LABOUR ACCUSED OF BREACHING MANIFESTO AS HOSPITALITY FACES £318MILLION BUSINESS RATES BOMBSHELL

Hospitality chiefs have accused Labour of breaching its manifesto after hammering firms with a huge increase in their business rates bill that will result in closures and job losses.

Before the general election, the party promised to reform the hated property tax to ‘level the playing field between the high street and online giants’.

And in her Budget last week, Rachel Reeves boasted that she was introducing ‘permanently lower tax rates for over 750,000 retail, hospitality and leisure properties’.

She hailed ‘the lowest tax rates since 1991’.

But a report by UK Hospitality reveals small venues – such as pubs, bars and cafes – will see business rates bills rise by £318million over the next three years.

‘This outcome is totally contrary to the Government’s manifesto commitment,' said UK Hospitality chief Allen Simpson.

The Conservatives said the ‘Budget bombshell’ represented ‘one of the most punishing sets of tax rises High Streets have faced in years’.

It came as a survey by the Institute of Chartered Accountants in England and Wales (ICAEW) found 77pc of its members believe the Budget was ‘anti-business’.

In a letter to MPs regarding business rates, UK Hospitality's Mr Simpson said: ‘Far from a tax cut on hospitality, this is an unprecedented tax rise which disproportionately harms hospitality and protects the online giants and supermarkets. 

‘Without intervention, we face business closures, reduced investment and a contraction in youth employment.

‘This outcome is totally contrary to the Government’s manifesto commitment to “level the playing field between the high street and online giants".

‘This scale of increase will force venues to cut jobs, raise prices, and in many cases close entirely. The impact on youth employment, already fragile, will be severe.’

UK Hospitality said the smallest venues in the industry, with a rateable value below £51,000, will see their business rates bills jump by 13 per cent or £39milion to £328million next year.

The levy will then rise to £400million in 2027-28 and £458million in 2028-29.

It means these firms will pay £318million over the next three years in business rates than they would have done had the bill stayed at 2025-26 levels.

‘The shocking figures reveal the extent to which the Government’s business rates reforms have unravelled in the week after the Budget,’ said the UK Hospitality report.

Tory business spokesman Andrew Griffith said: ‘Buried beneath £26billion of tax rises and another £16billion poured into welfare, Labour snuck in an astronomical hike to business rates set to finish off the few businesses Labour hadn’t already crippled through their jobs tax.’

He warned Labour’s Employment Rights Bill – which will workers’ handed a wave of new rights – will burden business with a further £5billion in costs.

‘Labour are piling pressure upon pressure, and our high streets are the ones paying for it,’ said Mr Griffith.

The Chancellor has faced a growing backlash over her tax raid on pubs, restaurants and other hospitality venues.

Tax consultancy Ryan has branded her claim to have cut business rates bills to the lowest since 1991 ‘misleading’.

Alex Probyn, property tax expert at Ryan, said: ‘The headline message doesn’t match the fiscal reality and is misleading.

‘A large number of High Street premises will pay far higher tax rates than in the early 1990s with many facing the highest rates ever applied.’

As well as revealing that nearly four in five of its members believe the Budget was ‘anti-business’, the ICAEW survey found almost a third say it ‘very anti-business’ while just 4pc felt it was ‘pro-business’.

The survey found widespread concern about the inheritance tax raid on family firms and farms that threatens to destroy generations of work.

ICAEW chief executive Alan Vallance said: ‘For a government whose number one ambition is economic growth – and a Chancellor who certainly had the opportunity to go for growth – this was not the Budget to deliver a much-needed confidence boost to UK plc.

‘Unless the Government signals a clear change of course, it will struggle to deliver the conditions for growth the UK needs.’

Those surveyed described the Budget as ‘complex, anti-growth and lacking a coherent strategy’ with particular concern expressed over the impact on small firms, investment, jobs and the High Street.

The Chancellor was accused of breaching the Labour manifesto after her first Budget by hitting business with a £25billion national insurance tax hike.

Critics also claim her £68billion of tax rises since taking office mean she has broken the pledge to 'not increase taxes on working people'. 

2025-12-06T00:20:22Z