from next April as part of a bold November Budget by the Chancellor.
Their call follows research that revealed nearly 6,000 small pubs face inflation-busting property tax rises of more than 15% next year.
The British Beer & Pub Association (BBPA) said there was no question that if the tax rises go ahead it will result in more pubs closing.
The BBPA is also calling on the Government to take action on beer duty.