Business Rates: Retail, Hospitality and Leisure

(Limited Text - Ministerial Extracts only)

Tuesday 20th January 2026 Lords Chamber

I look forward to supplementary questions from the shadow Chancellor, the right honourable Member for Central Devon, Sir Mel Stride, and other Members, and I look forward to seeing whether the shadow Chancellor can keep a straight face, given that he knows his Government never did enough for our high streets: 7,000 pubs closed over the 14 years the Conservatives were in power; shops were shuttered on high streets up and down the country; the council services that keep our high streets clean and vibrant were cut to the bone; investment was down; and the public suffered from the longest squeeze on living standards on record. That is the legacy for our communities—one that we are turning around”.

[Baroness Neville-Rolfe (Con)]

My Lords, we have more bad news this morning from the ONS on job numbers in hospitality. That makes it even more important that we receive clear answers to the following questions. Why did the Government not get the new rating arrangements right first time in the Budget, when we now know that they already had the relevant information on pubs from the Valuation Office Agency? Following briefing to the FT last week, not only pubs but also restaurants and hotels do not know where they stand from 1 April. This is agony for them. When will the Government make a clear statement of their intentions?

[The Financial Secretary to the Treasury (Lord Livermore) (Lab)]

As the noble Baroness knows, and as I have said before, the previous revaluation was based on property values during the Covid pandemic, which meant that rateable values were much lower. That means that some businesses, including retail, hospitality and leisure venues, are now seeing an increase as a result of this valuation. At the Budget we therefore announced three elements of support at a total cost of £4.3 billion. We implemented transitional relief; we have capped the increase for any business whose value has increased so that they are no longer eligible for small business rates relief; and we have expanded the supporting small businesses scheme.

But, as the noble Baroness quite rightly says—and as I have acknowledged in your Lordships’ House before—the revaluation means that pubs and others will struggle in relation to the business rates applicable to them. That is why we are working with the sector to ensure that it gets the support it needs. Noble Lords will have heard what the Prime Minister and the Chancellor have both said on this in recent days. I will not add to that now or comment on speculation. When there are further comments to be made, I am sure I will be back here to discuss them with noble Lords.

[Lord Freyberg (CB)]

My Lords, given that grass-roots music venues and recording studios do not qualify for RHL relief because of the way “visiting members of the public” is defined, will Ministers commit to reviewing or amending the eligibility criterion so that businesses integral to the creative economy are not excluded?

[Lord Livermore (Lab)]

I absolutely hear what the noble Lord says, and I understand the points he is making. As I said, noble Lords will have heard what the Prime Minister and Chancellor have said in recent days. I will not add to that now, but when there are further comments to be made, I am sure I will be able to discuss them with the noble Lord.

[Baroness Buscombe (Con)]

My Lords, when we are talking about business rates, are any of the many thousands of Turkish barbers, as they are so called, vape shops and nail bars—which are all cash only and which have infected our villages, towns and cities—paying any business rates? Are any of them paying tax? We know that most of them are about money laundering, organised crime and county lines drugs. They are getting away for free. The whole thing seems to be for free, and they are laughing at us. Meanwhile, our pubs and our hospitality as a whole are on a knife-edge of existence. How is that fair?

[Lord Livermore (Lab)]

I agree with a great deal of what the noble Baroness says. HMRC has announced substantial measures to crack down on some of the businesses she mentioned, and I think she will have seen several of them closing in recent months. She is quite right that more needs to be done. She is absolutely right to talk about the importance of the hospitality industry, and we completely recognise that. It plays an incredibly important role in the UK economy, employing more than 2 million people. It is vital to the life of high streets across the UK, and we will do what we can to support it.

[Baroness Kramer (LD)]

My Lords, I will repeat the adage I used formerly: measure twice, cut once. Does the Minister understand that there is real urgency to get response and relief now within the hospitality industry and for pubs, as they face uncertainty? Many, believing that the blows had ended, went ahead and hired or invested and are now unsure whether they are economically viable. Has the Minister looked at the impact of this uncertainty, particularly on the independents, which I understand are disproportionately affected?

