Andy Burnham’s first major policy as prime minister – a 20% cut in business rates for pubs, live music venues and social clubs – was meant to throw a lifeline to the high street. But while industry bodies cheered the £100m package, many landlords and other business owners said it barely scratched the surface of their problems.
Keith Bott, who runs the Titanic Brewery and nine pubs in the Midlands, welcomed the gesture. “The government is finally recognising the plight of the hospitality industry and trying to help,” he told the BBC. But he warned that his sector is “heavily taxed”, with 35-40% of turnover going to the Treasury, and called for a fairer system where online retailers – who pay a “ridiculously low” amount of rates – are made to contribute more.
“Burnham's 20% business rates cut for pubs costs £100m, but landlords say it's a 'small snippet'.”
For others, the relief did not go far enough – or did not apply at all. Ruth Dawson, owner of HD3 Fitness Centre in Huddersfield, said her community gym had been “left out in the cold”. “If a pub can get support because it is the ‘heart of the community’, then so should we,” she said, pointing to the work her gym does keeping elderly residents active and connected.
Dan Smith, who runs the Red Lion in Derbyshire, sells about 300 pies a week – the most popular order being a steak and ale pie with chips, cauliflower cheese and onion gravy, washed down with a pint of Bass. He used to pay no business rates thanks to rural relief; now he pays about £680 a year. The rates cut, he calculates, accounts for just 16p of a pie and a pint, compared with £3.42 in VAT. “I’m not going to knock it – it’s showing willing from Mr Burnham. But it’s a small snippet,” Smith said.
He backs a hospitality-wide campaign to slash VAT from 20% to 10%, a measure Burnham supported when he was mayor of Manchester and which could cost the Treasury an estimated £10bn.
The financial reality for many pubs is stark. According to Colm O’Leary, director of the consultancy Packed House, a typical hospitality business with a turnover of £1m makes just £13,500 profit after tax. Staff costs take £3.88, employer’s taxes £0.74, and utility bills, operating costs and mortgage £2.85 on top of ingredients and VAT.
The move comes as pubs close at a rate of about one a day. Whether a 20% discount – worth just over £1,000 to the average pub – can stem that tide remains an open question.