Pubs cheer business rates relief while other firms 'left out in the cold'

ByArchie Mitchell

Business reporter

Andy Burnham's decision to cut business rates for pubs, social clubs and live music venues raised a cheer among industry bosses.

It was his third big policy announcement in three days, and as industry body UK Hospitality put it, it showed his enthusiasm for the sector "survived his trip down the M1".

Tax experts said the 20% discount, which comes on top of emergency business rates relief rolled out in January, would save the average pub more than £1,000.

But other High Street businesses complained they would miss out on the support and called for the package to be extended.

Keith Bott, who runs the Titanic Brewery and nine pubs across the Midlands, said the government was "finally recognising the plight of the hospitality industry and trying to help".

He said pubs had been hit by a mix of employer National Insurance increases, the rising minimum wage, high inflation and the climbing cost of living.

Meanwhile, the sector is "heavily taxed", with around 35-40% of turnover going to the Treasury, he added.

"What I really liked in this announcement is they are recognising we need to look at a fairer tax system so we can all contribute to society," Bott told the BBC. He said online retailers that operate out of warehouses pay a "ridiculously low" amount of business rates in comparison, and "we need to make the system fair".

And Bott urged the government to go further in supporting the industry, cutting the duty on draft beer to target drinks sold in pubs.

Missing out on support in Burnham's plans is Ruth Dawson's HD3 Fitness Centre in Huddersfield. The local gym "does exactly the kind of work the government says it wants to support", she told the BBC, but has been "left out in the cold".

Dawson said her firm faces a "damaging" business rates bill, which is "one of the biggest threats to our ability to keep operating".

"If a pub can get support because it is the 'heart of the community', then so should we," she added.

"A community gym that keeps elderly residents mobile, active and connected is every bit as vital to a High Street as a pub or a club - arguably more so, given the pressure on the NHS and social care from an ageing population."

She urged the government to rethink the plans, extending support to community leisure centres and fitness facilities.

Nick Smith, who runs the Ludoquist board game cafe and bar in Croydon, London, said Burnham's announcement was reminiscent of "the trauma of Covid days".

"Where the government makes an announcement and you have to spend days trawling websites to try to find out what they mean," he told the BBC.

Ludoquist is a licenced premises, but Smith said it does not meet the government definition of a "pub", so he fears being missed by the business rates package.

"It is not inconceivable that I am in fact a pub. But I don't think I am. No-one would describe me as a pub. I'm a cafe/bar/restaurant.

"Cafes aren't being helped any more, nor are restaurants, so I don't understand the logic of that."

But Smith said business rates are not the main challenge for Ludoquist, calling instead on the government to reduce the current 20% rate of VAT for hospitality businesses in line with European countries such as Germany, France, Spain and Italy which charge less.

Sam Lamiroy said Burnham's announcement is a step in the right direction and shows the government is trying to help, but agrees with Nick Smith that "VAT is the real problem".

He said the turnover of a typical pub or restaurant can easily be between £500,000 and £1m, meaning a £1,000 saving "won't make much difference".

"The 20% drop in business rates is really just lip service, it won't affect whether we survive or not, the real lever to pull is help with VAT, dropping the rate from 20% to 10% as it is in the rest of Europe," he told the BBC.

Lamiroy also said he fears his Penzance-based bar and restaurant, 45 Queen Street, will not be considered a "pub" and so be ineligible under the terms of the support package.

And, urging the government to do more to support hospitality businesses, he said: "These are the first jobs for a lot of young people, it is a springboard into work.

"When these places shut, it's not just my business and income that disappears, it is the entire team."