Pubs, social clubs and live music venues in England will be given a 20% cut to business rates from April, with new Prime Minister Andy Burnham calling it a “first step” to help the industry.
It is his third policy announcement since entering No 10, and the government estimates the plan will save firms around £1,100 next year.
With a cost £100m, it will be funded by a review of tax relief on firms such as vape shops which “do not make a positive contribution to local communities”, the government said.
Some hospitality firms welcomed the move but others in the industry, such as hotels and restaurants, questioned why the 20% cut would not extend to them.
Speaking from a pub in Essex, Burnham said pubs in particular “need to know that the cavalry is coming”.
Pubs have now had two rounds of relief – a 15% cut in April and a further 20% which will come into force next year.
The business rates discount will not apply to the “very largest” live music venues.
Details about which businesses are eligible will be announced at Chancellor John Healey’s first Budget in the autumn. The cut is expected to benefit almost 32,000 venues.
The BBC understands most nightclubs will not be eligible for the cut. The Treasury said the measure was intended for social clubs – such as working men’s clubs.
Under the current tax reliefs for pubs and live music venues, local authorities are left to decide which venues are eligible for business rates relief “where eligibility is unclear”, but nightclubs are specifically excluded in that guidance.
The BBC understands definitions of venues eligible for the upcoming cut will be similar to those in that guidance.
The Night Time Industries Association, which earlier welcomed the announcement, told BBC Newsbeat it was seeking clarity on the eligibility for the scheme.
Chief executive Mike Kill added: “We look forward to working constructively with Government to ensure nightclubs are fully recognised within these measures.”
UK Hospitality’s chief executive Allen Simpson said Burnham’s plans are “a good start”.
But he added: “Neither hotels nor restaurants have had the help they need. We’ve got to see a proper solution for the most overtaxed sector in the economy at this year’s Budget.”
Iain Hoskins, who owns Ma Pub Group in Liverpool, told the BBC the relief would help “chip away” at rising costs but questioned how many venues would benefit.
It could be “very meaningful”, he said, but “as always, the devil is in the detail”.
His pubs have previously missed out on government business rates support, and “the increases were so huge last year that now we’re sort of chipping away at some of those increases”.
Under the previous chancellor Rachel Reeves, the government said last year it would scale back business rate discounts that had been in force since the pandemic and announced that there would be no discount at all from April this year.
That, combined with big upward adjustments to rateable values of pub premises, left landlords with the prospect of much higher rates bills.
Following criticism from the hospitality industry, the government cut business rates for pubs and music venues by 15% earlier in 2026.
The 20% discount will apply on top of the existing support.
Commenting on the cut which comes into effect next year, Steve Perez, founder of soft drinks company Global Brands and an owner of two hotels, said the announcement is “welcome… but this won’t make any material difference to any pub”.
The change to business rates for some hospitality firms is the latest move in what Burnham hopes will provide “breathing space” for people and businesses.
Earlier this week, the new prime minister announced that the government would cut the 5% VAT charge on electricity bills and would cap bus fares at £2 in England outside London.
But on Thursday, Conservative leader Kemi Badenoch, said: “When I look at the plans that he has announced for the country I find myself asking ‘is that it’?”
She said: “Andy Burnham’s ambitions for Britain are too small.”
As well as reviewing tax relief on firms such as vape shops and gambling arcades in order to fund the rate cut, the government also said it will “crack down” on businesses selling through online marketplaces which “do not comply with their tax obligations”.
The Federation of Small Businesses (FSB) said Thursday’s announcement must be “a downpayment on action that reaches across the small business community”.
FSB policy chief Tina McKenzie said the plans were encouraging and fix the damage caused by past business rates decisions which are “holding back small business growth and jobs in every postcode”.
The 5% VAT cut for electricity bills – the first of Burnham’s cost of living measures announced this week – is estimated to save a household using a typical amount of energy about £45 a year.
The chancellor and energy secretary have set energy suppliers a deadline of Friday to confirm they will pass on in full October’s cut in VAT on electricity bills to their customers.
John Healey and Miatta Fahnbulleh have written a joint letter to suppliers pressing them to ensure customers – including those on fixed tariffs – benefit.
The policy will be in place from October to April, with any possible extension to be confirmed in the next Budget.
The letter comes as oil prices hit $100 a barrel for the first time since May as the escalating conflict in the Middle East reignited fears over global energy supplies.
