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Rachel Reeves has dashed hopes that her business rates U-turn will be widened to the broader hospitality sector by signalling that further support will be limited to pubs.
The chancellor told reporters at the World Economic Forum in Davos that pubs were in a different situation to other hospitality businesses, just days after suggesting that the whole sector would receive support.
“The situation the pubs face is different from other parts of the hospitality sector but we will be setting out the detail in the next few days,” Reeves said on Wednesday.
One Treasury official said the government would continue to listen to the concerns of the wider hospitality sector, adding: “But this package is for pubs.”
Last week Reeves said that additional support on business rates would be done in a “balanced way that particularly supports our pubs and the hospitality sector”.
Officials had said at the time that the chancellor was considering helping restaurants, cafés and hotels along with pubs, after the sector hit out at measures Reeves announced in her November Budget.
Reeves’ remarks on Wednesday drew immediate criticism from the hospitality sector, which had been expecting a broader reprieve from increases to business rates.
Kate Nicholls, chair of UKHospitality, said: “The situation the pubs face is no different from the hotels because of the very large increases in their rateable values.”
Pubs across the UK will face an average 76 per cent increase in their business rates bills over the next three years, while hotels face even larger 115 per cent rises, according to UKHospitality.
Simon Vincent, president for Emea at the hotel group Hilton, called on the UK government to provide a “sector-wide solution” to the “punitive business rates imposed on hospitality businesses up and down the country”.
He added: “Layer upon layer of extra taxes are disincentivising employment and impacting our hotel owners, many of whom are small and medium-sized businesses.”
Jo Boydell, chief executive of Travelodge, warned that the budget hotel chain’s bill would double over the next three years and that the increases would deter investment in “new hotel developments and ultimately jobs”.
Restaurateurs have also said that they will be hit hard by the revaluations.
“The government talks about growth, but growth only happens when businesses can invest and employ people: hospitality can’t do that right now,” said Tommy Banks, the chef and restaurateur behind Michelin-starred restaurants The Black Swan at Oldstead and Roots York.
Andrew Griffith, Conservative shadow business secretary, told the FT: “A U-turn which excludes the wider sector would be criminal. Many hotels and restaurants face even higher rates rises and their viability is equally at risk.”
Bricks-and-mortar businesses have accused the government of letting them down after the Labour Party promised to reform the archaic property tax in the run-up to the election. UK Prime Minister Sir Keir Starmer also made a pledge to small retail, hospitality and leisure businesses before the Budget that they would enjoy permanent discounts funded by larger warehouses and retailers.
Instead, bills for supermarkets, which mounted a ferocious campaign against business rates changes, have stayed broadly the same while rates for smaller high street shops will rise substantially.
Meryl Halls, managing director of the Booksellers Association, said: “If pubs are protected because of the value they bring to their communities, bookshops deserve their place alongside them in a fair and equal business rates system.”
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