--- Later in debate ---

[Lord Livermore (Lab)]

I understand and agree with a lot of what the noble Baroness says. It is important that we are able to create certainty for those businesses, but we did spend £4.3 billion at the time of the Budget in support of exactly the businesses she described. We are implementing transitional relief to cap the amount that bills increase for businesses that would otherwise have seen big increases. For any business whose values increase so that they are no longer eligible for small business rates relief, we are capping that increase, and we have expanded the supporting small businesses scheme. As I say, that is at a total cost of £4.3 billion, so we absolutely recognise the issues facing those businesses. The revaluation means that pubs and others will struggle in relation to the business rates applicable to them, which is exactly why we are working with the sector to ensure that it gets the support it needs.

[Baroness Wheatcroft (CB)]

My Lords, the retail and hospitality industries are often where youngsters who find it difficult to get into the workplace get their first foothold. Understandably, there have to be increases in the overheads that these organisations are paying, but can the Minister look at ways in which these organisations might be helped to bring some of those people who really need their first job into the employment market?

[Lord Livermore (Lab)]

The noble Baroness is absolutely right about the important role that those businesses play in giving young people their first jobs, and I agree with her. We are taking significant measures to help the UK hospitality sector, which employs more than 2 million people and is vital to high streets across the UK. Based on recommendations from the licensing taskforce, we published a new National Licensing Policy Framework for the hospitality sector at the time of the Budget. We are exploring planning reforms to help pubs and hospitality to expand, and the hospitality support fund has helped pubs in rural areas to diversify, ensuring that they can continue in their role as vital community hubs.

[Lord Watts (Lab)]

My Lords, on pub companies, there is no doubt that the tenants are facing major problems in the UK, but does the Minister agree with me that, although those pubs are struggling, brewers and pub companies are making record profits? Is it not time they passed that on to the pubs themselves?

[Lord Livermore (Lab)]

My noble friend is correct to say that pubs have been struggling in this economy for a long time. In the previous 14 years under the last Government, 7,000 pubs closed in the UK, so this is a long-standing issue. On his wider question, I am more than happy to look into that.

[Lord Hayward (Con)]

My Lords, as the former chief executive of the British Beer & Pub Association, I am only too conscious of the problems that the hospitality industry has faced over a large number of years. I listened to the Minister’s answers from the Peers’ Gallery in the Commons yesterday, and the unwillingness to give any indication to the industry as to when decisions will be given to it, whichever fields may be covered, means that it is totally unable to plan. The Minister’s answer today yet again gave no indication of whether there will be a response soon, at some time in the next few weeks or before the next financial year starts.

[Lord Livermore (Lab)]

I do not think I heard a question at the end there. As I have said, we are working with the sector to ensure that it gets the support it needs.

[Lord Evans of Rainow (Con)]

My Lords, given my noble friend’s question, and given the importance of hospitality for employment—and the reference in a previous question to the number of young people who are unemployed—why is hospitality not included in the Government’s industrial strategy?

[Lord Livermore (Lab)]

That is an excellent question. Of course, we have separate strategies for the retail, hospitality and leisure sector. With the industrial strategy, we are trying to do something different from what that strategy is doing. Just because a sector is not in the industrial strategy, that does not mean we do not value that sector extremely highly and do all we can for it.

[Baroness Foster of Oxton (Con)]

My Lords, there are many charity shops in the high streets across this country. They receive 80% mandatory relief and often up to 100% discretionary. Many of these charities are actually multimillion-pound businesses. Notwithstanding the pressures on the high street and the pressures on small businesses, obviously, with these forthcoming increases, does the Minister agree that perhaps it is about time that we looked into this issue to make sure that those on the high street are paying a fair rate for their business rates?

[Lord Livermore (Lab)]

I do not disagree with what the noble Baroness says. It is very important to say that we are fundamentally reforming the business rates system by introducing permanently lower business tax rates for more than 750,000 retail, hospitality and leisure properties, funded by a higher rate on the most valuable properties. I think that is absolutely the right thing to do.