'VAT is crucifying the industry': Pub landlords slam Andy Burnham's business rate move 'too little, too late'

Prime Minister Andy Burnham has unveiled a 20 per cent cut to business rates for pubs across England from April 2027, but publicans have warned the measure will do little to prevent more closures.

Downing Street said the change would benefit nearly 32,000 hospitality venues, with the average pub expected to save around £1,100 a year.

Landlords, however, said the relief comes too late to help many struggling businesses, with the sector continuing to face higher employers' National Insurance contributions, business rates changes and rising wage costs since Labour took office in 2024.

According to Campaign for Real Ale data analysed by The Telegraph, four pubs have been closing every day since January.

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Paul Stanford, proprietor of The Railway Tavern in Norfolk, described the announcement as "absolutely not enough" and called on the Government to introduce the relief sooner.

He said: "A lot of places won't survive until April 2027. It's a kick in the teeth after what we've been through — too little, too late."

Mr Stanford added that the economics of running a pub meant landlords could never compete with supermarkets on alcohol prices because of significantly higher overheads, forcing many businesses to absorb rising costs rather than pass them on to customers.

The small business rates threshold, currently set at £12,000, has remained unchanged since April 2017, adding to the financial pressure on independent operators.

The Prime Minister's announcement also did not include any reduction in VAT, which remains at 20 per cent.

Mr Stanford said: "VAT is crucifying the industry. A lot of friends in the industry just earn enough to pay taxes and keep everyone employed — they're not making any money whatsoever."

Sir Tim Martin, chief executive of the Wetherspoon chain, welcomed the business rates reduction but argued VAT remained the biggest disadvantage faced by pubs.

He said: "The biggest disadvantage for pubs versus supermarkets relates to VAT, where supermarkets pay zero on food sales while hospitality venues, including pubs, pay 20 per cent.

"This disadvantage is responsible for the ever-widening gap in the price of a pint or meal in a pub compared to a supermarket."

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Sean Hughes, landlord of The Boot in St Albans, said his business rates bill had increased from £78,000 to £132,000 after a Government revaluation that raised rateable values by an average of 30 per cent.

He said: "The whole rates system is incredibly flawed, and we have to reduce VAT too. The cost will be far greater when we lose more pubs and the tax revenue they bring."

Mr Hughes, who runs the 12-table pub, told The Telegraph that the Government should use its planned 10-year strategy for Britain to address the financial pressures facing the hospitality sector.

"The pub is a central part of the high street, and it needs to be employing under-25s and training them.

"We also need a special status protecting pubs, so they can't be demolished and turned into flats or hotels."

Chris Sargent, who has run the White Horse Inn in Dorset for 25 years, said his pub continued to face significant financial pressures despite the planned tax relief.

Mr Sargent said: "We're a little village pub, and my bill can be anything between £26,000 and £30,000. It's heartbreaking as there's no incentive to work and to employ. We're just treading water."

Labour pledged in its manifesto to overhaul the business rates valuation system, but Mr Hughes said meaningful reform had yet to materialise.

Former chancellor Rachel Reeves had previously announced a temporary package of 15 per cent business rates relief followed by a two-year freeze, although the Government was still projected to collect an additional £12billion from the sector over four years.

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