Burnham’s rates relief for pubs sends strong signal – but two big questions remain
Andy Burnham has made his third major announcement in as many days since taking over as prime minister.
A 20 per cent cut in business rates for pubs, clubs and music venues, except the largest ones, will come into force from April next year and Mr Burnham said the government would “support the businesses that people want to see in their communities”.
Rates are charges charged to a firm on its buildings or properties. The money goes to finance national or local public services.
Announcing the move, new chancellor John Healey said: “Pubs, clubs and live music venues are at the heart of communities across the UK. They bring people together, support local businesses and help keep high streets and town centers busy – so we’ll be backing them all the way.
“We are committed to restoring hope, giving businesses the support they need, and creating growth in every zip code.”
First question: Benefit and cost
The big question hanging over all of Mr. Burnham’s announcements was: How is this being paid for?
The government says this interest rate cut move is expected to cost around £100m, equating to a saving of around £1,100 for a typical pub next year.
This will apparently be paid for through a review of the tax breaks currently offered to businesses that, in the government’s eyes, “do not make a positive contribution to local communities, such as e-cigarette shops”; This means there will be a reaction from these businesses. This also means it is not currently funded.
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But there is still a balance issue to be solved: Does the benefit to businesses have a real impact and is it worth it in terms of overall cost?
Saving any amount of money will be welcomed by businesses. But for a pub turning over £250,000 a year, £1,100 less in expenses is not a clear and immediate financial benefit.
Jo Dearsley, owner of The Six Bells in Newdigate, Surrey, said pubs like hers still want England’s tax structure to be completely reformed.
“This announcement is a truly welcome step in the right direction. Pubs are much more than businesses that serve food and drink; they are the heart of our communities and bring people together in an increasingly digital and disconnected world,” he said.
“Every pound that can be reinvested into these venues helps protect local jobs, supports independent operators and ensures these important community spaces remain open for future generations.
“However, business rates are just one part of the challenges facing the hospitality sector. The ongoing VAT burden continues to put enormous pressure on pubs, which are already struggling with rising employment, energy and supply costs. This announcement should be the start of a wider conversation about creating a fairer tax environment that allows the sector to invest, grow and continue to play its vital role.”
There is also the issue that the rate cut will not take effect until April 2027.
A Whito industry report from July 2026 showed about 860 bars were closing annually, or more than two bars per day. Some of those still struggling may be wondering if this rate cut will be enough for them or if it will come quickly enough.
Second question: Who kidnapped?
Full details will not be revealed until the autumn budget, the first under Mr Healey, but the government has said the biggest venues will not receive the 20 per cent rate cut.
There will be questions about why and fairness, but until the details are known it is difficult to make a full assessment.
There will also be concerns about accommodation venues that are not covered by this cut.
Hotels and restaurants are feeling the pressure following additional pressures in successive years, including rising tax liabilities, previous end-of-rate relief cuts, rising employment costs, years of high energy bills and, for some firms, packaging duties.
UKHospitality backed the move as a “welcome first step from a government that recognizes the value of hospitality to jobs, growth and local communities”, but pointed out that restaurants “are in as much trouble as pubs” and hotels are set to see utility bills rise by 110 per cent.
“While today’s announcement will provide a welcome boost for bars, clubs and live music venues, they only account for a fifth of hospitality business. Now the rest of the industry needs to see the same ambition,” added Allen Simpson, the group’s chief executive.
Kate Shoesmith, policy director at the British Chamber of Commerce, also agreed that rates were a concern for many businesses.
“While news of regulation for pubs, clubs and music venues is welcome, there are many other smaller hospitality businesses facing an existential threat,” he said. “Our latest research shows that more than a third of firms believe business rates are more worrying than they were three months ago.
“Any action on interest rates is long overdue and welcome, but root and branch reform of the system was a Labor manifesto promise and it is time to deliver on that promise.”
