PARLIAMENTARY DEBATE
Hospitality Sector and SMEs - 9 December 2025 (Commons/Commons Chamber)

Small and medium-sized businesses are vital to our economy and our communities, and the Government’s small business strategy, published in July this year, sets out our approach to supporting them. As temporary pandemic business rates relief ends and the new revaluation comes into effect, we are supporting the high street with £4 billion-worth of support through transitional relief and our supporting small business schemes, as well as through our long-term reforms to permanently lower the multipliers for eligible retail, hospitality and leisure properties, and support them with a significant package that will cap most of the increases this year for those who have seen large increases since the pandemic.

If I had a such a charming Member of Parliament, I would also be as happy as his constituents in Skipton. I thank him for his question. We considered the support really carefully in advance of the Budget decisions announced last month. There is a challenge in that the revaluation, which was instigated by the previous Government and is carried out independently by the Valuation Office Agency, means that some businesses have seen their values increase significantly since the pandemic. That is why the Government are putting in £4 billion of support over the coming years, with around half of that coming next year to support businesses. Many will see their increases capped at either £800 or 15%. We think that that support will provide significant help to those businesses, alongside the underlying reform we are making to rebalance the system in favour of the high street.

It is important that we all communicate to the small businesses in our constituencies, as I was doing this weekend, that there is a difference when it comes to the increase in the rateable value. It may be that the business to which the hon. Lady refers—I like good small independent bookshops myself—has seen a large increase in its value since the pandemic, but precisely because that has happened in some cases, we are implementing a significant support package this year. That will mean that no business that has a rateable value of less than £100,000 will see an increase in its bills of more than either 15% or £800. There is a bit of a technical detail there, which I would be happy to go into with her, but the important thing is that there are significant protections on bills in place this year, even if rateable values have increased significantly since the pandemic.

One of the things we announced at the Budget is a rebalancing in the system away from properties that have large rateable values and towards the small businesses on our high streets. That shift from the large to the smaller properties is worth almost £1 billion and supports them in the business rates system, as part of our work to reform business rates and support our high streets.

I am sure that many of us do jump on the train to support our hospitality businesses. The consultation that my hon. Friend mentions, which we published on the day of the Budget, is an important piece of work. Chapter 4 of our call for evidence on how we can reform business rates to support investment will be important. We recognise that airports and other large infrastructure are valued in a different way from other business properties, and we want to look at the changes that we can make to support those businesses, which have seen very significant increases in their rateable values. Under the scheme that we have announced, they will of course be capped as well.

The multipliers are a product of the change in the valuation, and they did come down. We brought them down even further for retail, hospitality and leisure businesses. Without intervention this year, the bills paid by pubs would have increased by 45% as a result of the increase in value since the pandemic; because of this Government’s significant intervention this year, bills are going up by 4%. That is the impact of the changes this Government have made.

We have set out our plans to reduce the multipliers for retail, hospitality and leisure properties, which is a rebalancing in the system. It means that those businesses—particularly the smallest RHL properties—face the lowest tax rate in the system since 1991. At the same time, there is—[Interruption.] The hon. Lady shakes her head, but the tax rate is the lowest it has been since 1991. At the same time, there has been an unwinding of the reduction in values going into the pandemic, and because we are seeing a recovery and businesses are bouncing back, and their properties are worth more, there has been an increase in the values. We are spending £2 billion this year to cap those increases at either 5% or 15% for many of those businesses up and down the country.