Pubs: Business Rates

Debate between Andrea Jenkyns and Anne Main

Tuesday 15th January 2019 Westminster Hall

[Mrs Main]

Actually, we have tried to save pubs under the asset of community value scheme, and we have not been successful in St Albans, because the developer wins every time. I can see the point that my hon. Friend is making, but I am not going to take a diversion down too many tracks about the price of beer and community assets. Pubs and businesses in my constituency want a fair system that does not, as the hon. Member for East Kilbride, Strathaven and Lesmahagow (Dr Cameron) has said, discriminate against a business because it is located in a high-value area.

[Andrea Jenkyns (Morley and Outwood) (Con)]

I completely agree with my hon. Friend regarding high-value areas. The Old Griffin Head pub in Gildersome in my constituency has business rates of over £21,000—that is in a little village. Does my hon. Friend agree that that is an extortionate amount of money, and that it is no wonder that 21 pubs are closing every week in the UK?

[Mrs Main]

I absolutely agree with my hon. Friend, and that is why I think the Government need to hear why their best intentions have not hit the mark. As I was saying, and as the hon. Member for East Kilbride, Strathaven and Lesmahagow has described, pubs want a system that does not discriminate against businesses because they are in high-value areas. That is especially the case when they see a neighbouring, lacklustre pub—and by “neighbouring”, I mean literally three doors down in my constituency—that seems to have either had poor management or low investment, but perversely has benefited from a rate cut. How is that for a trading market? Hard-working landlords of successful pubs are penalised for their strong personal investment; they are enduring eye-watering rate hikes for their trouble.

The hon. Member for East Kilbride, Strathaven and Lesmahagow mentioned high rates in her area; I suspect that anyone who comes to St Albans will take a deep gulp. This is not what they expect from a Conservative Government, or any Government, especially one that has recognised the pressures our pubs are under and tried to help. I accept that, as I was told yesterday, the formula potentially has helped up to 90% of pubs nationwide, but it only benefits 60% of pubs in St Albans, and for some of them, the benefit is only marginal. That leaves many of the small, independent pubs that the hon. Member for Strangford (Jim Shannon) referred to facing massive hikes. The formula must be revised. The current methodology for pubs and the high tax-rate multiplier are barriers to new investment in small businesses and pubs, and we have to tackle that issue and find a fairer formula.

In November, I visited several pubs in St Albans—I think it was 10; that is how easy it is to walk around the pubs in St Albans—that are being hit the hardest by these rate increases. The campaign group, Save St Albans Pubs, took me on a tour of the pubs that face huge increases because of the system.

One of the pubs I visited recently, The Boot, is a tiny heritage pub that, as has been pointed out, will have to sell an additional 22,000 pints to cover the additional £51,000 in business rates that it now has to pay. That is a 280% rate increase, which is unsustainable and unfair.

Mr Christo Tofalli of Ye Olde Fighting Cocks told me that unless we have proper reform and relevant taxes, licensing laws and duty costs, his pub is finished. He speaks from experience because he has already come in and pulled the Fighting Cocks back from being closed under a former owner and not trading. He has invested considerable money and effort in the pub since then and has turned a closed, failed business that was an eyesore in St Albans into a successful pub that is an asset. However, under the new model, his taxes and rates have gone up to such an extent that he is now personally funding his pub to keep it open. Who would run a business like that?

Ye Olde Fighting Cocks has seen an increase in its rates of 66%, or £33,000. I hope the Minister will appreciate that that is an enormous increase for any pub owner to cope with and it does not show the level of support that the Government said was needed for small businesses.

The Six Bells, another great pub in my constituency that I visited on my tour, had an increase of 87% in its business rates: £31,000 a year. It has 1,000 square feet of operational space, which is smaller than many people’s homes. It exists in a neighbourhood where the average residential property is valued at more than £1 million. It is vulnerable to property developers wanting to move in, as they did recently with The Blue Anchor, which was located in a similar area and has now turned into a house. As Alan Oliver of The Six Bells said in his letter to me, he simply wants a level playing field for his business. It could take up to three years for Mr Oliver to appeal the unfair rate revaluation system. Meanwhile, he faces enormous penalties. He told me:

“If we put our prices up our customers will go to the pub next door which has the same size and offering but which has not had a rate increase.”

