Tesco chief supports pubs regarding ‘unjust’ business rates

Tesco Chief Urges Overhaul of Business Rates to Support Pubs

Ken Murphy, the CEO of Tesco, has voiced his support for pubs in the ongoing debate over the UK's business rates, calling on the government to implement urgent reforms that would benefit the entire hospitality industry.

Murphy highlighted that pubs have been hit hard by increased property taxes following the end of pandemic-era relief, adding further financial strain to landlords already under pressure.

He emphasized the importance of government action, stating, "It's crucial to back industries and businesses that provide career opportunities and stable employment, ensuring the system is just and balanced."

This intervention comes as concerns grow about the future of British pubs, with recent changes to business rates under Labour putting many establishments at risk of closure.

Pat McFadden, Secretary of State for Work and Pensions, recently indicated that the government is considering changes to the property tax system. During an interview on BBC Radio 4’s Today programme, he declined to rule out reforms and reiterated Labour’s commitment to supporting pubs.

The Telegraph has launched a campaign urging ministers to reduce the business rates burden on pubs, warning that hundreds could be forced to close if action is not taken.

According to recent data, the average pub faces a 76% increase in business rates over the next three years, following adjustments announced in the latest Budget. This surge comes on top of rising minimum wage costs and last year’s hike in employers’ National Insurance, with at least one pub expected to shut down every day this year.

McFadden acknowledged the significance of pubs in British society, saying, "We recognize the vital role pubs play in our communities. As politicians and people, we understand their importance."

Calls for a Fairer System

Murphy reiterated Tesco’s position as a proponent of a fairer rates system for the hospitality sector, describing the current arrangement as deeply unjust for over a decade.

He insisted, "The government must take a comprehensive look at the rates system and enact meaningful reform."

Labour has previously promised to revamp the system, pledging in its manifesto to reduce business rates for physical stores.

However, Murphy pointed out that the latest Budget changes would not lower Tesco’s overall business rates bill. He argued that retailers continue to shoulder an excessive share of the burden relative to their property holdings.

"Retailers make up about 5% of rateable properties but are responsible for 20% of the total rates bill. Tesco alone pays £700 million annually," Murphy explained.

Tesco’s Strong Performance Amid Challenges

These remarks coincided with Tesco’s announcement of its Christmas trading results, revealing the supermarket’s largest share of the grocery market in over ten years. According to Worldpanel, Tesco now commands a 28.7% market share.

The company has raised its profit expectations, forecasting earnings at the higher end of its £2.9 billion to £3.1 billion guidance for the full year ending in February.

Despite this, Tesco’s shares fell by more than 5% in early trading, as the results slightly missed analysts’ forecasts.