Burnham accused of ‘piecemeal’ business rates reform

Labour’s deputy leader Andy Burnham has come under fire for allegedly taking a "piecemeal" approach to business rates reform instead of delivering on his party’s manifesto promise to replace the tax system. The government has launched a review into business rates for pubs and hotels, but industry bodies argue the Prime Minister should commit to a comprehensive overhaul of the system.

The Treasury announced on Monday a review of property valuations for pubs and hotels, which will be led by Jerry Schurder, described as a "business rates expert" by the government. The aim of the review is to make valuations "fairer" for these businesses.

Hospitality industry leaders have criticized the current system for valuing pubs and hotels, claiming rural venues are disproportionately affected by what is described as a "nice pubs" tax. This is because the system takes into account features such as waterfront views and play areas when determining a venue’s value.

Burnham announced last month that pubs, social clubs, and live music venues would receive a 20% reduction in business rates bills. However, the British Chambers of Commerce (BCC) has criticized the government for limiting the review to just pubs and hotels, urging a more comprehensive approach that covers all sectors.

The review will not examine the rates paid by retailers, despite concerns that high street shops are facing significant financial burdens. Restaurants are also excluded from the review, which comes as a report found that the UK’s top 100 restaurant groups reported a 44% drop in profits to £204m in the previous year due to rising employment costs and business rates.

The Real Rates Reform Alliance, which has called for Burnham to replace business rates with a new system, expressed disappointment that the review is "narrowly focused" on pubs and hotels. Ros Morgan, the group’s chair, stated that "any lasting solution for pubs and hotels must be part of a wider overhaul."

The alliance has urged the government to cut business rates for physical premises by 37%, funded by a 2% levy on online sales. Labour’s 2024 manifesto pledged to replace the business rates system with a fairer alternative. The review, according to Morgan, should be used to move beyond "piecemeal reliefs" and design a business rates system fit for the modern economy.