PARLIAMENTARY DEBATE
Support for Businesses - 27 January 2026 (Commons/Commons Chamber)

There are a number of questions on this topic, and I am sure there will be more this afternoon when I make a statement to the House on a package of support in relation to business rates, with a particular focus on pubs. As previously announced, we are introducing a support package worth £4.3 billion to support rate payers who are seeing increases in their business rates.

Joanna Watson runs the Elizabeth hotel and the Kingswood hotel in Sidmouth. She is essentially facing a 20% rise in her business rate costs. Joanna’s bills do not reflect what she earns; they stay high all year round, even though there are months like these in winter when income completely collapses. The Government legislated for a 20p reduction in the business rates multiplier for hospitality, and that created an expectation that it would be used. The Minister said that he will make a statement this afternoon, but will he also consider the plight of hotels such as those in Sidmouth?

We have considered the challenges that hospitality businesses and businesses on our high streets have been facing. That is why we put in place £4.3 billion of support at the Budget. We recognise that there are concerns as to how hotels are valued for business rates, and that will be one of the items I talk about in the statement later.

I wish your leg a speedy recovery, Mr Speaker.

I recently visited the wonderful Aura salon in my constituency and spoke to the owners Victoria and Janet, who have owned the business for 24 years and are the hub of their local community. They have invested in and trained numerous young hair stylists but now their business rates and VAT are crippling them, meaning that they can no longer take on apprentices. Victoria and Janet told me that the VAT rate that they pay is unbalanced compared with other sectors that claim back VAT. Will the Minister please advise what can be done to help salons like Aura and others that are part of the Save our Salons campaign, and are there any plans for an affordable apprenticeship scheme in the hairdressing sector?

I thank my hon. Friend for the work that she is doing to champion salons and the beauty industry in her constituency and elsewhere. She will know that VAT is a broad-based tax; in fact, it is our third largest revenue raiser, raising £180 billion last year. That is vital revenue that pays for our public services. There are lots of issues in relation to VAT, including the differential treatment depending on how salons decide to set themselves up and pay their employees. Those are important issues, and we will consider tax changes in the usual way in the run-up to future Budgets.

I recently visited the Ship Inn in Burnham-on-Crouch, which has a few hotel rooms, as well as Peaberries, a tea shop on the high street. Both are looking at existential threats as a result of business rates. Can the Minister say whether the package that he will announce later will benefit them as well?

I do not think that Mr Speaker would like me to pre-empt the announcements that will be made later, but the right hon. Member has given me the opportunity to reiterate that at the Budget we implemented for the first time differential rates of tax—differential multipliers—meaning that the largest businesses now pay 33% more than the smallest high street businesses. That is a big differential that was not there before but which now exists because of the big reforms that we made at the Budget.

In my Oxfordshire constituency, pubs including the Fox Inn in Denchworth, the White Hart in Harwell and the Fox and Hounds in Uffington are vital to their village communities, yet they face significant business rate increases from April. Given that the chief executive of the Valuation Office Agency told the Treasury Committee that, ahead of the Budget, the VOA warned that over 5,000 pubs would see their business rates double, will the Minister tell the House why the Government decided to press on and create such uncertainty for our hospitality sector in the Budget?

The Government will have more to say a bit later today when it comes to pubs and the support that the Government can provide for them. We knew that the revaluations would be implemented from 1 April, and that is precisely why we came forward with a significant package of support for all businesses across the economy. We introduced significant reforms to lower the multipliers for businesses like the pubs that the hon. Member mentioned.

Sheffield Central businesses continue to face disproportionately higher pressures, with ever-increasing running costs stacking up and a drop in footfall. Businesses like the Gamers Guide Café and the Dove and Rainbow pub tell me that they need much more to survive the dip in foot traffic, so will the Minister set out how he is reducing pressures on high street cafés and pubs, and will he consider targeted relief to ensure viability for hospitality businesses?

I thank my hon. Friend for her representations on behalf of businesses and constituents in Sheffield. One of the important things to note about the business rates system is that there are many smaller businesses on our high streets that pay no business rates at all. One in three businesses continue to benefit from small business rate relief and an additional 85,000 benefit from reduced bills as that tapers. At the Budget we announced an additional two years of small business rate relief for those businesses that expand into a second property. This will be helpful for small and independent businesses, and will support them to grow.

