Andy Burnham has made his third major announcement in as many days since taking over as prime minister.
A 20 per cent cut to business rates will come into effect from April next year for pubs, clubs and music venues – except for the largest ones – with Mr Burnham saying the government will “back the businesses that people want to see in their communities”.
The rates are charges which are applied to a firm on its buildings or property. The money goes towards funding 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 jobs and help keep high streets and town centres busy — which is why we will back them all the way.
“We are determined to bring hope back, give businesses the support they need and generate growth in every postcode.”
Question one: Benefit vs cost
The big question hanging over all of Mr Burnham’s announcements has been: how is this being paid for?
This rates relief move is expected to cost around £100m equalling, the government says, to a saving of around £1,100 for a typical pub next year.
It will apparently be paid for by a review on tax reliefs currently offered to businesses that “do not make a positive contribution to local communities, such as vape shops”, in the eyes of the government – meaning there will be backlash from those businesses. It also means it is currently not funded.
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But there is still a question of balance to be struck: is the benefit to the businesses of real impact – and is it worth it for the overall cost?
Saving any money at all will be welcomed by businesses. But £1,100 less expenses for a pub which is turning over £250,000 a year isn’t a clear and immediate material benefit.
Jo Dearsley, proprietor of The Six Bells in Newdigate, Surrey, said pubs like hers still want the UK’s tax structure to be reformed entirely.
“This announcement is a genuinely welcome step in the right direction. Pubs are far more than businesses serving food and drink – they are the heart of our communities, bringing people together in a world that is becoming increasingly digital and disconnected,” she 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.
“That said, business rates are only one part of the challenge facing the hospitality sector. The ongoing VAT burden continues to place enormous pressure on pubs already dealing with rising employment, energy and supply costs. This announcement should be the start of a broader conversation about creating a fairer tax environment that allows the sector to invest, grow and continue playing its vital role.”
There’s also the matter of the rate cut not coming into effect until April 2027.
A Whito industry report from July 2026 showed around 860 pubs per year are closing, or more than two per day. Some of those still struggling may be wondering if this rate cut does enough for them – or will come quickly enough.
Question two: Who misses out?
Full details will not be available until the autumn Budget, the first under Mr Healey, but the government has said the largest venues will not receive the 20 per cent cut in rates.
There will be questions of why – as well as fairness – but until the detail is known it’s tough to make a full assessment.
There will also be concern for hospitality venues not covered by this cut.
Hotels and restaurants have been feeling the strain following successive years of increased tax obligations, the previous end of rates relief discounts, the rising cost of employment, years of higher energy bills and – for some firms – additional pressures including packaging taxes.
UKHospitality backed the move as a “welcome first step from a government that understand the value of hospitality to jobs, growth and local communities”, but pointed out that restaurants are “struggling just as much as pubs” – and that hotels are set to see rates bills increase by 110 per cent.
“While today’s announcement will provide welcome support for pubs, clubs and live music venues, they only account for around a fifth of hospitality jobs. The rest of the sector now needs to see the same ambition,” added Allen Simpson, the group’s CEO.
Kate Shoesmith, director of policy at the British Chambers of Commerce, agreed that rates are a worry for many businesses.
“While news of a carve out for pubs, clubs and music venues is welcome, there are many other smaller hospitality companies facing an existential threat,” she said. “Our latest research shows more than a third of firms believe business rates are of more concern now than they were three months ago.
“Any action on rates is long overdue and very welcome, but root and branch reform of the system was a Labour manifesto commitment, and it is time to deliver on that promise.”
