Pubs, bars and hotels report ‘Burnham bounce’ in optimism but call for further tax relief

Restaurants, bars, and hotels in the UK have reported a positive change in sentiment following the government's business rates action, according to a survey conducted by various trade bodies. The prime minister, Andy Burnham, has positioned himself as a strong supporter of the country's hospitality industry, announcing a discount on business rates for pubs, clubs, and live music venues.

As a result, 37% of businesses in this sector believe that the government will benefit their industry, which contributes approximately £100bn to the economy. This level of optimism is more than double the 18% recorded before the business rates policy was introduced, a trend that the trade bodies refer to as a "Burnham bounce".

While the government has indicated further reforms to business rates to alleviate the pressure on the sector, some venue owners have expressed that the current measures have not significantly reduced their mounting costs. The survey results, shared with the Guardian, also indicate that the industry perceives tax burdens, particularly VAT, as the main obstacle to their growth. Three-quarters of respondents identified tax as the most significant barrier, with political instability placing second.

The trade bodies, including the British Beer & Pubs Association, UK Hospitality, the British Institute of Innkeeping, and Hospitality Ulster, emphasized that while the government's initial actions have boosted sector optimism, more substantial support is required for the hospitality industry to flourish and generate employment. They argue that a lower VAT rate, wider permanent business rates reform, and changes to employer NICs would help the prime minister achieve his ambitious goals for the sector across all neighborhoods.

Over 330,000 individuals have also signed a petition advocating for the government to reduce VAT on hospitality from 20% to 10%, a move aimed at aligning the sales tax with the levels in many European countries. However, critics argue that this approach could be inefficient and would cost more than £10bn, with a significant portion benefiting large, profitable multinational chains.