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Urgent need to halt ‘unprecedented’ rise in business rates - hospitably leaders warn ministers

14/11/11


Hospitality industry leaders are calling for a halt to big hikes in business rates planned for next year, which would damage thousands of British businesses. In a letter to cabinet ministers Eric Pickles and Vince Cable, Chief Executives of the UK’s pub, hotel, restaurant and leisure industry trade bodies say that next year’s rates rise of 5.6 per cent is unprecedented, and will add hugely to pressures to a wide range of businesses in Britain’s hospitality and leisure sector.


The hospitality and leisure sectors are an important source of jobs and wealth creation and a key part of the UK tourism industry, says the letter. With the business confidence brought about by favourable tax policies, the sector could return to the position it occupied in the late 1990s when one in three new jobs in the UK were created in the leisure and hospitality industry. A rates freeze would send a very positive message to business, encouraging investment and promoting entrepreneurial activity.


Brigid Simmonds, Chief Executive of the British beer & Pub Association, comments:


“Council Tax has been frozen by the Government – and rightly so. Given the benefits it could bring, we need the same approach for business rates. Our leisure and hospitality sector is dominated by small business, like pubs, hotels and restaurants, and they are absolutely key to creating new jobs”


Ufi Ibrahim, Chief Executive of the British Hospitality Association, comments:


“We need a rates freeze. The VAT rise in January hit our businesses hard, with extra taxes on pub and restaurant food, while supermarket food remains zero rated. This is widening the gap between eating out and eating at home. There is no justification for further pain in what are labour-intensive parts of the economy, where jobs can be created.”


Dominic Harrison, Chief Executive of Business in Sport & Leisure comments:


“Business rates are one of the highest costs on businesses. They feed through to the prices of goods and services, reducing customer visits. A freeze would send a clear signal that the Government really understands that we are vital to generating growth and jobs in the economy, and growing our way out of recession. With current uncertainties, the timing couldn’t be more vital.”


Notes to editors:

The full text of the letter to Eric Pickles and Vince Cable follows.
+ + + + +
9th November 2011


The Rt Honourable Eric Pickles, MP,
Secretary of State for Communities and
Local Government,


The Rt Honourable Vince Cable, MP,
Secretary of State for Business, Innovation
and Skills,


Dear Secretaries of State


Business Rates – April 2012


The British Beer and Pub Association, British Hospitality Association and Business in Sport and Leisure are writing to you as representative bodies of major employers and investors in the leisure and hospitality industries, to express our concern over the level of business rates planned for next year.


As matters currently stand Business Rates across the country are set to rise by an unprecedented rate of 5.6%. Such a level of increase will add significantly to the escalating inflationary cost pressures on an industry which has to deal with rising costs across the board, at a time when customers are facing their own inflationary costs and falling incomes.


The hospitality and leisure sectors are an important source of jobs and wealth creation and an integral part of the contribution that tourism makes to the UK economy. We fervently believe that given the right fiscal climate the sector can return to the position it occupied in the late 1990s when one in three new jobs in the UK were created in the leisure and hospitality industry. Such jobs also generate a further five jobs in associated industries and services, providing a much needed boost to the economy and jobs market.1


Despite the general economic climate, there remains latent demand within the market as more people look to their more immediate locale to spend their leisure. This potential can only be unlocked through fiscal policies that restore confidence in the Government’s strategy for growth.


The Government has seen fit, rightly so in our view, to fund a freeze in domestic Council Tax for a further year. Similar action to alleviate or remove RPI increases on business rates would send a very positive message to business and would encourage investment and promote entrepreneurial activity. The leisure and hospitality industry has endured the increase of VAT to 20%, which has further increased the already wide differential between eating out and eating at home. Alcoholic drinks have seen not only the VAT increase, but further rises in duty two percent above RPI by the application of the duty escalator. Food prices and utility costs continue to rise well in excess of the overall inflationary pressures.


A standstill in business rates would go a long way to alleviate cost pressures on business, as well as reducing the overall level of inflation which the Government will want to return to much more sustainable levels. Indeed it is quite possible that by April 2012, inflation will have fallen considerably, but this will not be reflected in Business Rates and their rise is determined by the RPI rate in September 2011.


Business rates, which account for around 4 to 7% of turnover in British pubs and hotels are the highest cost on businesses after rent, wages and just marginally below the cost of utilities, representing around 12% of operating costs. They are a significant expense and determinant of ultimate retail prices, which in turn impacts on the customer’s willingness and ability to pay.


The BBPA, BHA and BISL urge the Government to recognise the industry’s concerns and freeze business rates for the coming year. To do so would not only be prudent but would send a clear signal to businesses that the Government is supportive of its efforts to generate growth, create jobs and invest in the UK economy.


We would very much welcome the opportunity to discuss the proposed increase further with you.


Yours sincerely,


Brigid Simmonds OBE
Chief Executive
British Beer and Pub Association


Ufi Ibrahim
Chief Executive
British Hospitality Association


Dominic Harrison
Chief Executive
Business in Sport and Leisure


The British Beer & Pub Association is the UK’s leading organisation representing the brewing and pub sector. Its members account for 96 per cent of the beer brewed in the UK and around half of Britain’s 51,000 pubs


The BHA is the leading representative organisation in the hospitality industry, representing hotels, restaurants and food service providers.


Business In Sport and Leisure (BISL) is the strategic body representing the private sector in the Sport and Leisure industry.




Tags:

Community, Employment, Pubs, Brewing, General


For further information contact:

Neil Williams
Head of Media
nwilliams@beerandpub.com
Tel: 020 7627 9156 / 07974 249 779


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