Business rates cut for pubs, clubs and music venues in England only ‘a small move’, say critics | Business rates

Pubs, clubs and live music venues in England will receive a 20 per cent cut on business tariffs as part of the £100 million aid package announced by Andy Burnham, but the prime minister quickly faced calls to be more ambitious.

Burnham said the measure, which aims to support the high street and ease cost-of-living pressures, would be fully funded, including a review of aid for businesses deemed not to make a positive contribution to communities, such as vape shops.

Other cost-of-living measures announced this week – capping bus fares at £2 and reducing VAT on electricity bills – have raised questions about how they will be financed, with the new administration under pressure to reveal details of its plans.

Burnham, who took office on Monday, has pledged to give people “more breathing room” on living costs through a range of policy interventions as she seeks to show an often skeptical public that the government can deliver meaningful change.

Speaking in London on Thursday, Conservative Party leader Kemi Badenoch said Burnham’s early policy statement had left her thinking: “Is this it?”

While hospitality leaders welcomed the tax cut, some questioned its size and expressed concerns that businesses such as hotels and restaurants were being left out.

The business rates cuts will benefit around 32,000 pubs, clubs and live music venues, with the typical pub expected to save an estimated £1,100 in the next financial year, according to the government. The support will aim to exclude the largest live music venues.

The measure builds on the 15% business rates cut for pubs and live music venues announced by Rachel Reeves this year; Covid-era relief has ended and new revaluations have come into force, with bills frozen in real terms for another two years.

“For too long governments have stood by and watched beloved venues disappear from local high streets. That’s why today I’m changing that,” the Prime Minister said. “This government will support the businesses people want to see in their communities. I said I would protect pubs and local high streets, which are the beating heart of our communities, and that’s what we’ll do.”

New chancellor John Healey said: The government remained committed to overhauling the wider business rates system within the budget, including help for small businesses.

Some hospitality leaders have called on Burnham to go further, especially given the industry supports calls for VAT to be cut to 10%. Although tax experts questioned the use of taxpayers’ money, the policy was expected to be worth £10bn for the struggling sector and warned that large, profitable businesses would benefit the most.

Tim Martin, the outspoken founder of pub chain Wetherspoons, said the business rates cut was “a small move in the right direction” but called on Burnham to cut VAT.

Nick Evans, co-owner of the Old Crown Coaching Inn in Faringdon, Oxfordshire, said the business rates cut would do little to benefit the pub.

“It’ll save £3,000 a year, something like that. If you’ve got a £1.8m turnover business with less than 2% gross profit, giving me £3,000 doesn’t do me any good,” he said. “Prices are increasing, energy is increasing, what can you do? He said he will reduce VAT to 10 percent.”

Kate Nicholls, chief executive of the UK Hospitality trade body, welcomed the government’s recognition of the challenges in the sector but noted restaurants and hotels were excluded. “We now need to see a solution for the rest of the industry,” he said.

Ministers also plan to put businesses that sell through online marketplaces but fail to comply with their tax obligations at an unfair advantage over those who do so, and are consulting on measures to make these marketplaces more accountable in this regard.

Tina McKenzie, head of policy at the Federation of Small Businesses, welcomed the proposal but said it should be a “down payment” on further action to help small businesses more widely in the next budget.

“Failure is not an option,” he said. “We are encouraged by the signal from the prime minister today, instructing his government to plan a significant reduction in small business rates at the heart of the next budget. This will deliver on the promises made in the campaigns for this role and fix the damage caused by business rates decisions that raise bills and hinder the growth of SMEs and jobs in every postcode.”

In his first policy intervention on Tuesday, Burnham said the government would reduce VAT on electricity bills by an average of £45 a year from October. This will be funded by the decision to cancel the digital identity plan, officials said.

But less than an hour after the measure was announced, Darren Jones, who was sacked as the prime minister’s chief secretary during Burham’s reshuffle, expressed doubts about how it would be paid for, saying the digital identity project, which was expected to save £1.8bn over three years, had not been funded.

Then on Wednesday the prime minister said he would reduce the bus fare cap from £3 to £2 per journey next year, largely financed by converting international climate grants into repayable loans.

The transition allows the government to borrow more against these loans without violating borrowing rules. But some experts say this could leave people in the world’s poorest parts more vulnerable to the effects of the climate crisis.