Westminster Government ‘shown up by Holyrood’ on rates relief

04-Mar-2021 - Last updated on 05-Mar-2021 at 07:41 GMT

Budget reaction: 'The Government in Westminster has again been shown up by Holyrood,' says Jerry Schurder, head of business rates at real estate company Gerald Eve. (image: Martin Isaac, Getty Images)

English pubs were granted a three month full extension of the business rates holiday while Scotland and Wales will see a year-long extension.

Chancellor Rishi Sunak announced in the Budget that the business rates holiday for English pubs would be extended a further three months until June.

After this, rates will be reduced by two thirds for nine months, up to a value of £2m for closed businesses with a lower cap for those who have been able to stay open.

While the announcement of an extension was broadly welcomed, trade bodies and operators had been pressing Sunak for a 12-month extension as the sector embarks on a long recovery.

Full relief on business rates for the hospitality sector will be extended for another year in Scotland, Finance Secretary Kate Forbes announced last month (February). She said this would meet the “number one ask” of businesses.

What’s more, the Welsh Government’s finance minister has confirmed that its business rates holiday would be extended for the 2021/22 financial year.

Rebecca Evans declared Welsh hospitality businesses with rateable values up to £500,000 will receive 100% relief for the next year.

Stay of execution

Of the situation for English businesses, Jerry Schurder, head of business rates at real estate company Gerald Eve, said: “While extending the rates holiday is welcome, three months will represent little more than a stay of execution for many firms.

He added: "There will be huge concerns over the to-be-announced criteria that will determine the extent to which retail, leisure and hospitality firms can benefit from the reduction of up to two thirds for the rest of the year."

The Office for Budget Responsibility (OBR) has forecast the economy to return to pre-pandemic levels in mid-2022 yet rates will be reimposed before this, Schurder said.

"The Government in Westminster has again been shown up by Holyrood which has extended the 100% rates holiday in Scotland for a further 12 months," he added.

Awaiting more detail

Emma McClarkin, chief Executive of British Beer & Pub Association, said: “We campaigned hard for an extension of the business rates holiday and the Chancellor announced a 100% cut on rates until June and up to a 66% cut for the following nine months."

The proposed cap will mean many pub businesses will not benefit fully from the extension, McClarkin added. "We await to see more detail," she said.

UKHospitality chief executive Kate Nicholls said it was great that the fixed cost had been eliminated for businesses as they ease out of lockdown and would be heavily reduced for the rest of the financial year.

She explained: "It will give some much-needed breathing room for businesses as they prepare to reopen, though the cap will impact some larger businesses. Not all businesses will be able to reopen swiftly, it will take them time to get up and running. They will be burning through meagre cash reserves as they do so, so this extra flexibility is going to crucial in ensuring as many as possible stay alive.

“The forthcoming revamp of the rates system then has to deliver a wholly new system of business tax that no longer unfairly penalises our sector."