Andy Burnham to cut pubs' business rates by a fifth - but some publicans say 'it won't make a difference'
The move comes after the Labour government has been attacked by pubs and restaurants for failing to understand their industry.
Business rates will be cut by a fifth for pubs, clubs and live music venues from April next year, Prime Minister Andy Burnham has announced, however some publicans said the measures “wouldn’t make a difference”.
It is expected to save a typical pub some £1,100 annually, but will not be available to the very largest live music venues.
The move will cost around £100m a year and funds are planned to be raised for it by cutting business rate relief for vape shops and cracking down on online businesses that fail to pay VAT.
The Prime Minister said it was time to support vanishing “cherished local spaces” with his business rates reduction.
He wrote on X: “I’m giving thousands of pubs, clubs and music venues a 20 per cent cut in business rates.
“I won’t stand by while these cherished local spaces disappear, replaced by boarded-up windows and ‘For Sale’ signs.
“They’re the heart of our communities and it’s time we backed them.”
In former chancellor Rachel Reeves’ first budget she raised national insurance on employers and the minimum wage, which particularly hit hospitality firms.
The former chancellor announced a 15 per cent reduction for pubs, with now Mr Burnham adding 20 per cent on top of that.
His announcement was praised by Camra (the Campaign for Real Ale), with chairman Ash Corbett-Collins saying: “This is a brilliant start to the new Prime Minister’s tenure, living up to the statements that he’s made before about pubs, pints and people.
“Our business rates system is grossly unfair to pubs and social clubs, bricks and mortar businesses that are also vital social institutions for their communities and desperately needs reform.
“As always we need to see the details at the Budget, but another year of rate relief will provide vital breathing space to publicans in England, while the work to review the rating system for hospitality businesses presumably continues.”
Natalie Hall, UK Spirits Alliance spokesperson and director at York Gin, added: "Today's announcement is a welcome step.
“Pubs, and the businesses that supply them, are grappling with a swathe of tax rises, from excise duty to sustainability requirements, and any measure that helps keep them afloat is a positive one.
“As the Government looks to fund this £100m commitment, it’s worth noting that revenue from the spirits sector fell by £94m last year alone, as a direct result of another excise duty increase.
“If ministers are looking for a more effective and permanent way to support the industry through business rates, a cut to excise duty should fund it - better for business, consumers and the Treasury's coffers.”
However, some pub owners have questioned whether the policy will make a difference, and questioned why restaurants and hotels are excluded.
Steve Perez, who owns two hotels in the Peak District, both including a pub and a restaurant, told BBC Radio 4’s Today programme: “Our business rates went up to about 130 per cent (in April).
“So this tiny, well, obviously it’s welcome £1,000, but this won’t make any material difference to any pub.
“And it’s interesting to know that they haven’t talked about restaurants and hotels because bear in mind most pubs these days serve food, many pubs also have accommodation.
“And we’ve had increases in national insurance, we’ve had the EPR, the tax no one’s ever heard of – extended producer responsibility.
“And it’s a little bit like the supermarkets putting up the prices and then saying they’ve reduced them.”
Chief Secretary to the Treasury Emma Reynolds insisted the policy is fully funded, despite both sources of revenue being described as subject to review or consultation.
She told Sky News: “There may be additional measures that we look at as well, but it is those two principal ways that we’re going to fund this business rate relief.”
Speaking to LBC, Ms Reynolds said vape shops were being targeted because they cause “social harm” and online firms were failing to comply with their tax obligations.
She said: “At the moment, vape shops, like other shops on the high street, get business rate relief.
“We don’t think that is fair because these businesses do cause social harm.
“So we will look to raise some revenue by reviewing that relief, and then also on the VAT, online businesses are often charged VAT, but they’re not paying that VAT.”