UKH: Sept inflation rise means £48m biz rates increase for pubs

16-Oct-2024 - Last updated on 16-Oct-2024 at 08:39 GMT

Dreadful prospect: UKH predicts £48m business rates rise for pubs next year based on Sept inflation figures (Credit: Getty/BrianAJackson)

September’s inflation figures indicate a potential £48m increase for business rates next year for hospitality firms, one trade body has predicted.

The latest figures from the Office for National Statistics (ONS), released on Wednesday 16 October, showed the headline rate of inflation had risen by 1.7% in the 12 months to September 2024, down from 2.2% in August.

As September’s inflation figures are used to calculate the annual uplift to business rates, a rate of 1.7% means a "likely increase" of £48m for hospitality businesses, UKHospitality (UKH) estimated.

On top of this, if the Government does not extend the current business rates relief in the upcoming Budget, firms could also face an additional £866m rise in bills, taking the overall hit to the sector in April to £914m, according to UKH.

Dreadful prospect

UKH chief executive Kate Nicholls said. “These inflation figures confirm hospitality is set for an eye-watering £914 million tax bill in April, if the Chancellor doesn’t act at the Budget.

“Business rates must be addressed, or venues at the heart of communities will see their rates bills quadruple and find themselves making awful decisions about whether to shorten hours, close more days, lay off staff, or even close their doors for good.”

The trade body added a large pub or restaurant could face a £33,500 increase in its rates.

“A lower rate of business rates for hospitality would avoid this dreadful prospect and keep hospitality at the centre of our high streets.

Host of pressures

“Measures in the Budget could be an investment in our high streets, creating new jobs driving local economic growth and securing the future of the venues that people love”, Nicholls continued.

In addition, food costs were found to have made one of the largest upward contributions to the figure, rising 1.8% during the period, up from 1.3% in August. The increase was largely driven by the price of milk, cheese, eggs fruit and soft drinks, according to the ONS.

A spokesperson for the BBPA said "While food and drink inflation remains higher, this is an indication that some cost pressures faced by brewers and pubs are easing, and we look forward to a corresponding fall in interest rates this quarter from the Bank of England.
"However, the fact remains that brewers and pubs face a host of cost pressures and, to deliver on the pre-election five point plan for pubs, the Chancellor must use the Budget to maintain the 75% business rates relief and cut beer duty. Only then will many pubs be able to keep the doors open and the pint remain affordable for all.”