Pubs: Business Rates
Debate between Lisa Cameron and Anne Main(6 years, 3 months ago)
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Mrs Main
The hon. Gentleman makes an excellent point. Indeed yesterday, I took some representatives of pubs to meet the Minister with specific responsibility for this issue, and interestingly they were all from small independent pubs. The big pub chains can cross-subsidise in other areas if they are hit in this way; it is the small independent pubs, often run by one or two people who have put their lifeblood into those pubs, that are suffering. Those people are the ones whose voices need to be heard today. This cannot be the message that we are sending out as a Government. We must ensure that we are supporting small businesses, such as our smaller pubs, which drive our economy and play an important role in communities.
In high-value property areas such as St Albans, there is not a standard Government model that fits. The average house price stands at over £600,000: if a struggling business closes, it will quickly be snapped up by a property developer who sees it as a lucrative brownfield site ripe for housing, and often turned into an individual house or a pair of houses. That practice of turning commercial space into residential space is affecting businesses across St Albans with, for example, a staggering loss of office space over the past few years since the planning laws were changed. That is a double whammy for pubs. Businesses, particularly pubs, are struggling under the current system, and the new rate simply provides a cliff edge that penalises successful businesses in areas plagued by high property values. We must devise a system that helps all small businesses and pubs to thrive, not just the ones with low retail value.
The 2017 business rate formula for pubs uses a methodology for setting the rateable value based on a fair maintainable trade, which is a difficult phrase to interpret. The rateable value is driven mainly by the pub’s turnover. The calculation also takes into account property valuations in the area, which means that even small pubs, such as many of the pubs in St Albans that have been hit the hardest, can have a high rateable value because the area they are in has high property values. Sadly, the current formula does not take into account the many models of pub ownership that are often used by landlords and owners. That formula effectively penalises small business operators through an arbitrary taxation system that significantly reduces any profits a pub landlord can make while trying to pay staff wages and other costs.
Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP)
I thank the hon. Lady for bringing this important debate before the House. We are at risk of losing our Glassford Inn, the only pub in its village, because of the issue that she has spoken about: the high rateable value of property in the area. It is the last business in the area, yet the rateable amount cannot be varied. Does the hon. Lady agree that this situation has to be changed to sustain these businesses over the long term?
Mrs Main
I absolutely agree with the hon. Lady, because I do not believe that what she has described was the Government’s intention. As I have said, the formula does not take into account the current models: some of these pubs are leasehold, and some are owned; there can be no bigger incentive to sell a pub than knowing it could be worth a heck of a lot more as a house than as a pub.