The hospitality sector is sounding the alarm about a potential £900 million loss this coming spring unless the chancellor makes vital reforms to business rates during the budget announcement.

Leaders from major UK pubs and high street establishments have indicated that without government intervention, business rates could increase fourfold after the current relief period ends on March 31, resulting in an additional cost of £914 million for the industry.

This concern is echoed by the heads of 170 hospitality businesses, alongside UKHospitality, who have urged the Labour government to fulfill its manifesto commitment to reform the current business rates system.

In a letter addressed to Rachel Reeves, they emphasized that the upcoming budget represents the chancellor’s “last chance” to prevent a steep rise in business rate expenses over the next five months.

“We urge your government to establish a new, lower, permanent, and universal multiplier specifically for the hospitality sector, applicable across all UK regions,” the letter stated.

The coalition includes executives from prominent chains such as Greene King and JD Wetherspoon, as well as leaders from high street names like Caffè Nero and IHG Hotels.

Industry leaders have pointed out that the current cap on business rates relief has disincentivized expansion, with many businesses hesitating to open additional locations due to the associated costs.

Warnings have been issued that without a reform of the business rates system, the resulting increase in expenses could contribute to a rise in business closures and a decrease in investment across the sector.

The group emphasized that the present business rates framework “discourages individuals from operating high street businesses,” undermining the government’s goals of fostering growth and investment.

Initially introduced in the spring budget of 2020 to mitigate the effects of the COVID-19 pandemic on the hospitality sector, business rates relief has been maintained as businesses recover from health restrictions and rising operational costs.

Kate Nicholls, the CEO of UKHospitality, cautioned that a drastic hike in business rates could lead to “more venues permanently closing” and result in increased vacancy rates on high streets across the UK.

She added, “Further closures would severely hinder the government’s growth agenda and negatively impact our sector’s capacity to create desirable living, working, and investment environments.”

“To prevent losing out on crucial investment, job creation, and the revitalization of our high streets, it is essential for the chancellor to introduce a reduced business rate for the hospitality sector in the upcoming budget,” she continued.

Furthermore, UKHospitality noted that despite the government facing fiscal challenges, investing in the hospitality industry could be achieved through a more equitable distribution of the business rates burden. Currently, hospitality is paying more than its fair share relative to the level of economic activity generated.

Other trade organizations, including the British Retail Consortium, have also reached out to Reeves, highlighting that the detrimental effects of high business rates are visible in high streets nationwide, where closures, job losses, and both social and economic costs are being observed.