Pubs, clubs and music venues to get 20% cut to business rates from April

Prime Minister Andy Burnham has announced that business rates are set to be cut by 20 per cent for pubs, clubs and live music venues across England from April next year, with the discount applying to nearly 32,000 hospitality businesses.

Susannah Streeter, chief investment strategist at Wealth Club, said: “Shares in pub operators haven’t benefited from a Burnham bounce, despite the Prime Minister’s announcement of a 20 per cent cut to business rates for night-time hospitality businesses.  Wetherspoon’s shares continued their descent, with investors still reeling from yesterday’s downbeat update.

“Fresh clouds have also scuttled over the sector after Mitchells & Butlers, the owner of brands including Harvester, Toby Carvery, All Bar One and Miller & Carter, warned that the recent heatwave dented food sales. The hot weather has been a bittersweet brew,  filling beer gardens but emptying dining tables, with customers choosing another round rather than another course. While that kept drinks sales flowing, it was a less profitable sales mix as food serves up the fatter margins.

“Given operators had been calling for much steeper relief, such as a cut in VAT from 20 per cent to nine per cent, bringing the UK more into line with European peers, today’s measures look more like a small top-up than a game-changing pint of support. Investors are also mindful that hospitality businesses continue to grapple with higher wage bills, elevated National Insurance contributions and stubborn input costs, all of which continue to squeeze margins.

“Another headache is brewing with crude oil prices climbing again, raising the prospect of higher transport, logistics and energy costs filtering through supply chains in the months ahead. That threatens to pile further pressure on margins at a time when operators are already finding it difficult to pass higher costs on to increasingly value-conscious consumers.

“So, while the business rates cut is a welcome gesture, it’s not enough to dispel concerns about the sector’s longer-term profitability. Far from providing bubbles of cheer, today’s announcement has had a flat response.”