Andy Burnham has been accused of failing to honour Labour’s manifesto pledge to overhaul the business rates system, opting instead for a narrow review targeting pubs and hotels.
The Treasury launched the review on Monday, focusing on how property valuations are calculated to determine business rates bills for the hospitality sector.
Jerry Schurder, described by the government as a “business rates expert”, will lead the review, which ministers said would make valuations “fairer” for affected businesses.
Burnham announced a 20 per cent cut in business rates bills for pubs, social clubs and live music venues last month, with this latest review building on that move.
Hospitality leaders have long criticised the current valuation system, with some warning that rural venues are subject to a “nice pubs” tax because features like waterfront views and play areas count towards their assessed value.
The British Chambers of Commerce (BCC) criticised the government for limiting the review to pubs and hotels, arguing it should cover every sector of the economy.
Jonny Haseldine, the BCC’s head of business environment policy, said: “The full reform of business rates, promised by the government at the last election, is urgently needed. This continued piecemeal approach to reform is the wrong approach.”
The review will not consider the rates paid by retailers, despite widespread warnings that high street shops are being burdened with disproportionately large bills.
Tom Ironside, the British Retail Consortium’s director of business and regulation, said: “[But] it’s vitally important that the needs of retailers are not overlooked as retail represents five per cent of the economy but pays 20 per cent of the business rates bills.”
The British Retail Consortium, which represents major retailers including Tesco, Marks and Spencer and Waterstones, welcomed Schurder’s appointment, noting his “deep expertise in this area.”
Restaurants will also be excluded from the review’s scope, as a report published Monday found that the UK’s top 100 restaurant groups saw profits fall by 44 per cent to £204m in the last year.
Rising employment costs and business rates have made it “far more difficult” for these firms to turn sales into profit, according to consultancy group UHY Hacker Young.
The Real Rates Reform Alliance said it was “disappointing” that the review is “narrowly focused” on pubs and hotels, calling instead for a comprehensive overhaul of the entire system.
Ros Morgan, the Alliance’s chair, said: “We cannot keep tinkering with business rates one sector at a time; any lasting solution for pubs and hotels must be part of a wider overhaul.”
The Alliance has called on the government to cut business rates for bricks-and-mortar businesses by 37 per cent, funded by a two per cent levy on online sales.
Morgan added: “This would help to dramatically reduce the burden on businesses with physical premises,” and urged the review to move beyond incremental changes.
During his Makerfield by-election campaign, Burnham backed hiking taxes on warehouses to fund business rates cuts for high street businesses, a position opposed by some retailers who argue it would push up prices.
Labour’s 2024 election manifesto pledged to “replace the business rates system, so we can raise the same revenue but in a fairer way,” a commitment critics say remains unfulfilled.
Morgan said: “This review should be used as an opportunity to move beyond piecemeal reliefs and start designing a business rates system fit for the modern economy.”
Financial secretary to the Treasury James Murray defended the government’s approach, saying: “Last month we announced tax cuts for pubs to give them the breathing room they need. Today we’re going further with a rethink of valuations, so that we can build a fairer system for the future.”