Andy Burnham's £100m business rates giveaway for pubs, clubs, and live music venues aims to support the high street. But what do pub owners really think? We break down the policy, its impact on your bar bill, and whether it can stem the tide of closures.
What the Policy Means for Pubs
The new prime minister announced a 20% reduction in business rates for hospitality venues. For a typical pub like the Red Lion in Derbyshire, that cuts rates from about £680 to £544 a year. Owner Dan Smith calls it "a small snippet" — rates make up only 16p of a typical £20.50 pie-and-pint meal.
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Breaking Down the Bar Bill
To understand the real cost, look at where your money goes. The table below shows the breakdown for a steak and ale pie with chips and a pint of Bass.
| Item | Cost | Percentage |
|---|---|---|
| Ingredients | £6.48 | 31.6% |
| VAT (20%) | £3.42 | 16.7% |
| Staff | £3.88 | 18.9% |
| Employer's taxes | £0.74 | 3.6% |
| Utilities, operating, mortgage | £2.85 | 13.9% |
| Business rates | £0.16 | 0.8% |
| Pub profit | £2.97 | 14.5% |
VAT is the biggest slice at £3.42, while business rates are just 16p. Many landlords argue a VAT cut from 20% to 10% would be far more effective — but that would cost the Treasury £10bn.
Can the Rates Cut Halt Pub Closures?
Pubs are closing at a rate of about one a day. The £100m giveaway might slow the trend, but it's no silver bullet. Higher energy bills, rising food costs, and staff shortages remain pressing issues.
- Business rates are only a tiny fraction of total costs for most pubs.
- VAT reduction would have a much larger impact on profitability.
- Rural pubs already benefit from relief, making the cut less meaningful.
- Complexity of the rates system frustrates owners like Smith.
FAQ
Who qualifies for the business rates cut?
Pubs, clubs, and live music venues in England will receive a 20% reduction on their business rates bill from April 2025.
How much will the average pub save?
For a typical small pub paying £680 annually, the saving is about £136 — roughly 0.8% of the cost of a pie-and-pint meal.
Why do pub owners want a VAT cut instead?
VAT accounts for over 16% of the average meal cost, compared to less than 1% for business rates. A 10% VAT cut would save customers and pubs far more.
Ultimately, Burnham's business rates giveaway offers modest relief, but the industry is calling for bigger changes. Whether it reverses the closure trend remains to be seen.
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