Pubs, clubs and live music venues in England will receive a 20% cut to their business rates bills from next April under a plan from Andy Burnham to support local high streets, in his latest measure to tackle costs for working people and communities.
The prime minister said the £100m package would be fully funded including through reviewing reliefs for businesses that do not make a positive contribution to communities, such as vape shops.
Other cost of living announcements this week – capping bus fares at £2 and cutting VAT on electricity bills – have prompted questions about how they will be paid for, with the new administration under pressure to set out the detail of its proposals more fully.
Burnham took office on Monday while promising to give people “more breathing space” on living costs with a series of policy interventions, as he attempts to demonstrate to an often sceptical public that government can deliver change.
The business rates cut will benefit nearly 32,000 pubs, clubs and live music venues, according to the government, saving the typical pub an estimated £1,100 in the next financial year. The support will be targeted so that the very largest live music venues are not included.
Hospitality groups are expected to welcome the plan, which they have argued will create much-needed certainty for businesses that want to invest, grow and create jobs, at a time of growing financial pressures.
It comes on top of the 15% business rate relief for pubs and live music venues announced by Rachel Reeves earlier this year, as pandemic-era reliefs came to an end 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 would return to its commitment to overhaul the wider business rates system, including small business rates relief, at the budget.
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, adding: “Failure is not an option.”
“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,” she said. “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.”
Iain Hoskins, owner of Ma Pub Group in Liverpool, said that an extra 20% relief on business rates would go some way to “chipping away” at the rising cost but cast doubt on how many venues would be covered by the change. He told BBC Radio 4’s Today programme: “The worry has been, obviously, in recent years, I mean, when our venues from last year to this current year got revalued, we saw increases of between 100% and 150% on the rates that we pay.
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“So that just goes to show how much they went up by. And while 20% – particularly if that 20% is on top of the 15% and other help that’s there – that can be very meaningful for businesses, independent businesses such as mine; I don’t want to sound ungrateful, but the increases were so huge last year that now we’re sort of chipping away at some of those increases.
“We’re not actually … getting better value than we had before. We’re still having to find extra money for these business rates. But you know, it is a relief that actually some of that is mitigated quickly. 20% isn’t an insignificant figure.”
In his first policy intervention, Burnham announced on Tuesday that the government would cut VAT on electricity bills, reducing them by an average of £45 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 move 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 due to save £1.8bn over three years – was unfunded.
Then on Wednesday the prime minister announced he would reduce the fare cap from £3 a journey to £2 next year, 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.