How unfair is that in the trading environment that we tried to achieve? No wonder he feels hung out to dry.

The landlord of the White Hart Tap also wrote to me and said that he risked losing customers if he put his prices up. He, too, has invested significantly in his business, a small heritage pub. When all costs are taken into account, his annual pre-tax profits are £24,000, which results in £12,000 each for him and his partner. They take no other salary. Many pubs operate with a business model that pays about £12,000 to £15,000. It is not sustainable. Those are just two examples. I have all their details and will send them to the Minister.

In fact, 30 of the 50 pubs in St Albans have seen a rate increase. Astonishingly, they need to sell around 180,000 more pints per year to cover those increases. The Blacksmiths Arms has had an 82% increase and The Beech House a 59% increase, meaning they pay £74,000. I invite the Minister to come and see those pubs, which are less than half the size of this room. Pubs in St Albans saw an average increase in rateable value of more than £27,000. That is a 56% increase in rateable value since the business rate reform. So far, 10% of pubs in St Albans have closed because of such pressures. Sadly, further closures are expected. I know the Minister talks to representatives from the industry, but I am concerned, as has been indicated, that he is not hearing the voice of small independent pubs such as The Boot.

CAMRA, which is based in my constituency, recently provided a comprehensive submission to the Chancellor ahead of the Budget in September. It has called for a full review of the business rate system with regard to pubs. It maintains that the current system is not fit for purpose and a review is needed to tackle the unfair penalisation of property-based businesses like pubs, especially given the vastly reduced levels of taxation paid by online retailers. I hope CAMRA will engage with all the pubs I have mentioned today to ensure that everyone is singing from the same hymn sheet and that their voices are heard.

The British Beer and Pub Association has rightly pointed out that pubs pay 2.8% of the total rates bill, yet contribute only 0.5% of rate-paying business turnover. That is an overpayment potentially of £500 million. Not only are pubs hit hard by business rates, but many other shops on our high streets face similar rate hikes. Save St Albans Pubs, the campaigning group in my constituency, is calling for the 33% cut to apply to all pubs for the first £51,000 to prevent the cliff edge that I talked about. If there is an ambition to help all pubs—the Government believe 90% have been helped—why not help the other 10%? I seem to have a lot of them in my constituency and they are also in the constituency of the hon. Member for East Kilbride, Strathaven and Lesmahagow. Why not ensure that all pubs get the help that they need for a favourable trading environment?

I welcome the freeze on beer duty that was announced by the Chancellor. It will help pubs across the country, and it will certainly help many pubs where the margin is narrow, but it does not help to make up for the major hit on business rates that pubs in St Albans have to endure. As I have said, small pubs, particularly ones with 1,000 square feet of space, cannot possibly have enough people coming through their doors when they are already busy and trading to make up for the huge hike in rates. In the long term, Save St Albans Pubs is calling for a fundamental review of the business rates formula for small businesses, particularly pubs. It rightly points out that pubs are complex with various business models. It is not a one-size-fits-all tax. There are many examples, particularly in high-value areas, where property values drive up the rates, meaning pubs risk being closed.

The Government have rightly identified business rate cuts as a method to support our high streets and pubs. Now we must alter the system to make sure it works for all of them. I hope the Minister will take that on board. Time is running out for pubs. Three years to challenge a business rate is far too long. The whole idea of demonstrating a sustainable trading market is obviously not working. I hope the Minister will come to St Albans. I invite him—in fact, I demand he comes to do the same pub crawl that I did. Pub owners in my constituency would be delighted to welcome the Minister to their pubs so that they could show him their premises and tell him why the model has got to be altered in line with a fairer system that respects the heritage pubs that are the lifeblood of constituencies such as mine.

Care Homes: England

Debate between Andrea Jenkyns and Anne Main

Wednesday 13th January 2016 Westminster Hall

[Andrea Jenkyns (Morley and Outwood) (Con)]

I have been a councillor, so I know that budgets have been quite tight in local authorities over the years. A care home in my constituency, Siegen Manor, is possibly due to close. Does the right hon. Lady agree that we need to look at the way councils spend money? In my new city council, there is a lot of wastage. We need to look at how councils spend their money, because I could give a lot of examples of how they could—

[Mrs Anne Main (in the Chair)]

Order. I call Joan Ryan.