Hospitality business rate reaction

North East restaurants, hotels, and cafes are at risk of becoming “unsustainable” after being excluded from financial support from the Government, local industry leaders fear, writes Local Democracy Reporter, Daniel Holland.

Chancellor Rachel Reeves has announced that pubs and live music venues will get a 15% discount on their new business rate bills from this April, after warnings that mounting costs could spark a wave of closures.

But the support has not been extended to other hospitality businesses, despite their own concerns over rising costs from taxes, energy bills, and staffing.

Jack Brown, part of Heaton Group which owns popular restaurant Nest, described the 15% cut for pubs as “an insult” and said he hoped the Government would do more “because it’s unsustainable for so many businesses whether it’s restaurants, bars, hotels or cafes”.

The 36-year-old added that the situation was “becoming harder and harder” for independent businesses and that the Government was “making it difficult to have that longevity”.

Newcastle nightlife boss Ollie Vaulkhard, whose Vaulkhard Group runs venues including Barluga and the Bridge Tavern, called the Treasury’s commitment “underwhelming” and “incoherent”.

He told the Local Democracy Reporting Service: “We have not yet found a definition of what a pub is. And why is a coffee shop or a restaurant left struggling more than a pub or a music venue? It doesn’t make sense.

“In my mind it is a bit incoherent and it doesn’t address the root problems we are facing. It is just yet another sticking plaster that it seems to me is there to appease backbench MPs.”

Atul Malhotra, COO of hotel and leisure operator Malhotra Group PLC, was also critical of the deal.

Mr Malhotra, whose firm owns the likes of the Grey Street Hotel and the Duke of Northumberland, said: “While anything that helps hospitality is very welcome at a time when the industry is being hit so hard, in reality this is a 15% reduction to a 100% increase so in real terms it means absolutely nothing and is unlikely to make any real impact on the struggles facing businesses in the sector.

“It also completely fails to recognise the challenges hotels are currently facing and in the North East in particular they are among the hardest hit and yet the Government has done absolutely nothing to help them.”

Stephen Patterson, CEO of NE1 Ltd, the Business Improvement District company for Newcastle City Centre, which represents the interests of 1,400 businesses, 31% of which are in the hospitality industry said: “It is encouraging that the Chancellor has listened to our concerns and the calls from businesses to offer some concessions to the pub trade and music venues.

“For some licensees, these measures will provide a degree of comfort, but they don’t fix the fundamental problems with the business rates system. Hospitality is one of the most highly regulated, highly taxed sectors of the economy. Recent changes in the last two budgets, combined with national and local regulation leave many feeling they face a slow death march to oblivion.  Even with the relief, I fear that the tax burden placed on the hospitality sector has reached a tipping point, and increased closures and job losses will be the result.

“The hospitality sector makes up 31% of city centre businesses, but it accounted for 51% of the additional business rates tax burden; it is simply inequitable and needs to be reformed. After all, a city without a thriving hospitality scene isn’t really a city, it’s just a poorly designed business park.”  

When asked why other businesses would not be extended the same level of help, Ms Reeves said on Tuesday that pubs “are different” and a “huge community asset”.

The Chancellor’s offer of support this week came after she had previously announced changes in her November Budget that would increase business rate bills, through a  combination of properties being revalued and the phasing out of Covid-era relief.

Emma Lewell, the Labour MP for South Shields, said ministers could not afford to ignore the concerns of the wider industry.

She added: “Government support must expand to the whole sector, not just pubs and music venues. No one wants to drink in a pub next door to a boarded-up café, restaurant or bed and breakfast.”

The Chancellor has also promised a new High Street Strategy to help retail, leisure and hospitality businesses thrive.

Ms Reeves said: “If we’re going to restore the pride in our communities, we need our pubs and our high streets to thrive. We’re backing British pubs with additional support, and our new High Streets Strategy will help tackle the long-term challenges that our much-loved retail, leisure and hospitality businesses have faced. Thriving local businesses, bustling high streets and pride restored in our communities – that’s what this government is delivering.”