Andy Burnham’s pledge to cut business rates for pubs, clubs and live music venues has been criticised as a political stunt with industry leaders warning it fails to go far enough.
Mr Burnham announced the 20 per cent reduction in business rates on Thursday – his third major policy announcement in three days – promising around 32,000 businesses would benefit. He said the typical pub would save around £1,100 annually.
But the announcement triggered a row, with celebrity chef and publican Tom Kerridge among the hospitality industry leaders to warn the savings passed on to businesses “won’t really make a difference”.
The TV chef had previously led a nationwide campaign calling for hospitality VAT to be cut to 10 per cent, under the banner “VAT’s the Problem”.
He said: “It doesn’t go far enough but it does show that there is an understanding that hospitality needs a hand, especially smaller venues.”
Great British Menu winner Nick Beardshaw branded the change a “political manoeuvre”, which he said was “an absolute drop in the ocean” when it comes to helping the hospitality industry.
He said the policy was “not enough to save any businesses”, and warned many would have closed their doors by April when the measure is due to come in.
“While it is a positive thing, I feel like it’s just a bit of a political manoeuvre designed to take a bit of heat away from the noise that hospitality is making,” he said.
“It’s an absolute drop in the ocean. Business rates are normally between 2 per cent and 4 per cent of turnover in these businesses, so the reduction represents a 0.4 per cent to 0.8 per cent reduction in total costs.
“Not enough to save any businesses, as is implied in his statement about not wanting to see any more of these businesses boarded up. Many of them won’t make it to next April.”
Mr Burnham said it was time to support vanishing “cherished local spaces” as he announced the measure, which comes amid a policy blitz to provide “breathing space” to the public and businesses as they experience cost pressures.
The move will cost around £100m a year and funds are planned to be raised for it by cutting business rate relief for vape shops and cracking down on online businesses that fail to pay VAT.
The prime minister had campaigned for the hospitality sector when he was mayor of Greater Manchester and raised concerns about the way costs are forcing many venues to close.
Entrepreneur Sacha Lord, the chair of the Night Time Industries Association and an ally of Mr Burnham, told The Independent that the measure is “just the beginning” of help.
Meanwhile, Sophia Handschuh, co-founder of bakery Sourdough Sophia, said it was “genuinely encouraging to see the high street getting some attention at last”, but added: “My worry is that cafes, bakeries and restaurants have been left out, and we’re facing exactly the same rising rents, wages and energy bills as the pubs next door.
“We’re just as much a part of what makes a neighbourhood feel alive, so I’d love to see that support extended to all of us.”
Steve Perez, founder of Global Brands soft drinks firm and owner of two hotels in the Peak District, called the rates cut “tiny”.
He told the BBC: “Obviously it is welcome, but it won’t make any material difference to any pub.”
He added: “It is a little like the supermarket putting up prices and then saying they are reducing them.”
A pub landlord in London told The Independent that while any cut was good, the impact of the business rates relief would be “mild” compared to VAT costs.
Alberto Romanelli, owner and landlord of the Windmill Pub in Shoreditch, said: “The cut on business rates is very mild, because 20 per cent, we don’t pay massive, massive amounts of business rates compared to what we pay in VAT because that’s huge.”
The pub was forced due to rising costs to cut its full menu of Italian food down to just pizza.
“Food cost is very high, but personally, with the pizza, I managed to change that,” he said. “But again, if they would cut VAT, it would be the best thing to do, 100 per cent.”
Since entering Downing Street on Monday, Mr Burnham has unveiled a string of plans to help ease the impact of the cost of living crisis, including the removal of VAT from electricity bills and the introduction of a £2 cap on single bus fares across England.
Chief secretary to the Treasury Emma Reynolds insisted the pubs policy was fully funded, despite both sources of revenue being described as subject to review or consultation.
But the Conservatives said Mr Burnham must detail how he will pay for his policies.
Shadow business secretary Andrew Griffith said: “Whilst any support for Britain’s hard-pressed businesses is welcome, once again this government has been found wanting on both the detail and funding for this policy.”