Non-Domestic Rating (Chargeable Amounts) (England) Regulations 2026

Lord Stoneham of Droxford Excerpts

Wednesday 28th January 2026 Lords Chamber

[Lord Jamieson (Con)]

My Lords, in speaking to this regret amendment in my name, I declare my interest as a councillor in Central Bedfordshire.

At first glance, the statutory instrument may appear technical and relatively uncontroversial with transitional relief, but in reality for many businesses, particularly in hospitality and leisure, the substantial underlying increase in business rates is very damaging. In fact, in many ways, it can be considered to be the straw that, so to speak, breaks the camel’s back. Our high streets, pubs, hotels and restaurants—indeed, the whole of the hospitality and leisure sector—are already under severe strain. Yet the Government, which claim that their number one priority is economic growth, have instead pursued a series of policies that systematically undermine one of the country’s most important employment-intensive and community-focused sectors. The Government have abandoned small business, and nowhere is that abandonment clearer than in their announcement on business rates in the Budget.

Increases in business rates cannot be considered in isolation. They come on top of a jobs tax through higher national insurance contributions, which have substantially increased the cost of employment and disproportionately hit labour-intensive businesses, particularly those that rely on part-time workers, where national insurance was extended further down the run. For hospitality, this is not an abstract accounting change; it is a direct tax on jobs. It comes alongside a sharp increase in the minimum wage. While we all want people to earn more money—rightly so—wage increases must be affordable if businesses are to survive.

This is a particular challenge for the hospitality and leisure sector, which employs a high proportion of younger workers, many of them working part-time. The minimum wage for an 18 year-old has risen by around 45% over the past two years. Now, on top of all this, we have rising business rates.

Analysis from UKHospitality shows that the average pub will face an increase of around 15% in business rates next year, admittedly prior to the recent announcements. With those increases compounding over time, by 2028-29 the typical pub will be paying around £7,000 more per year, with the cumulative impact approaching £13,000 over the next three years.

Hotels face an even more dramatic increase. Average bills are expected to rise by nearly £29,000 next year, reaching well over £110,000 a year by 2028-29, with the cumulative additional burden exceeding £200,000. For many operators, particularly outside London, these figures are simply unsustainable.

Let me illustrate this with a concrete example. My local pub faces a cumulative increase in costs of around £50,000 as a result of recent changes, of which around £10,000 comes from business rates alone. That is on a turnover of £800,000. This would be bad enough in isolation, but alongside this there is food price inflation of over 4%, including an alarming 30% increase in beef prices, and higher utility bills. Consumers themselves are tightening their belts, meaning higher prices leading to lower volumes, and many pubs are struggling just to stand still.

Traditionally, Christmas is when you make the money that helps you survive the winter, but my local pubs are finding that their profitability in December has dropped dramatically, and they will no longer be able to cope through the winter. The inevitable result is closures, reduced operating hours, fewer staff and pubs shutting one or two days a week. This matters because pubs are not just businesses. They are community anchors. They provide social value, local employment and vitality to our towns and villages.

Like many people, my first job was a part-time Saturday job in the retail and leisure sector. These crucial jobs give youngsters their first experience of work and the first step on the jobs ladder. This Government seem determined to remove that opportunity.

The consequences of this approach are entirely predictable. Without urgent action, and not just a temporary measure, it is estimated that more than 500 pubs will close this year alone, with the loss of jobs, investment and vital community assets that will inevitably follow. Yet instead of clarity, businesses are offered speculation. The Chancellor chose to signal another reversal—the 14th U-turn by this Government. Rather than offer clarity to Parliament, the Chancellor chose to signal it at Davos and in subsequent announcements by unveiling a targeted support package for pubs and live music venues worth over £80 million a year. This relief is time-limited and confined to pubs, while hotels, restaurants and the wider hospitality sector remain excluded from this concession.

That is in the context of a £3.5 billion increase in business rates. The Minister talked about it going up in some cases and down in other cases. Predominantly, it is going up. As Michael Kill, the chief executive of the Night Time Industries Association, said, this is

“little more than a drop in the ocean”.

