Mark Tan comments on hospitality business rates cut proposals
The UK Government’s plans to cut business rates for pubs, clubs and live music venues have been welcomed as a positive step for the hospitality sector, but questions remain over how the relief will be funded and where the cost will ultimately fall.
The proposed 20 per cent reduction, announced shortly after Andy Burnham became Prime Minister, is expected to benefit around 32,000 businesses from April next year. It follows earlier measures announced in January, including a 15 per cent cut to new business-rates bills for pubs, a two-year real-terms freeze and a review of how pubs are valued.
Spencer West partner Mark Tan, who was quoted by Event Planner News on the issue, said the policy should be assessed not only by the immediate support it offers to venues, but by its wider economic impact.
Mark explained that the wider funding mechanism will be crucial in determining whether the policy delivers meaningful support or simply shifts costs elsewhere in the economy.
“The 20 per cent cut is welcome. Pubs need help. But there is a habit in tax policy of pretending relief can be paid for by somebody else, usually a large, multination and ‘unpopular’ business. Burnham has talked about charging large out-of-town warehouses more, which plainly means Amazon. The problem is that the tax system sees a property in this case, rather than a company name, which means the higher tax multiplier can also catch a British-owned regional warehouse, a British supermarket distribution centre or a British logistics business operating on tight margins.”
Mark noted that, even where the policy is designed to raise revenue from larger operators, the financial impact may not remain there.
“Nor does the cost necessarily stay with a big multinational. A powerful operator may squeeze suppliers and marketplace sellers, renegotiate rents or pass some of the cost to customers. The burden can travel back down the chain until it reaches the same small businesses and households politicians say they are helping.”
He added that greater transparency will be needed on eligibility, funding and the likely knock-on effects across supply chains.
“So yes, help pubs. But publish the eligibility rules and funding properly, and show who really pays. Taxing one part of the economy to subsidise another is not automatically growth. The test is whether the policy strengthens local businesses without quietly increasing their costs somewhere else, which gets passed back to the very pubs and customers anyway.”
Read Mark’s full comments here.
