Surging business rates contributing to pub closures
15 February 2017
Surging business rates have contributed to the closure of one in five pubs across England and Wales in the last six years, according to new research.
Figures from rates and rents specialist CVS show that a fifth of pubs - or 11,443 - have closed between April 2010 and the end of last year, which is the equivalent of four pubs every day.
There is now the lowest ever number of pubs in England and Wales, at 43,231, down from 54,674 in April 2010.
CVS, which compiled the research for BBC Radio 4's You And Yours programme, said unfairly high business rates are a major factor behind the widespread pub closures.
And there are fears over the health of many more pubs, as well as a raft of firms in other sectors, as rates are set to rise again in April.
The research suggests that 17,160 pubs will have to pay more in business rates from April, with rises for pubs in 881 towns across England and Wales.
It is estimated that overall business rate bills will be hiked by £421 million for pubs in England and Wales over the next five years.
This means pubs will have to pour an extra 121 million pints to fund increases in property taxes paid to councils, CVS said.
But Mark Rigby, chief executive of CVS, said pubs in particular have been hit hard as rates are based on outdated valuations.
They are paying their rates based on turnover valuation made in 2008, he said.
He added: “There is no doubt about it anything that keeps operating costs high and not reflective of current circumstances is going to be a factor in terms of the long term health of the business.”
The Government’s recent revaluation means that all properties with a rateable worth of £12,000 or more will have to pay business rates.
There are also significant differences in rate hikes, with central London pubs facing a 43% hike and those in Manchester looking at a 12% increase.
Sean Hughes, landlord of The Boot pub in St Albans, said his rates bill is set to soar by nearly 300% in April from £14,000 a year to £52,000.
He told You And Yours: “It leaves us in a very difficult situation.
“We’ve worked out we’ll have to sell an additional 22,000 pints of beer a year just to pay for the increase. I can’t see how we’re going to do that. It’ll have a huge impact on our family run business – it makes you wonder if it’s worth it.”
A Government spokesman said: “Following the revaluation, three quarters of properties will see no change or even a fall in their bills, and the small minority of businesses that face an increase will benefit from our £3.6 billion transitional relief scheme.”
But Brigid Simmonds, chief executive of the Beer and Pub Association, said: “It is clearly unfair, and for some pubs, the revaluation has led to some huge increases.
“We need a scheme of relief that is specific to the pub sector which is without doubt, a force for good in local communities.”
The Government said on average business rates will rise by 3% for pubs.
It added that it was committed to supporting the sector, having cut beer duty by a penny a pint in 2013, 2014 and 2015 and frozen beer duty in 2016.
Photo: Ian Nicholson/PA Wire