Newcastle City Council has called on the government to radically overhaul the "fundamentally broken" business rates system for local businesses, as the Treasury launches a review into how pubs and hotels are charged.
On Monday, 24 August, the Treasury announced it had launched a review into how business rates are calculated for pubs and hotels across England and Wales. The move follows longstanding complaints from the hospitality sector, especially pubs, that they face disproportionately high business rates.
Recent national insurance hikes and rising energy costs have also been cited as major strains on the industry.
Councillor calls for wholesale reform
However, the deputy leader of Newcastle City Council has called on the government to go further than the planned review, which is scheduled to be completed in March 2027.
Coun Mark Mitchell, deputy leader of Newcastle City Council and cabinet member for finance and resources, said: "The business rates system is unfair and fundamentally broken, creates winners and losers, and is unfit to fund local councils. Wholesale reform or replacement with a better system is long overdue, which takes into account local needs, local businesses and local control.
"We are pleased that the Government is seeking to review how business rates are calculated for our vibrant and welcoming hospitality sector and hope that they will seek some fundamental fairness that recognizes the challenges that the sector faces.
"The current arrangement is a barrier to growth and jobs in one of our city's key areas of employment and punishes pubs, bars and clubs for their success. However, while support for our hospitality trade is welcome, such a piecemeal approach to reform is wrong and we once again call on the Government to introduce a fair system of local taxation for all local businesses."
Late Night Levy under consideration
Newcastle City Council is also considering scrapping its 'Late Night Levy', amid concerns from business organisations about the financial pressure it places. The levy is a charge of between £299 and £4,400 for licensed premises that serve alcohol from midnight to six in the morning.
It has raised around £3m since its introduction in 2013, and proceeds have been split between Northumbria Police and Newcastle City Council to fund measures like CCTV and street marshals.
Treasury review aims for fairer system
In Monday's announcement, financial secretary to the Treasury, James Murray MP, said: "Pubs and hotels are vital for communities and bringing growth to every postcode.
"Last month we announced tax cuts for pubs to give them the breathing room they need. Today we're going further with a rethink of valuations – so that we can build a fairer system for the future."
According to the government's release, the review aims to make the system fairer after many pubs and hotels were left with increased rates bills earlier this year. This is down to "pandemic-era valuations", which many have said no longer reflect the current situation in the hospitality sector.
