The UK government has initiated a review of the business rates system for pubs and hotels across England and Wales, amid longstanding concerns about the fairness of current charges on the hospitality sector. The Treasury announced the review this week, aiming to reassess how rates are calculated and address challenges faced by these businesses.

The hospitality industry, particularly pubs, has frequently criticised the existing business rates framework for disproportionately high charges. These concerns have been compounded by recent increases in national insurance contributions and escalating energy costs, which have put additional financial strain on the sector.

Coun Mark Mitchell, deputy leader of Newcastle City Council and cabinet member for finance and resources, called for more comprehensive reform beyond the government’s planned review, which is expected to conclude by March 2027. He described the system as “unfair and fundamentally broken,” criticising it for producing “winners and losers” and deeming it “unfit to fund local councils.” Mitchell urged for wholesale changes that reflect local needs, support local businesses, and provide local control over taxation.

Mitchell welcomed the government’s attention to the hospitality sector but warned that a limited review focused solely on pubs and hotels would be insufficient. He said the current system acts as a barrier to growth and employment across key industries and penalises successful venues such as pubs, bars, and clubs.

James Murray, financial secretary to the Treasury, emphasised the importance of pubs and hotels to local communities and economic growth. In the announcement, he referenced recent tax cuts introduced to support pubs and signalled that the government plans to go further by revisiting business valuations to create a fairer system for the hospitality sector.

Separately, Newcastle City Council is considering the abolition of its ‘Late Night Levy,’ a charge levied on licensed premises that sell alcohol between midnight and 6 a.m. The levy, which ranges from £299 to £4,400 depending on the venue’s rateable value, was introduced in 2013 to fund safety measures including CCTV and street marshals, benefiting both the council and Northumbria Police. The licensing committee has recommended scrapping the levy following concerns raised by business groups, though the final decision remains pending at a full council meeting.