‘A small snippet’: what pubs make of Burnham’s £100m rates giveaway

Dan Smith, owner of the Red Lion pub in Derbyshire, says he sells 300 pies a week. Photograph: Andrew Fox/The Guardian View image in fullscreen Dan Smith, owner of the Red Lion pub in Derbyshire, says he sells 300 pies a week. Photograph: Andrew Fox/The Guardian ‘A small snippet’: what pubs make of Burnham’s £100m rates giveaway Landlords say high costs of running hospitality business outweigh potential savings of business rates discount One of Andy Burnham’s first policy measures as prime minister is a 20% reduction in business rates for pubs, clubs and live music venues. The policy, announced on Thursday, is part of a broader agenda to support the high street and will cost £100m. So how does the policy measure up in the context of running a business and where does the money on your bar bill actually go? Also, can the rates reduction halt a trend in pub closures, running at about one a day ? A pie and a pint, Red Lion, Hollington, Derbyshire You pay: £20.50 Pub profit: £2.97 View image in fullscreen Photograph: Andrew Fox/The Guardian The Red Lion serves 15 types of pie, 15 types of potato side dish, 15 types of veg and 15 types of gravy but the most common order is a steak and ale pie with chips, cauliflower cheese and onion gravy, washed down with a pint of Bass. “We’re the place for pies,” says Dan Smith, who owns the pub in Derbyshire. “Over the course of a week, we’d sell about 300 of them and get through about six 25kg sacks of potatoes from a farmer up the road. A local brewery does our own beer, the Pie & Glory, but the Bass is our most popular.” Smith says he used to pay no business rates at all thanks to relief provided for rural businesses. Now he pays about £680 a year and has already seen his estimated bill oscillate several times because of successive policy tweaks, including a nationwide property revaluation. “They’ve made it 10 times more complicated than it needed to be,” he says. Business rates account for about 16p of a pie and a pint, he reckons, compared with VAT of £3.42. “I’m not going to knock it [the business rate cut], it’s showing willing from Mr Burnham. But it’s a small snippet,” says Smith. He supports a hospitality-wide campaign to cut VAT from 20% to 10%, a measure that Burnham supported when he was mayor of Manchester. That could cost the Treasury an estimated £10bn. The breakdown Ingredients: £6.48 VAT: £3.42 Staff: £3.88 Employer’s taxes: £0.74 Utility bills, operating costs and mortgage: £2.85 Business rates: £0.16 View image in fullscreen Andy Burnham at the Hare pub in Harlow, Essex, on Thursday after announcing a tax break for the hospitality industry. Photograph: Richard Pohle/The Times/PA A typical hospitality business Turnover: £1m Profit after tax: £13,500 Packed House is a family-run consultancy that acts as a commercial director for independent hospitality businesses and provides a breakdown of annual costs for businesses with a turnover of about £1m. Colm O’Leary, the director at Packed House, says: