Broken business rates having devastating impact on struggling pub trade, Camra warns

The business rates system is broken and is having a devastating impact on pubs, according to the Campaign for Real Ale. Picture by Johnny Green/PA Wire/PA Images.
The business rates system is broken and is having a devastating impact on pubs, according to the Campaign for Real Ale. Picture by Johnny Green/PA Wire/PA Images.
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Business rate hikes are having “devastating” impacts on jobs and investment in British pubs, a campaign group has warned.

The Campaign for Real Ale (Camra) said new research shows that the business rates system is “broken”, with financially-stricken pub owners and managed being forced to lay off staff, raise prices at the bar and put off much-needed investment.

A survey of 650 licensees found that three out of every four publicans believed that the system was “unfair” to pubs.

Camra has submitted its research to the Commons Treasury Committee in order to raise the worrying trends.

Tom Stainer, Camra’s chief executive, said: “Since the last business rates revaluation in 2017, it has been clear that the system simply isn’t working for publicans.”

Inflated business rates are particularly hitting pub tenants who are “tied” to sourcing their beer from a particular brewery company, as this meant they have no hope of reducing costs but looking for alternative suppliers.

According to recent findings by the Office of National Statistics (ONS), more than 11,000 pubs have closed in the UK in the last decade - a fall of almost a quarter; some 23 per cent.

As many as 18 pubs are estimated to be closing each week, leaving around 39,000 pubs nationally, down from 50,000 in 2008.

Small pubs in particular disappearing as big pub chains consolidate their businesses around bigger bars, an analysis by the ONS found.

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In York, some pubs have had to cope with business rate rises of more than 400 per cent. With other pressures also mounting on the sector, “outdated” business rate calculations simply have to be addressed, according to the pub protection officer at Camra’s York branch, Nick Love.

“Pubs are suffering from an unprecedented cocktail of business pressures at present – be it beer duty, rents, the pubs code, heavily discounted supermarket booze or business rates,” Mr Love said.

“The way business rates are calculated for pubs is both outdated and unfair,” he added, saying: “Pubs generate 0.5 per cent of business turnover in England, yet pay 2.8 per cent of the business rates bill; an overpayment of over £500m.

“The method of calculation called Fair Maintainable Trade which works out rateable value based on how much a pub in particular area could be reasonably expected to take is often wildly inaccurate and, from talking with York’s licensees, unfairly penalises successful businesses.”

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Some pub closures as tenants have struggled to make the business pay have led to community groups securing grant funding to revive their ailing locals.

Research by the independent Power to Change trust found that there are now 100 community-run pubs across the country. Some 14 of those have opened in the past year.

Another organisation, the Plunkett Foundation, reports that 49 community pubs opened in the five years to last August, including two in Yorkshire, taking the total of community-run pubs in the county to five.

Vidhya Alakeson, chief executive of Power to Change, said community owners had embraced the role of the pub as other local services have declined. She said: “Community run pubs are so powerful to the people who use them, offering a huge range of crucial services including lunch clubs for vulnerable people, gardening and cooking classes.”