Somerset MPs call for support for struggling county pubs
Pubs across Somerset have been struggling since the coronavirus pandemic
Somerset MPs have demanded a VAT cut for rural pubs which are struggling in the face of rising costs.
Pubs across Somerset have been struggling since the coronavirus pandemic, with the cost of living crisis, rises in employers’ national insurance contributions and changes to business rates making it difficult for businesses to keep their heads above water.
Two of Somerset’s Liberal Democrat MPs raised the issue during a Westminster Hall debate on June 17, adding their voices to wider calls for a VAT cut for rural pubs.
The Treasury has responded that such a cut would cost £11bn to implement, but said it was reviewing the amount and type of business rate relief that pubs could be offered going forward.
Rachel Gilmour, the MP for Tiverton and Minehead, praised one of the pubs in her predominantly rural constituency which had recently reopened and become a significant focal point for the community.
She said: “Pubs are not just about food and drink; they are also somewhere for people to go to socialise. They are great for people who are lonely.
“The Butchers Arms in Carhampton reopened in January, and it now has a library and a shop. I am sure the minister would agree that is a very good situation to be in.”
Yeovil MP Adam Dance referenced two pubs in his constituency which were struggling as a result of higher national insurance and other tax rises.
He said: “Tax changes have really affected Jack, the owner of Ye Olde Poppe Inn in Tatworth, and Buddy, the owner of the Flying Fish in Ashill. We need to lower VAT for pubs.”
Daniel Tomlinson MP, the exchequer secretary to the Treasury, said the government was committed to ensuring pubs across the UK “have the support they need”, adding: “Pubs are so important to so many communities, particularly rural communities.
“The government has rural rates relief for pubs that are the only pub in villages with populations of 3,000 or less. There are a couple of thousand businesses across the country that make use of the rural rate relief scheme, which covers shops as well.
“I encourage all members to make sure that local businesses are aware of that scheme, which was also in place under the previous government. I know that it is welcomed by those businesses that use it.
“We are reforming the business rates system and have implemented permanently lower multipliers for eligible retail, hospitality and leisure properties, such as pubs.
“That is funded by a high-value multiplier on the one per cent of the most expensive properties, which includes large distribution warehouses used by online giants.
“That change will mean that the tax rate paid by the smallest businesses on the high street will have a wedge of a third compared with the tax rate paid by the online giants. That is a permanent change, not a temporary relief that will jump up and down.
“Those changes are worth nearly £1bn a year for the 750,000 retail, hospitality and leisure businesses that are the lifeblood of our high streets.”
Rural businesses across Somerset have been hit with a rapid rise in business rates following the government’s recent re-evaluation – with the owner of the Cider Barn in Draycott (within the Wells and Mendip Hills constituency) warning they could go out of business as a result.
Mr Tomlinson – who represents the Chipping Barnet constituency in London – said the Treasury was aware of this issue and was actively looking at additional rate relief which could be provides for pubs and related hospitality businesses.
He elaborated: “Last year, in a call for evidence on how we can improve the business rate system to support investment, we set out that we would look at improvement relief.
“At the moment, it does give a relief if a business invests, but only for a short time.
“That is under active review as a result of the call for evidence, where we heard that businesses were interested in the extent to which changes to improvement relief could support them and their investment decisions.
“In January this year, we went further to support pubs, with a further 15 per cent off their business rates bills and a real-terms freeze in business rates for pubs in the next two years of this revaluation period.
“That support is worth £1,650 for the average pub this year. It means that three quarters of pubs are seeing their bills either fall or stay flat this year and, as a sector, pubs will pay eight per cent less in business rates in 2029 than before the revaluation took effect.”
Turning to the specific issue of VAT, Mr Tomlinson said that such a cut would cost £11bn – something that could not be counselled as the government sought to reduce the overall levels of borrowing.
He said: “I have heard calls from members to cut VAT for hospitality, and I am aware that there is a campaign on that matter.
“I just say that cutting VAT for hospitality from 20 per cent to ten per cent would cost £11bn.
“It is important that we manage the public finances and bring down government borrowing, and we are forecast to have the fastest reduction in government borrowing of any G7 economy, with our deficit falling below the G7 average for the first time in a very long time.
“Of course, I will listen to the representations made and the asks from campaigners, but I caution that we have to ensure that we have sufficient revenue to fund our public services in a sustainable way.
“The chancellor and I will keep tax policy under review in the run-up to the budget later this year.”