Andy Burnham has announced the government will cut business rate bills for pubs, clubs and live music venues in England by 20% from April next year.
The government said the cut will benefit nearly 32,000 businesses saving the typical pub an estimated £1,100 in the next financial year.
Burnham said: “For too long, governments have stood by while cherished venues have disappeared from our local high streets. So today I am changing that. 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.”
Writing on X the prime minister added: “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.”
Earlier today, chancellor, John Healey, said the government would also look to overhaul the business rates system, including small business rates relief, at the budget.
The property industry broadly welcomed the announcement. Dominic Curran, head of communications at Real Estate:UK, said: “Any cut in the onerous burden of business rates is welcome given that the UK imposes the highest tax on property in the OECD. However, what’s really needed is a cut for all businesses alongside fixing the tax rate to make bills more predictable, and changes to empty property relief that actually reflect the time taken to relet properties.”
Damien Clarke, head of business rates UK at Knight Frank, added: “Today’s announcement is a welcome step in the right direction and, crucially, shows that the new government recognises the need for more fundamental reform of a business rates system that has placed a disproportionate burden on our high streets. But, as ever, the devil will be in the detail.
“The biggest question is how these cuts will ultimately be funded. The government has pointed to withdrawing relief from businesses such as vape shops and tackling tax avoidance by sellers using online marketplaces, but it remains unclear how much revenue this will realistically raise, or how such measures will be administered and enforced.
“More encouraging is the recognition that a more flexible approach is needed to determine which businesses should benefit from relief. Our high streets have evolved enormously, but the business rates system has not always kept pace. A licensed café, for example, may fulfil much the same social and economic role as a traditional pub, particularly as younger consumers increasingly favour more diverse hospitality venues, yet its technical classification can determine whether it qualifies for support.”
John Webber, head of business rates at Colliers, said: “This measure is more about creating vibes than dealing with the punitive business rates bills faced by businesses up and down the country. Extending the business rates discount for pubs, clubs and live music venues from 15% to 20% next year will help a little, but it does not address the real problem which is the valuation method used.
“The elephant in the room that the new prime minister and chancellor need to acknowledge is that the business rates burden is too high for British business as a whole. The government has increased the business rates take by 10.2% rise this year, trying to squeeze out so much money from businesses that it leaves very little room for them to invest and grow. Hotels are trying to manage a 77% increase. The fact remains that the business rates burden is increasing this year and next, at precisely the moment when businesses are being made to grapple with higher wage costs and NI contributions.”
Adam Barnfield, head of business rates at Vail Williams, said: “Any reduction in operating costs will be welcomed by businesses that have faced sustained financial pressure over recent years. Pubs, clubs and live music venues play a vital role in our town centres and local communities, so targeted support for those sectors is undoubtedly positive.
“However, today’s announcement inevitably raises questions for the wider hospitality sector. Hotels, restaurants, cafés and many other businesses continue to face the same cost pressures, yet at this stage remain outside the scope of the proposed relief. Until we see the detailed eligibility criteria, many businesses will be wondering where they stand.”
Chris Grose, rating director at Hartnell Taylor Cook and junior vice president of the Institute of Revenues, Rating and Valuation, added: “Additional business rates relief for pubs, leisure and hospitality will be welcomed, but average savings of £1,100 per year are more of a helping hand than a game changer. This is will not be enough on its own to transform the fortunes of struggling operators facing much larger cost pressures.
“What’s more significant is how the government intends to pay for it. Rather than introducing an additional surcharge on larger commercial properties – possibly due to the difficulty of identifying large online warehouses without impacting other large units – it has chosen to fund the relief through a clampdown on VAT compliance among online sellers and removing business rate reliefs from ‘vape shops’. But what if a vape shop sells more than vapes? The practical challenges of pursuing this route remain to be ironed out.”
Katie Wyle, managing director, customer and retail operations, Northern Europe at Unibail-Rodamco-Westfield, said: “Yesterday’s announcement on business rates is a positive step and recognises the important contribution pubs, clubs and live music venues make to our towns and cities. Places thrive when retail, hospitality and leisure work together.
“They each play a role in attracting visitors, creating jobs and supporting local economies, so targeted support for one sector can have a positive impact across the wider high street ecosystem. If the government wants to drive long-term growth, it needs to look beyond business rates alone. Reducing the wider cost of doing business, including energy costs, will be just as important in helping businesses invest in jobs, places and communities.”
Justin Young, CEO of RICS, added: “Protecting and revitalising our high streets is critical to the UK’s prosperity. In every corner of the country, we must boost growth and support communities to thrive. RICS welcomes the new government’s scrutiny of the business rates system and attempt to remedy some of the burden it brings. Chartered surveyors play a critical role in the rating system, supporting businesses to navigate complex regulations and ensure fair assessment. UK taxation should not fall disproportionately on businesses because they require physical assets to operate.
“We have consistently supported a more responsive rating system. In practice, this includes meaningful and wholesale reform of the business rates system, as well as reduced complexity and greater transparency. To ensure high streets are supported across the country, the government must focus on the role commercial property plays and its benefits. RICS will continue to make the case for a fairer system for ratepayers and all stakeholders.”
