MPs' report warns 'up to 20,000' pubs could close if business rates not reformed

A report by a group of MPs has warned that up to 20,000 UK pubs could be at risk of closure if the government fails to reform the business rates system.

Ahead of the chancellor’s spring statement on Wednesday (23 March), the All-Party Parliamentary Beer Group (APPBG) said the current system was threatening the future of pubs while online businesses pay less tax.

Its report found that the average pub pays 3% of its turnover on rates alone, with some paying up to 10%, while online retailer Amazon paid 2% tax on its 2020 turnover of almost £21b.

The APPBG said rates relief and other support had been ‘lifesavers’ for community pubs during the pandemic, but that one in 10 publicans now believe their business is unviable. It warned that if support is withdrawn without a reform of the business rates system, up to 20,000 UK pubs may be at risk.

The group of MPs is calling for the introduction of an online sales tax and a new and specific rates multiplier for pubs, closer to the 1990s level of 32p per pound of rateable value. It is calling for greater transparency and Valuation Office Agency resources to support the current system of valuation for pubs.

As rising utility costs also threaten pubs the report has called for an increase in small business relief to allow more pubs to benefit.

Mike Wood MP, chair of the APPBG, said: “British pubs are at the heart of the community. Never more so, than since the pandemic, when their fundamental place in society has been pivotal.

“The onus of business rates falls disproportionately on pubs in a valuation system mired by complexity and opacity, where online giants are not paying their fair share.

“Urgent action is needed, and I call on the chancellor is his spring statement next week to help us level the playing field and turn back the clock on years of stealth increases to business rates, which threaten to bring a sector so critical to economic and social recovery to its knees.”