A cabinet revolt is brewing over the upcoming business rates increase – as hospitality has been warned not to protest, Sky News can reveal.
There is “ongoing cabinet-level opposition” to the hike, and ministers are “not happy about it”, deputy political editor Sam Coates revealed on the Politics at Sam and Anne’s podcast.
In November’s budget, Chancellor Rachel Reeves announced a shake-up to how business rates are calculated, with a new band for retail, hospitality and leisure – bringing an end to the relief scheme first introduced in 2020 during the pandemic.
The sector argues the new business rates, while lower than before COVID, do not go far enough.
They say because the tax is based on rateable property values (an official estimate of a commercial property’s annual rental value), they are disproportionately affected because they have physical stores, restaurants and pubs – unlike online giants.
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Sir Keir Starmer has acknowledged the industry will struggle with the new rates, telling LBC this week: “Obviously, what’s happened is there were reductions in place during COVID, which were always going to be unwound.
“At some point, the overall rates are going to be lower. But I accept that because of revaluation, that means that some will have their bills going up.”
He said the government is putting transitional relief in place and they are looking at what else they can do, such as “licensing freedoms”.
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Chef Tom Kerridge, who has four gastropubs, said his rateable values at The Coach in Marlow had risen 100% from £50,000 to £106,000, which he said is “unsustainable”.
Several pubs have already barred Labour MPs in protest at the changes.
However, Sky News understands the government has been warning businesses not to protest over the changes if they want to get any concessions.
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An industry insider said the government has been telling the business community if they want help, then they should take a cue from farmers, who were given a reprieve just before Christmas when the government raised the threshold for inheritance tax from £1m to £2.5m.
But, the industry insider said the government has been telling them farmers were “good, fair negotiators and didn’t make a big campaign of it, which is why they got what they wanted”.
The messaging appears confusing as farmers carried out protests over many months, with tractors blocking Whitehall becoming commonplace.
Sam Coates said: “Anybody who spent a second in Whitehall looking at those tractors trundling down and the mass campaign knows that that’s just utter nonsense.
“What’s really happening here is, despite the facts being completely untrue, this is government basically threatening the industry.
“The implication, I don’t know which Whitehall department it is, but the implication quite clearly is ‘stop being so aggressive with your briefing if you want anything at all for your industry’.
“Now that doesn’t smack of a government coming at things from a position of strength to my mind.”
The Valuation Office Agency, which provides the government with property valuations, has said an increase in rateable value does not necessarily mean a similar rise in business rates, as there is transitional relief available, including:
• A £3.2bn transitional relief scheme to support the largest ratepayers, including airports and hospitality
• £500m to help the smallest businesses
• A £1.3bn expansion of the Supporting Small Business scheme for those who were eligible for retail, hospitality and leisure relief as they transition.
