Rachel Reeves in Davos, where she spoke about high street taxes (Image: Getty)
Rachel Reeves has been accused of “costing Britain jobs” as it emerged struggling pubs face years of massive tax rises. Conservatives warned the Chancellor was “shutting up shop” in high streets across the country, after the Treasury admitted tax relief to help pubs cope with massive business rate increases will “slowly unwind” over the next three years.
And there was fury after Ms Reeves ruled out support for shops, hotels and cafes, despite fears that they too could be forced to shed thousands of jobs. Shadow Chancellor Sir Mel Stride said: “The Chancellor chose higher business rates over backing our high streets”. Ms Reeves is also under pressure to perform yet another u-turn from Labour MPs, who fear her tax hikes will leaded to more boarded-up premises in town and city centres.
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Liam Byrne, Labour chair of the Commons Business and Trade Committee, said tax rises “are strangling hospitality businesses.” Dame Meg Hillier, Labour chair of the Commons Treasury Committee, said: “Many pubs in my constituency are seeing eye-watering increases in business rates.”
Pubs face business rates increases of up to 63% when new property valuations come into effect April 1, as the payment is calculated partly on the value of their premises. A discount introduced to help hospitality businesses cope with the impact of the Covid pandemic is also coming to an end.
The Beer and Pub Association has warned that the industry faces higher bills of £150 million every year, putting 15,000 jobs at risk, and a number of venues have barred Labour MPs – including the Marsh Inn in Ms Reeves’s constituency of Leeds West and Pudsey, which says the chancellor is not welcome.
The Chancellor has announced a package of rate relief but Treasury Minister Dan Tomlinson admitted tax relief for pubs will be “phased out” and said the government was “slowly unwinding it over the coming three years”, when he was summoned by Sir Mel to answer an urgent question in Parliament.
Ms Reeves promised last week that further support for pubs is planned – but has yet to provide any details.
And last night she appeared to rule out pleas to help other high street businesses, despite Labour backbenchers warning of mass closures in town and city centres due to soaring taxes. Speaking at the Davos Economic Summit, she said: “The situation the pubs face is different from other parts of the hospitality sector”.
It sparked an angry response from the employers. Allen Simpson, Chief Executive of trade body UKHospitality, said: “The entire hospitality sector faces the same cost challenges – from eye-watering business rates hikes to the soaring cost of employment.
“These are not challenges unique to pubs. Our hotels, restaurants and cafes, to name a few, all face their business rates bills increasing by thousands, driven by the same large increases to rateable values affecting pubs. These businesses employ six in seven people in hospitality.”
He said: “The Government has one chance to get this right. Without a package of support for the entire sector, I fear it will be too little, too late.”
Sir Mel warned: “The numbers are stark. Shops are facing bill increases of around 50 per cent. Restaurants more than 50 per cent. Hotels an eyewatering 100 per cent-plus.
“Reeves’ brutal High Street Tax is the difference between businesses staying open and shutting up shop in communities across the country.”
Labour MPs also made their concerns public. Labour backbencher Rachael Maskell said: “Some little retail outlets are seeing their business rates rise by 93%, and they simply do not have the resilience to deal with it.”
Fellow Labour MP Toby Perkins urged the Government to provide details of promised help for pubs, saying: “Many pubs are really concerned, and are under the impression that further help is coming. They are trying to make accounting decisions right now.”
Backbencher Cat Eccles said: “This is not just about pubs; it is about all hospitality businesses, including music venues … they have been massively impacted by a perfect storm of new valuations by the Valuation Office Agency, the end of covid-related reliefs and rising energy costs.”
Ms Reeves insisted businesses were feeling “optimistic” despite mounting signs of the impact of tax hikes and cost pressures.
Speaking at Davos, she said: “Businesses here, this week are feeling positive. They’re feeling optimistic about the year ahead.
“I am too, because we have the right plan, for our economy, for our country to bring that growth and prosperity in all parts of the country that we need.”