Less than 72 hours into his tenure as prime minister, Andy Burnham has delivered some long-awaited good news for parts of the hospitality industry, announcing a 20% reduction in business rates for pubs, clubs and live music venues from April 2027.
The move is expected to save the average pub around £1,100 each year, and is estimated to benefit around 32,000 hospitality venues across the UK. Costing the government an estimated £100m a year, the measure will be funded by reviewing business rates for so-called ‘anti-social businesses’, including vape shops.
The prime minister took to X, saying he: ‘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.’
The announcement has been broadly welcomed by hospitality operators, but many argue it's only a fraction of what's needed to keep the industry afloat.
So what does this mean for the industry?
While the new relief offers a welcome reduction in costs, as a whole, the hospitality industry remains under pressure.
Former Chancellor Rachel Reeves introduced selective cuts to business rates in her autumn budget, but businesses continue to face rising National Living Wage costs, increased alcohol duties, soaring energy prices and unchanged VAT rates.
The combined effect has left many businesses operating on razor-thin margins, with many warning that without broader reform, the industry should expect thousands more closures; UKHospitality predicts an average of six hospitality businesses could close daily.
Who benefits from these changes?
The discounted rates apply exclusively to pubs, clubs, and music venues, leaving hotels and restaurants outside the scheme.
When the new business rates were calculated last year, pubs were expected to see an average increase of 76% over the next three years, while hotels faced rises of up to 115%. Since then, pubs have benefited from two rounds of relief, while hotels and restaurants are still waiting for support.
Restaurants are continuing to close at an alarming rate, and many operators fear that this trend will only worsen unless further measures are introduced.
Allen Simpson, CEO of UKHospitality, commented: ‘Neither hotels nor restaurants have had the help they need. We’ve got to see a proper solution for the most overtaxed sector in the economy at this year’s budget.’
Is the change enough to keep businesses afloat?
For many the news is welcome. Emma McClarkin, Chief Executive of the British Beer & Pub Association, commented that ‘this sorely needed discount will be celebrated by pubs up and down the country.’
Michael Kill, CEO of the Night Time Industries Association, said: ‘Having worked closely with the new Prime Minister's team over recent weeks, it is encouraging to see a positive outcome for genuine engagement with the sector.’
For others, it's simply not enough.
Tom Kerridge, leader of the #VATsTheProblem campaign, which is championing cuts to hospitality VAT, commented: '£1,000 on a yearly revenue doesn't really make a difference.'
He added: 'It shows the government are beginning to listen and has an understanding that hospitality is at the core and heart of so many communities.
'I'm hopeful that as the prime minister and his team begin to get their feet underneath the table and they get to have an understanding on what's going on, that there will be more and more measures that come into place to help hospitality.'
The move is clearly a step in the right direction, but with fundamental challenges unchanged, wider reform is needed, and needed soon.
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