Pubs, clubs and live music venues in England will receive a ۲۰% discount on their business rates bills as part of a £۱۰۰m aid package unveiled by Andy Burnham but the prime minister immediately faced calls to be more ambitious.
Burnham said the measure, aimed at supporting the high street and easing cost of living pressures, would be fully funded, including through a review of relief 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 £۲ and cutting VAT on electricity bills – have prompted questions about how they will be funded, with the new administration under pressure to set out the detail of its plans.
Burnham, who took office on Monday, has promised to give people “more breathing space” on living costs through a series of policy interventions, as he attempts to demonstrate to an often sceptical public that government can deliver meaningful change.
Speaking in London on Thursday, the Conservative leader, Kemi Badenoch, said Burnham’s early policy announcement had left her thinking: “Is that it?”
And while hospitality leaders welcomed the tax cut, some questioned its scale and raised concerns that businesses such as hotels and restaurants had been left out.
The business rates cut will benefit almost ۳۲,۰۰۰ pubs, clubs and live music venues, according to the government, with the typical pub expected to save an estimated £۱,۱۰۰ in the next financial year. The support will be targeted so that the largest live music venues are excluded.
The measure builds on the ۱۵% business rates relief for pubs and live music venues announced by Rachel Reeves this year, as Covid-era relief ended and new revaluations took effect, with bills frozen in real terms for a further two years.
“For too long, governments have stood by while cherished venues have disappeared from our local high streets. So today I am changing that,” the prime minister said. “This government will back the businesses that people want to see in their communities. I said I would protect pubs and local high streets – the beating heart of our communities – and that’s what we will do.”
The new chancellor, John Healey, said the government remained committed to overhauling the wider business rates system, including relief for small businesses, at the budget.
Some hospitality leaders urged Burnham to go further, particularly given that he has previously backed the industry’s call for a reduction in VAT to ۱۰%. That policy would have been worth £۱۰bn to the hard-pressed sector, although tax experts have questioned the use of taxpayers’ money, warning that large, profitable businesses would enjoy most of the benefit.
Tim Martin, the outspoken founder of the Wetherspoons pub chain, said business rates relief was “a small move in the right direction” but called on Burnham to make the cut in VAT.
Nick Evans, a co-owner of the Old Crown Coaching Inn in Faringdon, Oxfordshire, said business rates relief would do little to help the pub.
“It’ll save £۳,۰۰۰ a year, something like that. When you’ve got a £۱.۸m turnover business that shows less than ۲% gross profit, chucking me £۳,۰۰۰ doesn’t help me at all,” he said. “Prices are going up, energy is going up, so what can you do? He said he was going to cut VAT to ۱۰%.”
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Kate Nicholls, the chair of the UK Hospitality trade body, welcomed the government’s recognition of the sector’s difficulties but pointed out that restaurants and hotels were excluded. “We now need to see a solution for the rest of the sector,” she said.
Ministers also plan to crack down on businesses that sell through online marketplaces but do not comply with their tax obligations, putting them at an unfair advantage over those that do, and is consulting on measures to make those marketplaces more responsible for this.
Tina McKenzie, the policy chair of the Federation of Small Businesses, welcomed the proposal but said it must be a “downpayment” on further action to help small businesses more broadly at the next budget.
“Failure is not an option,” she said. “We are encouraged at the signal from the prime minister today, instructing his government to plan for a significant increase in small business rates relief at the heart of the next budget. This would deliver on promises made campaigning for the role, and fix the damage caused by business rates decisions that sent bills up and are holding back SME growth and jobs in every postcode.”
On Tuesday, in his first policy intervention, Burnham said the government would cut VAT on electricity bills, reducing them by an average of £۴۵ a year from October. This would be funded, officials said, by his decision to scrap the digital ID scheme.
However, less than an hour after the measure was announced, Darren Jones, who was sacked as chief secretary to the prime minister in Burham’s reshuffle, raised doubts over how it would be paid for, saying the digital ID project – which was expected to save £۱.۸bn over three years – was unfunded.
Then on Wednesday, the prime minister said he would reduce the bus fare cap next year from £۳ a journey to £۲, funded mainly by changing international climate donations into repayable loans.
The switch allows the government to borrow more against those loans without violating its borrowing rules. But some experts say it could leave people in the poorest parts of the world more vulnerable to the effects of the climate crisis.
