As the Chancellor of the Exchequer was delivering her Budget last Wednesday (26 November) the Valuation Office Agency (VOA) published its assessment of the rateable values of all commercial properties in England and Wales, one of the two components of how much money a business pays in rates. The result has seen many rural pubs’ rate bills soar.
The Countryside Alliance is deeply concerned about the cumulative impact of a range of pressures on the continued viability of rural pubs, which so often serve as the lynchpin of their communities.
Paid for by higher rates on properties with rateable values of £500,000 or more, the Chancellor announced “permanently lower tax rates for over 750,000 retail, hospitality and leisure properties – the lowest tax rates since 1991”. She was referring to the other component of a rate bill: the so-called business rates multiplier. An overall annual tax bill is calculated by multiplying the rateable value by the multiplier, which is usually expressed as pence in the pound but has the same effect as a percentage. For the retail, hospitality and leisure (RHL) sector, which includes pubs, she opted to reduce it by 5p.
Business rates valuations are an attempt to reckon how much a turnover a business should have been able to generate during the year of assessment, which, for the 2026 revaluation, was 2024. The last time rates were valued was in 2023 with an assessment year of 2021, during which market conditions were heavily depressed by the coronavirus pandemic. Since those conditions no longer existed in 2024, some increase in business valuations was inevitable. VOA statistics show that pubs experienced an average increase of 30%, but anecdotal evidence suggests they have been distinctly uneven, with some publicans showing on social media business valuation increases of up to four times.
The Countryside Alliance welcomed the Chancellor’s announcement of a rate reduction for the RHL sector and indeed, had called for her to uphold the commitment she made in last year’s Budget to do so. The reduction does improve the position for businesses compared to what it would have been had it not been made.
It coincides, however, with the unwinding of business rates relief schemes introduced initially by Rishi Sunak as Chancellor during the pandemic and reduced to 40% by the present Chancellor last year, and now with the VOA’s newly inflated valuations. Further transitional reliefs have also been announced but the Telegraph has reported analysis from UK Hospitality that the combined effect of all of these factors will leave pubs facing an average bill increase of 15% next year. In 2026-27 bills are expected to be £1,400 higher than today, in 2027-28 £4,500 higher and in 2028-29 £7,000 higher. While the Chancellor’s statement about “permanently lower rates” was technically true, supposing she must have been aware of the direction of VOA revaluations it might also be thought misleading.
In other respects, too, the business environment for pubs remains hostile. Alcohol duties are being uprated in line with retail price inflation (RPI) at 3.66%, minimum wage increases are raising staffing costs, recruitment remains challenging and the Office for Budget Responsibility, now best known for having leaked the Budget half an hour beforehand, has declined even to model the possible economic impact of the government’s Employment Rights Bill.
The Countryside Alliance will continue to call on the Chancellor and the wider government to make policy that tends to foster and defend rural pubs, for the sake of the communities that rely on them. We regret that the combined effect of the Budget and the VOA revaluations has done the opposite.