The government’s pledge to protect England’s pubs by giving them a £1,000 business rates discount has been described as a “stay of execution” rather than long-term support by a Labour MP, as new industry estimates suggested thousands of businesses would get no help at all.

Jim McMahon said it was welcome that chancellor Philip Hammond had shown some recognition of the pressures on pubs in last week’s budget when he announced those with a rateable value of less than £100,000 would receive a £1,000 discount on their business rates bill this year.



But the MP for Oldham West and Royton said industry estimates suggested the chancellor may have overstated how many pubs would qualify for the support, which forms part of a £435m relief package designed to dampen criticism of the controversial changes to business rates.

McMahon said said there were also serious questions over how pubs would afford to stay open when the support ends as scheduled in April 2018.



“Pubs are at the heart of community life. So it’s disappointing that all the chancellor can muster is a half-hearted response. For many in the pub industry this feels like a stay of execution. It does little to reassure the hard-working business owners that the Tories keep promising to help,” said McMahon. “I’m calling on the government to issue clarity on this important issue.”

In his budget speech last Wednesday, Hammond said that 90% of all pubs had a rateable value of less than £100,000. But industry group the British Beer and Pub Association (BBPA) estimated a smaller proportion were likely to qualify for the discount, partly because of rules on how much state aid can go to any one pub company.



EU rules restrict state aid to €200,000 (£174,000) per business over three years. The BBPA said that meant larger pub-owning companies with managed premises might not be able to receive the business rates discount, or would be eligible only for part of it. In other words, pubs that are part of chains such as JD Wetherspoon or Greene King risk getting no support at all.

“Our analysis suggests that between 3,000 and 4,000 pubs could miss out on the relief. This would mean that of rate-paying pubs, we would expect 72% to 75% to benefit from relief, as opposed to the 90% stated,” said a spokesman for BBPA.

The BBPA chief executive, Brigid Simmonds, said the one-year relief was still welcome but it did not go far enough.



“Pubs pay 2.8% of the total rates bill, yet contribute only 0.5% of rate-paying businesses turnover. To really help pubs, the government should increase rate relief to £5,000 per year, every year, until a full and fair review of business rates has taken place,” she said.



“Pub-specific business rates relief amounts to £25m, but this is wiped out by a 3.9% increase in beer duty, which will cost pubs £47m this year alone.”

The criticism of the government’s plans follows claims last week by property consultancy Gerald Eve that a maximum of 61% of pubs would benefit.

It found there were just under 40,000 properties in England described as public houses and 3,700 of these had a rateable value of more than £100,000, meaning they did not qualify for the discount. Of the remainder, about 12,000 pubs already got rates relief because they were classed as small businesses.

A Treasury spokesman said: “The budget announced a £1,000 business rates discount for the 90% of pubs in England which have a rateable value below £100,000. We were clear that this is subject to state aid limits, and even businesses with more than one pub could receive up to the full £174,000 limit in one year. In addition, pubs can also access the £300m of discretionary relief controlled by local authorities.

“This is on top of £9bn of rates cuts coming into effect in April for all businesses, including pubs, and £3.6bn of transitional relief to support businesses as part of the revaluation.”