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Viewpoint: Why is hospitality being penalised when it comes to the rates reform?

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Viewpoint: Why is hospitality being penalised when it comes to the rates reform?

The unfairness of the system means that entrepreneurial operators are being punished for success, says Kate Nichols, chief executive, ALMR

Last week’s budget was not without some cheer for the hospitality sector and there were certainly some significant wins which marked an important first step on the road to reform. But let’s be clear – the issue of business rates is not going away and the fight for a fairer deal must go on.

The announcement of additional sector-specific help on business rates – pubs were the only sector singled out for support – was a direct response to the ALMR’s concerted six-month campaign, with support from members, constituency MPs and other industry bodies. The safeguarding of rates appeals was a further win and will help ensure fairness and transparency when operators come to challenge their bills. Alongside this, there are additional funds available to local authorities to help ease the burden for those businesses facing the steepest bills.

Most significantly, the chancellor acknowledged the need for root and branch reform of the current regressive system. A review provides a golden opportunity to examine the way in which rateable value is calculated, to push for a move to more frequent revaluation cycles and to put in place measures which incentivise, not penalise, investment in our sector.

Entrepreneurial pub, restaurant and casual-dining operators – faced with substantial rates increases when their bills land next month – are justifiably angry. So-called ‘clicks and mortar’ businesses are not paying their fair share and all this does is highlight the archaic nature of the current system, with hospitality subsidising other sectors to the tune of an estimated £500m.

How can it be right that Amazon, Heathrow Airport and even Arsenal FC are all getting their bills cut, while bricks and mortar retailers pay an ever-increasing share? The London offices of the Department for Communities and Local Government – the department that sets business rates and is located on prime Westminster real estate – is actually seeing a drop in rateable value, while the nearest pub is seeing a 50% increase in its bill. The rates burden must be shared out and equitable.

The ALMR will be pushing for the consultation to begin as soon as possible. There should be no reason why additional contributions cannot be made mid-way through this valuation period with the funds raised ring-fenced to help those hit by the biggest hikes. We will be pushing to move to a three-year cycle now, so that the next revaluation occurs in 2020, not 2022 as currently planned.

As it stands, entrepreneurial operators investing in and transforming their businesses are being unfairly penalised for success. We must view last week’s budget as just the start. It’s imperative the industry is vocal and continues to bang the drum on how the unfairness and disparity of the system undermines growth and investment.

The chancellor’s announcement signalled a government that is willing to listen and act on the concerns of business. The issue of business rates allied to the real concerns of operators is not going away. We will continue the fight for a fairer deal for the eating-out and drinking-out market.

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