Today (23 July) Prime Minister Andy Burnham announced a 20% cut in business rates for pubs, social clubs and live music venues in England from next year, which it says could save a typical pub an around £1,100 in tax next year.
However, restaurant owners are questioning the decision to exclude restaurants from rates reduction and are querying what methodology the Government is using to determine which businesses are pubs and which are restaurants.
Sam Harrison, co-founder of Genuine Restaurant Group (pictured), says the rates relief should be extended to restaurants to help solve the problems many in the sector are facing.
“I’m pleased to see some of the changes happening already from Andy Burnham, and it’s great that he is offering a 20% business rates relief to pubs, bars and live music. But if he is serious about supporting all of hospitality, this must also be extended to restaurants, cafes and hotels,” he says.
“And whilst this would be a welcome relief and we would of course say thank you, VAT is where it really matters. We’re paying the same rate as buying a car. Every restaurant in the country is operating on wafer-thin margins — bring VAT down and that money goes straight back into jobs, wages, and keeping the doors open.”
More clarity required
Harrison is also calling for clarity on whether restaurants are actually included in this cut, or whether it just applies to pubs and music venues only. “That raises the obvious question: when is a pub a pub, and when is it a restaurant? Half the sites in this industry serve food, drink, and music under one roof — you can’t draw a neat line around them, and government shouldn’t try to.”
Nick Beardshaw, chef patron at Michelin-starred restaurant Starling in Esher, shares Harrison’s confusion. “It’s a bit strange that these spaces are categorised differently to restaurants, so [I] would love to hear the justification on why it’s been done in this way,” he says.
“It’s obviously because it would cost too much to include all restaurants and the definition of them is less clear. Equally, it’s just not a significant enough amount to get upset about.”
Jackie Ha, general manager at The Crown in Bildeston, also questions the Government’s omission of restaurants in the policy.
“Any support for hospitality is welcome. A reduction in business rates for pubs is certainly a positive step and will help ease some of the financial pressure many businesses are facing,” she says.
“However, it does raise the question of why restaurants have been left out. Restaurants are dealing with the same challenges as pubs—rising employment costs, food inflation, energy bills and increasing supplier costs—so it’s difficult to see the rationale for treating different parts of the hospitality sector differently.
“Hospitality is a cornerstone of our communities and local economies. While this announcement is a welcome step, I’d like to see governments back the entire sector with fair, consistent measures that recognise the pressures all hospitality businesses are facing.”
Adam Handling, chef owner at Adam Handling Collection, adds: “I also don’t really understand why restaurants seem to be getting left out in favour of pubs. As a Collection, we have pubs and bars but we also have high-end restaurants and they’re not seeing the same relief at all.
“We’ve had other announcements, like the temporary VAT reduction from 20% to 5% on children’s meals but you just can’t reap the benefits of that with luxury restaurants like ours.”
A level playing field
Jamie Jones, co-founder of The Mayfair Chippy, Mayfair and Knightsbridge, is urging the Government to rethink its decision and extend support to restaurants, cafés and the wider hospitality sector.
“The decision to exclude restaurants from the latest hospitality support is incredibly disappointing. Restaurants are every bit as important to our high streets, local economies and communities as pubs and bars. We employ hundreds of thousands of people, create opportunities for young people entering the workforce, support British farmers, fishermen and suppliers, and attract visitors to towns and cities across the UK,” he says.
“Yet once again, restaurants appear to have been left behind. A level playing field is what the industry needs, not selective relief.”
Earlier today hospitality trade bodies broadly welcomed the Government’s announcement but also called for widespread rate reforms to ensure fairness across the hospitality industry.