Burnham cuts business rates for England's pubs by 20% but industry calls £1,100 saving a 'drop in the ocean'

The announcement

On his fourth day in office, Prime Minister Andy Burnham unveiled a 20% reduction in business rates for pubs, social clubs and eligible live music venues in England, to take effect from April 2027. The Treasury estimates the measure will cost around £100m a year and benefit nearly 32,000 premises, saving a typical pub about £1,100 annually. Visiting a pub in Harlow, Burnham said the cut was a "first" but "important" step.

We're losing pubs. Pubs need to know that the cavalry is coming.

The policy is the third major cost-of-living intervention in as many days, following a planned cap on most bus fares in England and the removal of VAT on household electricity bills. Burnham, who took office on 20 July, is under pressure to deliver the economic revival Labour promised when it won power in July 2024.

Funding and criticism

The government says the rates cut will be paid for by reducing tax relief for vape shops and gambling arcades, and by stepping up enforcement against online marketplace sellers who fail to meet tax obligations. However, ministers struggled to provide full details of the funding, and the opposition Conservative Party labelled it the "third unfunded spending commitment in three days".

This is the third unfunded spending commitment in three days.

The relief replaces a previous 40% business rates discount for hospitality that was abolished by former chancellor Rachel Reeves, with temporary transition arrangements now winding down. Pubs also face rising energy bills, higher alcohol duties, increased employer national insurance contributions and weakened consumer demand.

Industry reaction

Hospitality figures gave a guarded welcome. Tom Kerridge, the chef leading the VAT's the Problem campaign, said the £1,100 saving spread across a year amounts to just over £3 a day.

It does nothing really. It's almost a drop in the ocean.

Ian Hoskins, owner of Liverpool's Ma Pub Group, called it a "drop in the ocean" and said the biggest help would be a full reform of business rates and more disposable income for customers. Mark Davy, chief executive of the Music Venue Trust, described the move as "an encouraging first step". Kerridge noted that restaurants, cafes and hotels are excluded from the relief, and that business rates at some of his own venues rose by around 100 to 115% at the start of the year.

Political manoeuvring

Burnham's first days have also been marked by a factional reshuffle. He has purged several allies of his predecessor Keir Starmer, including Steve Reed, Darren Jones, Peter Kyle and Liz Kendall, while promoting figures who were sacked or sidelined by Starmer, such as Louise Haigh, Lucy Powell and Anneliese Midgley. John McTernan, a former Number 10 adviser, said Starmer's team had shown "thoughtless vindictiveness" in pushing out politicians and advisers, who then coalesced around Burnham.

I think Keir Starmer's Number 10 had a thoughtless vindictiveness with which they pushed out politicians and advisers, they were pushed off the pitch and then they came together to form a new winning team.

One Labour figure warned that Burnham has now created a faction around Starmer "in a way that Keir never succeeded in doing for himself", adding that "this equals trouble in the long run".

Devolution signal

On Friday 24 July, Burnham will open "Number 10 North" in Manchester's Heron House, a branch of the prime minister's office intended to demonstrate his commitment to devolving power away from London. The move echoes his background as a former mayor and is part of a broader effort to show that his government will operate differently from its predecessors.

What lies ahead

With nearly two-thirds of Britons telling Ipsos the country is heading in the wrong direction, Burnham's early announcements are designed to lift a gloomy national mood. The business rates cut will not take effect for another nine months, and the hospitality sector continues to lose roughly one pub a day, according to the British Beer and Pub Association. Kerridge remains hopeful of a future VAT reduction for hospitality, but acknowledges that a £100m rates package is a fraction of the £10bn such a move would cost.