A formal review into how business rates are calculated for pubs and hotels in England and Wales has been launched, with the government saying the pub business rates review could lead to a wholesale rethink of the valuation system. The Treasury has appointed Jerry Schurder, a former business rates policy lead at advisory firm Newmark UK, to lead the work, with a report due back in March 2027.
The review comes against a backdrop of accelerating pub closures. According to the British Beer and Pub Association (BBPA), 161 pubs closed across England, Scotland and Wales in the first three months of this year, equating to the loss of around 2,400 jobs. That works out at roughly two closures a day.
Why pubs say the current system punishes success
The core grievance of the hospitality industry is that pubs are not valued for rates purposes in the same way as most other businesses. Rather than being assessed purely on floor area, pubs are judged by a measure called Fair Maintainable Trade (FMT). In practice, that means a pub’s rates bill rises when its trade improves.
Jonathan Lawson, chief executive of Butcombe Group, which has 120 pubs across the south and south west of England, told the BBC’s Today programme that FMT meant pubs were being ‘punished for success’. Large online retailers operating out of warehouses, he pointed out, face no equivalent revenue-based calculation. Their rates, Lawson said, ‘are calculated based on what is deemed to be the market rent for that area, and takes very little on board in terms of revenue driven through that site’. The upshot, he argued, is that ‘you can have a very large site paying a relatively low level of business rates versus a relatively small pub… paying a very high level of business rates.’
Emma McClarkin, chief executive of the BBPA, said: ‘For years pubs have paid a disproportionately higher business rates bill which has ground down their ability to keep the doors open, so this review is sorely needed and hugely welcome.’
The pub business rates review and what happens next
Schurder’s findings will feed into the next rates revaluation, due in 2029. Northern Ireland and Scotland set their own valuations independently. Wales currently chooses to align its methodology with England, which is why the review covers both nations and is inviting responses from businesses in each.
James Murray, financial secretary to the Treasury, said the review would look at ‘a rethink of valuations, so that we can build a fairer system for the future.’ Craig Beaumont of the Federation of Small Businesses (FSB) welcomed Schurder’s appointment, saying he would bring ‘crucial heavyweight business rates expertise into the Treasury.’ But Beaumont added that the government needed to go further by exempting more smaller firms through an increase in the rates relief threshold.
Tom Ironside from the British Retail Consortium also welcomed the review, but warned it was ‘vitally important that the needs of retailers are not overlooked.’
The review sits alongside a broader package of relief already in train. Andy Burnham announced a 20% cut in business rates for pubs, social clubs and live music venues in England last month. According to This is Money, that cut is due to come into force from April 2027, and the £100 million commitment behind it will be funded by cracking down on companies such as vape shops, which Labour said ‘do not make a positive contribution to local communities.’ The 20% reduction will apply on top of a 15% cut the government introduced earlier in 2026, after scrapping pandemic-era discounts had left landlords facing sharply higher bills.
Details about which businesses will be classed as eligible for the relief, including whether certain larger venues qualify as pubs, are expected to be set out at Chancellor John Healey’s first Budget in the autumn.
Not everyone welcomed the announcement on the same terms. Shadow Chancellor Sir Mel Stride said the review was ‘far too late for a sector this Labour government has already done its best to kill off’, arguing that tax hikes on business premises, combined with what he called ‘job-destroying regulation in the Employment Rights Act’, had left many hospitality businesses on the brink. Liberal Democrat Treasury spokesperson Daisy Cooper said reform of business rates was ‘long overdue’, but called simultaneously for an emergency VAT cut and a reversal of jobs tax changes ‘which have hammered hospitality in particular.’
Rising rates are cited as one pressure on the sector, though pub groups have also pointed to increases in National Insurance and the minimum wage as factors that have made staffing more expensive. The government is calling for the views of landlords, hoteliers and business owners to feed into Schurder’s process ahead of his March 2027 deadline.
