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Earlier today (Thursday 23 July), Andy Burnham revealed pubs, clubs and live music venues are set to receive a 20% cut to their business rates bills from April 2027.
The Government estimated the reduction will benefit almost 32,000 venues, saving the typical pub about £1,100 in the next financial year.
Rob Barr, who runs the Onslow Arms in Loxwood and the White Hart in Henfield, both in West Sussex as well as the Red Lion in Winfrith, Dorset shared his thoughts.
He said: “It’s an encouraging start from the new Prime Minister and the speed of this decision [suggests] he’s clearly keen to show his support for part of the hospitality sector and support community-valued venues.
“The 20% relief on pubs will bring a bit of pressure relief and we’ll see if this leads into the wider reform, which was committed to in the Labour manifesto.”
The move was also welcomed by London-based multiple operator Tim Skinner.
He said “Any support for hospitality has to be welcomed, and a 20% reduction in business rates for pubs, clubs and music venues is a positive step.
“It shows the Government recognises that our industry is under enormous pressure, and that acknowledgement matters.”
However, he also highlighted the impact ongoing cost increases are having on businesses across the sector.
Relatively small contribution
Skinner added: “That said, we have to be honest about the reality. For many operators, the average saving is likely to be around £1,100 a year.
“Every pound helps, but in the context of soaring employment costs, national insurance, utilities, insurance, food inflation and the wider cost of doing business, it’s a relatively small contribution to a much bigger problem.
“Hospitality isn’t suffering because people have fallen out of love with pubs. It’s suffering because the economics no longer stack up.
“Every week we continue to lose good businesses, not because they’re badly run or unloved, but because cumulative cost increases and disproportionate taxation have made trading increasingly unsustainable.
“The vast majority of these businesses are independent operators.
“They employ local people, buy from local suppliers, create opportunities for young people and provide the social fabric that keeps our high streets and communities alive.
“When we lose a pub, we lose far more than a business.”
A VAT cut and long-term reform is what businesses need, the operator outlined and called for further Government action.
“Andy Burnham has publicly backed the #VATsTheProblem campaign and recognised the case for reducing hospitality VAT to 10%, bringing us more into line with much of Europe,” Skinner said.
“If that support translates into action, it has the potential to be genuinely transformational.
“This announcement is a welcome gesture, but hospitality doesn’t need gestures or headlines we need structural reform.
“If we want to save businesses, protect jobs and get Britain’s pubs, bars and restaurants growing again, now is the time to be bold.
“The industry has heard the words. Now let’s see the action.”
Fairer VAT rate required
VAT reform was also called for by Adam Taylor - owner of the Feathered Nest in Nether Westcote, Oxfordshire.
He said: “While the Government’s decision to reduce business rates by 20% is welcomed, it should be seen as the first step - not the solution. If the Government genuinely wants to secure the future of pubs, protect jobs and boost economic growth, VAT reform really needs to be the priority.
“A fairer VAT rate would deliver far greater, long-term benefits to pubs, their employees and the communities they serve than business rates relief alone.”
Furthermore, the British Institute of Innkeeping (BII) stated the move was encouraging but this needed to be “the beginning of the changes” needed by its members.
CEO Steve Alton said: “Our members, operating independent pubs at the heart of their communities in towns and high streets across the UK, will be encouraged by this initial step taken by the new Prime Minister in his first few days in office.
“The recognition he has given to the vital role that pubs play in local economies, local employment and the huge social value they bring to their communities is welcome.
“However, even with this additional 20% discount on current bill levels, we now need to see a significant change to the cumulative taxation faced by our sector, to allow our nations’ pubs to have the ability to grow and reach their full potential.
“With the average salary of a 21-year-old having increased by almost £5,000 over the past two Budgets plus the significant increases in NICs costs for employers , the discount on business rates bills, while a welcome step, can only be the beginning of the changes we need to see for our members.
“In order for pubs to be able to support local employment growth, particularly for young people beginning their careers, we need to see significant change to the overall tax burden they face.”
He echoed Skinner’s comments on cutting VAT in order to give businesses the chance to grow.
Alton said: “Our members have been clear and consistent in their calls for an urgent need to reduce their cumulative tax bill with a priority of a fair deal of VAT at 10% on all pub sales.
“This will be essential to provide the breathing space these vital local businesses need to grow and be at the heart of economic growth, as well as providing essential employment for young people in every postcode across the country.”
