North East hospitality and business groups have welcomed new cuts to business rates bills for pubs, clubs and live music venues – but say the cuts do not go far enough to help the sector.
Prime Minister Andy Burnham has announced a 20% cut in rates specifically for social clubs, pubs and music venues, which is set to come into force next April – moves which Labour say will save the typical pub an estimated £1,100 next year.
Support for high streets
The measures have been created to “support the backbone of local high streets”, where the Government says that venues have been replaced by boarded up windows and for sale signs for too long. The announcement forms part of wider plans to drive good growth in towns and cities, by lowering the burden on local businesses, boosting investment on high streets and helping communities to thrive.
And the moves will also include reviewing reliefs provided to firms the Government says do not make a positive contribution to local communities, such as vape shops. Labour North says 435 licensed clubs and 1,660 bars and public houses will benefit from the moves.
Calls for wider reform
Hospitality groups and business leaders have been quick to welcome the slashing of the rates, but called for them to be extended to all businesses operating in the sector.
Stephen Patterson, CEO of NE1 Ltd, Business Improvement District company for Newcastle city centre, which represents 1,400 businesses, said: “We welcome this news and the positive impact it will have on many businesses in Newcastle and the rest of the country, but clearly more needs to be done and for the whole hospitality sector. This will provide immediate relief for many businesses and will buy the Government time to address the much-needed fundamental reform of the Business Rates system.
“The last two budgets have had a catastrophic effect on many businesses and the Business Rates cut is an important step in the right direction towards redressing the balance. Perhaps more importantly, it signals a clear acknowledgement that further help is needed to support this vital sector of the economy.”
NE1 Ltd’s calls were echoed by The Core Newcastle Hospitality Association, which launched in March to give a voice to bars, restaurants, hotels, and entertainment venues across the city.
Nick Kemp, head of operations, said: “We welcome the Government’s decision to reduce business rates for pubs, clubs and live music venues. It is a positive step by the new Prime Minister and a positive recognition of the important contribution hospitality makes to our economy, our communities and the vitality of our city.
“However, this should be the start, not the end, of reform. Many hospitality businesses that are equally important to Newcastle’s economy and visitor offer—including restaurants, cafés, coffee shops, hotels, independent eateries, and other hospitality venues—are not covered by these changes. They too face significant cost pressures and should be included as part of any long-term reform of the business rates system.
“For those businesses that do benefit, the reduction will provide some welcome relief, but it will not fully offset the additional costs introduced over the past year, including higher employer National Insurance contributions and increases in the National Living Wage. Many operators are still facing very challenging trading conditions.
“We would like to see a broader package of support that includes meaningful business rates reform across the whole hospitality sector, consideration of VAT, and policies that help businesses invest, grow and create jobs. Hospitality is one of Newcastle’s greatest strengths, and supporting the entire sector is an investment in Newcastle’s economy, culture and future.”
Meanwhile, Rachel Anderson, assistant director of policy at the North East Chamber of Commerce, said: “Pubs, clubs and live music venues are an essential part of our towns and city centres, creating jobs, attracting visitors and providing spaces that bring communities together. The announcement of a 20% cut in business rates for these businesses is welcome and demonstrates recognition of the pressures the sector continues to face.
“However, while this targeted support is positive, it must be part of a much broader conversation. The current business rates system is outdated and continues to place an unfair burden on many businesses.
“We need to see meaningful progress on a wider review of business rates that delivers a fairer, more sustainable system, giving businesses the confidence to invest, grow and support local economies for the long term.”
Impact on the region
Increased costs and business rates burdens have proved to be a major challenge for all businesses in the North East, including bars, restaurants, clubs and cafes. The last few years have seen a number of high profile hospitality closures across the region, including Horticulture bar and restaurants in Newcastle and Whitley Bay, the Earl of Pitt Street in Newcastle, which has since been turned into a new restaurant, Ophelia in Gosforth, and Peace and Loaf in Jesmond.
This week, family business Wyvestows in Westoe, South Shields also announced it is closing for good on July 25, while Pigalos in North Shields has announced it has shut down with immediate effect.
Lewis Atkinson, MP for Sunderland Central said: “The third announcement in as many days that will have a huge impact on people in Sunderland. Our city is a proud music city, and a business rates cut for pubs, clubs and live music venues will make a real difference to those running these venues, which are at the heart of this city.”
Last week it emerged that £2.2m is set to be awarded to protect venues offering a launchpad for the North East’s musicians, comedians, and other creative talents. A new funding pot has been promised to help grassroots venues across the region that are under pressure due to rising costs and in need of a fresh injection of cash.