It is striking that the Chancellor appears not to have absorbed the lessons of the 2025 Budget. On that occasion, as on this one, the Government allowed rumour and conjecture to run ahead of policy, creating weeks of damaging uncertainty before detail was finally provided. That uncertainty has been a major factor in suppressing economic growth.

What makes this situation all the more remarkable is the Government’s selective enthusiasm for certainty. When it comes to public sector unions, Ministers have shown themselves perfectly willing to offer generous multiyear settlements, providing stability and predictability and doing so without meaningful conditions attached. The Government will claim that the measures announced by the previous Government on business rates were temporary, as the Minister did, and linked solely to the pandemic. That is not correct. These reliefs stem from a 2019 manifesto commitment and reflected a continuing policy of choice, not a short-term emergency response.

The Government can try to point to the timing of valuations, as the Minister did, during the pandemic to explain volatility, but if this were a genuine reform, the revaluation would be broadly revenue neutral. As I said, it is going to raise £3.5 billion extra—a 10% increase in the first year alone, with further increases built in thereafter. It is nothing more than a stealth tax.

Finally, the House should note the uncomfortable contrast between the treatment of small businesses and the treatment of the Treasury itself. While local pubs are facing rising bills, the business rates at 1 Horse Guards Road, the home of the Exchequer, are set to fall by nearly £300,000. At 2 Marsham Street, which houses many major government departments including the Minister’s department, business rates will fall by over £1 million. The Treasury is happy to cushion itself while small businesses are left to absorb the shock. This House should regret the passage of this statutory instrument and urge the Government to rethink an approach that damages confidence, undermines growth and places an ever-greater burden on the very businesses on which our country depends.

[Lord Stoneham of Droxford (LD)]

My Lords, this is the last speech that I shall be making after midnight as Chief Whip for the Liberal Democrats, because I am stepping down at the weekend. I hope that the first thing that the next Session of Parliament does is bring in some legislation, or whatever we require, to modernise the hours of this House. It is ludicrous that we are sitting here at this time.

I will not speak for very long, because this SI is aimed at providing transitional relief to support business rate payers as they transfer to the new bills following the 2026 business rates revaluation. It is based on schemes that we have had for some time and has been improved by the Government. We will deal with extra support for public music venues when we look at the SIs on 10 February, so I am not going to go on about the impact of NI with the minimum wage and the rate valuation now. We will look more closely at those issues at that time.

We support the new structure of rates designed to shift the burden from the high street to large warehouses. The only problem that I want to raise is that the Government would do well to publish data on the impact of the revaluation on specific sectors to help analyse the need for targeted support.

[Baroness Taylor of Stevenage (Lab)]

My Lords, before I respond to the regret amendment, I thank the noble Lord, Lord Stoneham, for all his work as Chief Whip of the Liberal Democrat group. I am very grateful to him for everything he has done. I know that he will continue to contribute in the House, but we are very grateful for what he has done in that role.

Quite honestly, it was the party opposite that sat on their hands as our high streets crumbled around them for 14 years. Therefore, I find this simply astonishing, and the selective memory on Covid measures, again, is quite baffling. The measures were put in as a response to the situation during Covid. I will respond to some of the points that the noble Lord, Lord Jamieson, made, but I do so in the hope that, at some point, those who were part of the previous Government will have a bit of humility about the fact that we have had to come in and sort all this out, because it was left in such a mess when we took over in 2024.

In relation to the noble Lord’s comments on stealth tax, the retail, hospitality and leisure relief introduced by the previous Government in 2020 is unsustainable and was always temporary in nature. We have ended the uncertainty of that relief and replaced it with permanently lower tax rates for eligible retail, hospitality and leisure properties. We have done this in a way that is financially responsible and sustainable by funding this support from within the business rate system via the high-value multiplier for ratepayers with a rateable value of £500,000 and above.

In relation to further support for high streets, as I set out in my opening speech, the Government have introduced permanently lower multipliers, and we have also provided an expanded supporting small business rate relief scheme to help those ratepayers gradually move from the 2025-26 relief to the new tax rates by moderating their bill increases over the next three years. We went further in the announcements yesterday with the additional 15% relief for pubs and live music venues on top of the Budget package.