Brilliant start or token gesture? Hospitality divided on Andy Burnham’s rates relief package

After pledging to provide support for independent hospitality in the weeks preceding his succession of Keir Starmer as Prime Minister, Andy Burnham has fired his opening salvo.

 

The newly-appointed PM has today (Thursday 23 July) announced plans to cut business rates by a fifth for pubs, clubs and live music venues from next April – a move which the government described as “a first step” ahead of wider business rate reforms set to come in the Autumn Budget.

 

UKHospitality’s chief executive Allen Simpson described today’s announcement as “good news and a welcome first step” – but he warned that today’s measures do not go far enough.

 

“Restaurants are struggling just as much as pubs, while hotels are due to see their business rates bills increase by an average of 110%, the highest in the sector,” he said.

 

Chef Tom Kerridge told the Caterer that while this initiative represented “small monetary savings that won’t necessarily go a long way” for pubs, it does “reiterate that the way business rates are calculated is not fit for purpose” and “need to be looked at” for all hospitality operators across the industry.

 

“It’s not the reduction in VAT we want and will continue to keep pushing for through VAT’s The Problem, but we have to remember it is day four this Prime Minister,” Kerridge added.

 

“An announcement of something positive means this is a government that is perhaps listening and has a bit more understanding of the pressure hospitality is facing.”

 

Against this backdrop, The Caterer rounds up reaction from hospitality operators across the industry on Burnham’s first hospitality support pledge.

 

‘Disappointed, but still hopeful’

Fanny Stocker, co-founder of Hammersmith restaurant Sam’s Riverside told The Caterer she was “disappointed, but still hopeful” after restaurants and cafés were left out of today’s announcement, adding that “we await the Autumn Budget with hope and trepidation".

 

“Without a reduction in business rates, a reversal of the increase in employer National Insurance contributions and fundamental VAT reform, businesses will continue to close. Jobs will disappear,” she said.

 

“We are not asking for a handout. We are asking for the conditions that will allow us to stand on our own feet – to invest, employ, train and grow. We are behind you, Andy. Please be behind us too.”

 

Meanwhile, the chef-patron of the Michelin-starred Black Swan in Yorkshire, Tommy Banks, dismissed today’s support package as “a token gesture”, saying “the industry will have lost another thousand businesses” by the time this change comes into effect next April, based on the current rate of six hospitality closures per day.

 

Banks said operators across hospitality feel “thoroughly patronised and unvalued and just disappointed” by Labour’s policies, and that the impact of this rate cut to his business amounted to “between £3 and £5 – less than the cost of a pint of beer” per day.

 

“This is not going to change anything. It doesn’t save a single venue. It doesn’t save a single job,” said Banks.

 

London-based restaurant group Fallow’s executive chair James Robson told The Caterer that hospitality wide VAT reform was needed.

 

“Burnham has picked a very, very small proportion of the high street to help out” he said, adding that the current cost burden for hospitality meant that "for me, the UK is shut for business".

 

“We’ve got to be positive about this. But nothing is out yet that deals with the majority of us in this situation.”

 

Speaking to The Caterer Ayesha Kalaji, chef-owner of Glastonbury restaurant Queen of Cups described today’s reforms as “superfluous tape on a gaping wound that’s rapidly pumping out blood.

 

“We need a tourniquet, not a blister plaster. The measures being circulated would amount to less than 1% of what I pay annually in VAT and will therefore have little to no impact.

 

“Hospitality doesn’t need symbolic gestures; it needs meaningful intervention. Until the government addresses the crippling VAT burden, the sector will continue to fight for survival in an increasingly hostile economic climate.

 

“I appreciate that the plight of the hospitality industry is being discussed, but we need substantive action in order to survive."

 

Winners and losers

BWH Hotels CEO Tim Rumney welcomed Burnham’s commitment to wider rates reform, but said “these measures alone will make no difference to the challenges facing independent hotels, making their continued exclusion from business rates relief all the more disappointing.”

 

Rumney described hotels as “the anchor of local economies” and called for a hospitality-wide VAT cut as a “a simpler, more effective and immediate way to protect jobs, support investment and keep prices competitive.”

 

“If the government is serious about backing Britain’s high streets and visitor economy hospitality needs a joined-up approach, not one that continues to pick winners and losers,” he concluded.

 

Pub group Stonegate’s CEO David McDowall told The Caterer: “I’m pleased to see Mr Burnham championing our industry and recognising just how vital pubs are to the heart of local communities.

 

“To build on this, I’d love to see the government keep going, particularly around the recent hikes in employer National Insurance and our industry’s 20% VAT rate, which remains among the highest in Europe. But today is a strong indication of support for our sector, and we look forward to working together on what comes next.”

 

The British Beer and Pub Association CEO Emma McClarkin said they were “delighted” that Burnham “has swiftly acted on our concerns and provided new backing to our nation’s pubs as he promised”.

 

Similarly, the Campaign for Real Ale (CAMRA) chairman Ash Corbett-Collins hailed this support package as “a brilliant start to the new Prime Minister’s tenure, living up to the statements that he’s made before about pubs, pints and people”.

 

Adam Handling, chef-owner of restaurants in London, Cornwall and Berkshire including the Newquay’s Michelin-starred Ugly Butterfly said: "It feels like the government is trying to make the support it’s giving hospitality sound better than it actually is. There have been so many different versions of ‘we’re reducing business rates’ but, realistically, the only time we’ve really felt the benefit was with the support that came after Covid.

 

“I also don’t really understand why restaurants seem to be getting left out in favour of pubs. As a collection, we have pubs and bars but we also have high-end restaurants and they’re not seeing the same relief at all. 

 

“VAT is a strain every single month across all of our sites. Hospitality has been asking for meaningful support for a long time now, so the question really is: when are we actually going to see something that makes a genuine difference?”

 

In an open letter to the new Prime Minister following the announcement of today’ rates relief package, co-founders of Cornwall’s St Moritz Hotel Hugh and Steve Ridgway said: “Whilst you’re on fire with common sense announcements like this, can we please politely prod on the glaring fact that you need to add hotels to the reduced rates list immediately, whilst applying a ‘deep slash’ to VAT? Not next Budget, now.

 

“Anything less is only half a policy – and therefore half a win.”