Watchdog Criticises Chancellor’s Budget Statement
Rachel Reeves has been criticised by the UK Statistics Authority (UKSA) for failing to clearly explain the real impact of her Budget changes on business rates for pubs and hospitality firms.
The Chancellor had pledged in November’s Budget to deliver “the lowest rates since 1991” for more than 750,000 retail, hospitality and leisure businesses. However, the UKSA has now said she “should have been clearer” about what that claim actually meant.
The watchdog concluded there were “opportunities for improvements” in how the data was presented, warning that the lack of clarity created the potential for people to be misled.
Multiplier Cut Masked Rising Overall Bills
At the heart of the row is the way business rates are calculated. A business multiplies the “rateable value” of its property essentially its estimated rental value by a tax rate known as the multiplier.
In the Budget, Reeves set the small business multiplier for retail, hospitality and leisure properties at 38.2% for 2026-27, which is indeed the lowest level since 1991. This was presented as a tax cut.
However, thousands of pubs are expected to face rising bills because of significant increases in rateable values following the 2024 revaluation, which comes into effect in April 2026. The UKSA said it was important to distinguish between cutting the multiplier and reducing overall business rates, as total tax bills could still increase.
UKSA: Statements Lacked Clarity
In its letter to the Conservatives, who had complained that the Chancellor’s claim was “statistically misleading”, the UKSA said that while the new multiplier rates were lower, overall business rates were likely to rise for many firms due to higher property valuations.
The regulator said statements should have been clearer about whether they referred specifically to the tax rate (the multiplier) or the broader business rates bill. It also noted that the Government could have better explained the introduction of a surcharge on higher-value properties.
The UKSA confirmed it had passed its findings to HM Treasury and the Ministry of Housing, Communities and Local Government to ensure greater transparency in future statistical claims.
Political Backlash Intensifies
The findings have fuelled political criticism. Sir James Cleverly, the shadow communities secretary, accused Labour of intentionally misleading businesses and Parliament.
He argued that while ministers claimed reforms would lower business rates, many firms were facing sharply higher bills in practice. The row comes amid mounting pressure on the Government over the financial health of pubs, many of which are still struggling after the end of Covid-era support and rising operating costs.
The Treasury defended the Chancellor’s remarks, insisting her claim about the multiplier being at its lowest level since 1991 was “categorically true”. It also pointed to a £4.3 billion support package and caps on bills to help offset rising costs for some businesses.
For many pub landlords, the controversy highlights a deeper concern about fiscal drag and shifting tax mechanics that can obscure the real-world impact on small businesses.
While headline tax rates may fall, rising property valuations and reduced reliefs mean the actual bills landing on doormats could be significantly higher than expected.
Summary
With hospitality already battling higher wages, energy costs and reduced consumer spending, clarity over taxation is becoming as important as the tax level itself.
The UKSA’s intervention signals growing scrutiny over how government fiscal measures are communicated and suggests future Budget claims may face far tougher examination.