Chelmsford has a vibrant night-time economy. Just last Sunday, I spent the evening at a fabulous local music venue called Hot Box, right in the heart of my constituency. Venues such as Hot Box represent important cultural and social spaces for smaller cities like mine, but many are at risk due to recent Government changes to the business rates system. New analysis puts the average increase in the hospitality business rates bill in Chelmsford at nearly £23,000 over three years. For many, that is impossible to absorb. Another family-run business in Chelmsford that has been going for 25 years will see its monthly rates more than double from April. It says that it will simply have to close its doors if that goes ahead, resulting in 40 people losing their jobs. Will the Government implement the 20p discount that they have already legislated for and let all businesses in retail, leisure and hospitality get the support that they need?

I think the Minister has got the idea.

I have got the idea, Mr Speaker!

The key thing to note here is that there is a significant difference between the change in the rateable value and the change in the business rates. This year, we have stepped in to cap the increases for bills at £800 for those coming into the system for the first time. For most high street businesses, the increase will be 15%, while the very largest will see increases of 30%. Those are the steps we have taken. When the Liberal Democrats were in government, they chose to increase VAT on businesses up and down the country.

I wish you a speedy recovery, Mr Speaker.

Will the Minister say something about music recording studios, such as the Church Studios, where Annie Lennox recorded “Sweet Dreams (Are Made of This)”? Could he give me a sweet dream this evening and tell me that my music recording studio is going to be fine?

I am very fond of my constituency neighbour, who has the privilege of sharing a part of Barnet with me. There will be news this afternoon—I am just trying to find my words, Mr Speaker.

Everybody’s looking for something! [Laughter.]

I hope the microphone picked that up.

We will make further announcements this afternoon specifically focused on pubs, but I understand that there are businesses across the economy that will have seen increases in their rateable values since the pandemic. That is precisely why we have stepped in with our support package.

Here’s another one: what assessment has the Minister made of the impact on really small independent high street bookshops? This is the National Year of Reading; we want them to stay open, not closed.

Many really small bookshops up and down the country will not pay any business rates at all because they will be in receipt of small business rate relief. Of course, there will be some that will have seen either their rateable value increase, or—because of the Government’s decision to slowly wind down the temporary pandemic support—an increase in their bills. We are capping those increases in this year and in subsequent years so that transition can be manageable for those businesses. Of course we want to support bookshops on our high streets; they are incredibly important, along with all the other high street retailers up and down the country.

I call the shadow Minister.

The Chancellor promised hospitality firms that she would lower their taxes, but her business rate raid is hammering every town, village, city and high street. This is not just an attack on pubs; hotels, cafés, music venues and many more are being hit. It is two months since the Budget caused huge worry for these businesses, and we await details of this latest U-turn, but the key question is: does the Chancellor get it? Does she get that it is not just pubs but hospitality, leisure and retail businesses that need support because of her terrible choices?

Conservative Members do not get it, because when they were in government, they set out plans to remove the temporary pandemic rates relief overnight in 2025. That would have seen an increase of 300% in business rate bills overnight for businesses on the high street. We have taken a different, fairer and more proportional approach, phasing out the pandemic relief over a slower time period and extending it into this year.

I call the Liberal Democrat spokesperson.

Thank you, Mr Speaker, and I wish you a speedy recovery.

We know that pubs have been badly hit by these business rates changes, but businesses right across retail, hospitality and leisure have made investment and hiring decisions based on the expectation raised by this Government that they would get a full 20p discount on their business rate multiplier. Those businesses—music venues, restaurants, soft play centres and hotels—are the high street shops that communities most love. Do Ministers accept that anything less than the full 20p discount for retail, hospitality and leisure will leave the three-to-five-year business plans of those high street businesses in total disarray?

We announced a 5p reduction in the multiplier on top of the 7p or thereabouts reduction that was taking place as a result of the revaluation more broadly. That is a £900 million transfer of underlying rates liability away from the smallest high street businesses towards the online giants and the largest properties. When the Liberal Democrats and the Conservatives had the chance, they kept the tax rates the same. We have introduced significant reform, and we started the work of that reform at the Budget. Of course we will continue our conversations in the months ahead.

Businesses up and down the country know that the Government raised their expectations and then dashed them. This whole sorry saga has been an absolute shambles. The question remains: why were Ministers so blindsided, when the VOA has confirmed that it was providing data drops over a period of 12 months? Will Ministers use the opportunity in 90 minutes’ time to answer all the questions that Opposition MPs have asked and to explain what they knew and when?

Yes, happily.