The report identifies the UK’s hospitality sector as crucial to the health and success of future town centres and makes a number of recommendations to reform business rates, as suggested by UKHospitality CEO Kate Nicholls, in her oral evidence session to the inquiry.
- Introducing an online sales tax, the receipts of which would offset business rates bills
- A ‘holiday’ for high street retailers from rates increases which result from investments to improvements in property
- A reduction in business rates for retailers in high streets and town centres, which would have the additional effect of balancing competition from out-of-town shopping centres.
Further proposals regarding planning and central and local Government support for the UK’s high streets combine to set a positive vision for an evolved and sustainable high street long into the future, providing the services that communities want and need.
UKHospitality Chief Executive Kate Nicholls said: “Hospitality businesses lie at the heart of communities across the UK and play pivotal economic and social roles on UK high streets. The report gives due recognition to how crucial the sector is to the high street of the future, as they move away from the shopping-focus of the past. Policies to drive growth and regenerate high streets must have hospitality at their core and this needs to be recognised by the Government and local authorities.
“In the absence of the Government’s promised full of review of business rates, this represents the most radical assessment of the state of the rates regime. This is a great starting point for opening up the conversation and beginning to address an issue that has crippled many high street businesses, not least in hospitality.
“Property tax is the chief cause of the decline of the high street and a reduction in the tax burden would be very welcome. Supplementing rates with an online sales tax, something UKHospitality has pushed for, would provide a significant boost and the Government needs to consider this in the design of the Digital Services Tax. That tax will need to cover areas such as financial and professional services that have moved away from the high street in recent years. A new sales tax or increase in VAT for retail and hospitality would need to be pitched significantly lower than the current business rates charge to be helpful.
“Many businesses are also penalised by a rates hike having made a significant financial investment into their property. A tax holiday would be a good way to remove this disincentive to invest, although the 12-month limit is not long enough.”
The British Institute of innkeeping (BII) welcomed recommendations made in the Housing, Communities and Local Government report, following the recent enquiry into what is needed to save our High Streets and Town Centres.
BII CEO Mike Clist commented:“The recommendations made in the report are a move in the right direction from government, which will go some way to helping our members overcome the challenges they currently face in their businesses. We know that pubs are vital to the health of high streets up and down the country, but the recognition of this from government is fantastic to see.”
, Brigid Simmonds, Chief Executive of the British Beer & Pub Association, said:“As a member of the Government’s Future High Streets Forum, the BBPA has called consistently for the Government to help high streets and town centres. We were also delighted to give evidence to the Housing, Communities and Local Government Committee on the matter. The Great British High Street’s competition and the new fund for high streets announced in the Budget are both very welcome initiatives, but there is more to be done.
“As highlighted in the BBPA’s evidence to the Committee, the current business rates system penalises businesses like pubs for investing in their property, as improvements lead to rates rises. The Committee’s recommendation of exploring the introduction of a 12 month ‘holiday’ on these rates increases is most welcome. This would be a positive step forward in regenerating high streets and town centres across the UK if implemented.
“The report also recommends replacing business rates for bricks and mortar businesses with a sales tax or an increase in VAT. As always, the devil is in the detail as to whether this would be effective. In any case, a replacement of business rates would need to address the fact that pubs and high street businesses are unfairly taxed, whilst online retailers are not contributing enough. As the report notes, pubs alone pay 2.8% of the total business rates bill, despite accounting for just 0.5% of total rateable turnover. We welcome the call for the Government to come forward with views on how business rates could be reformed by October this year. Without doubt a full review is required.
“The Chancellor Phillip Hammond’s decision to cut business rates for high street and other small businesses by one third for the next two years in the Autumn Budget was most welcome, as was the announcement of the £675 million Future High Streets Fund. These actions, combined with a number of the recommendations outlined in the Housing, Communities and Local Government Committee’s report, are a welcome step towards securing the future of the high street and the pubs that serve them.”