The government has announced a rates cut for pubs, clubs and live music venues, and for a room that is losing money now, eighteen months is a long time to hold your breath
The Business Rates Cut for Venues
Ask anyone who runs a bar or club in Shoreditch what keeps them awake and you will hear four things, usually in the same order. Rent. Rates. Licensing. And the building being sold from under them.
On the second of those there has been some news, and I want to look at it carefully, because it is both real and late.
The Announcement
A guide to the state of London’s clubs, published this summer, records it. On 23 July 2026 the government announced a 20 per cent business-rates cut for pubs, clubs and live music venues in England from April 2027.
That is a specific commitment to a specific sector, which is more than the trade has had for some time.
The Diagnosis
The same guide offers a clear account of why venues are closing, and I think it is right.
The squeeze, it says, comes from four directions at once: rising operating costs, a punishing business-rates system, restrictive and inconsistent borough licensing, and redevelopment pressure on the land underneath the dance floor.
And it makes a point that is easy to miss. What is not driving the closures is a collapse in demand. It cites the trade body’s reading in May that demand is changing rather than disappearing, while the venues that host it are being priced and planned out of existence.
That matches what I see. People still want to go out. They go out differently: earlier, less often, to something particular. But on a good night the rooms that remain are full. The problem is not empty dance floors. It is that a full dance floor no longer pays the bills.
Why Rates Hurt So Much
Business rates are a tax on the premises a business occupies, based on what the property would rent for.
For a venue this is peculiarly harsh. A club needs a large space in a central location. Both of those make the rateable value high. But it trades for perhaps three nights a week, a few hours each. An office in the same building is used fifty hours a week by people generating fees. The club pays a tax assessed on prime central property and earns from it on a Friday and Saturday.
And rates are due regardless of takings. A bad month, a closed month, a month when the Overground was on strike: the bill is the same.
During and after the pandemic there was substantial relief for hospitality and leisure. It was then scaled back. Operators who had budgeted with the relief found the bill more than doubling. Several closures I have reported followed within months of that.
What Twenty Percent Is Worth
For a mid-sized venue in this neighbourhood, a rates bill of sixty to a hundred thousand pounds a year is not unusual. A fifth off that is twelve to twenty thousand.
That is not trivial. It is a member of staff. It is the sound system serviced and the toilets fixed. For a place operating at the margin, it could be the margin.
It is also less than the relief that was withdrawn. And it does nothing about the other three pressures.
April 2027
The date is the difficulty.
A venue that is losing money in the autumn of 2026 has to get through this winter, next spring and next summer on the present bill before any help arrives. The first reduced payment is the better part of a year off.
I spoke to someone who manages a basement club off Old Street. She was grateful for the announcement and blunt about the timing. Her lease has a break clause next June. Her landlord has indicated the rent will rise. She said, “If I’m still here in April I’ll be delighted to pay twenty per cent less. I’m doing the sums on whether I will be.”
That is the trouble with relief announced for the future. The venues strong enough to survive until it comes need it least.
Why the Delay?
There are reasons, and they are not discreditable.
Business rates are set on a yearly cycle that begins in April. Changing them mid-year is administratively awkward and councils, who collect the tax, need notice. A change to the system requires legislation or regulations. And the government has very little money. Every report on this autumn’s Budget says so. A cut that starts later costs less in the current year.
The Treasury would add that announcing it early gives operators certainty. They can plan, and show a landlord or a bank that costs will fall.
I accept all of that. I also think that if you see somebody drowning, a promise to throw a rope next spring is of limited use.
Is a Rates Cut the Right Tool?
There is a more searching criticism.
When a tenant’s costs fall, a landlord can raise the rent. In a neighbourhood like this one, where demand for space is intense, there is every chance that a twenty per cent saving on rates will find its way, over a few years, into the freeholder’s pocket.
That has been observed with rates relief before. The tax falls on the occupier, but its burden is shared with the owner. Reduce it and the owner captures some of the benefit.
So a rates cut helps in the short term and may be absorbed in the long term. The lasting problem is the value of the land.
The Land
That brings me to the fourth pressure, which the guide puts well: the venues closing are mid-sized independents on redevelopment land.
A club occupies a site that, with planning permission, could hold an office block or a hotel. To the owner, the club is what you do with the building while waiting for something better. No reduction in rates changes that sum.
What would change it is planning protection: a rule that a venue cannot be redeveloped unless an equivalent space is provided. The taskforce report this year made recommendations in that direction. That is where the fight really is.
Credit Where It Is Due
Having said all that, I do not want to be churlish. For years the trade asked for help with rates and was told there was no money. A government has now singled out pubs, clubs and music venues and committed to a permanent reduction. That is recognition that these places are worth something beyond their turnover.
It would be better sooner. It would be better alongside action on licensing and on land. But it is the first time in a long while that the news has pointed the right way.
If you run a venue: make sure you are correctly classified so that you qualify. Check your rateable value, and challenge it if it looks wrong. And tell your landlord, in writing, that you know about the cut and expect to keep it.
The London Prat, whose own premises have been rated as a public nuisance, considers the matter in its English satirical news on rates relief for pubs and its UK satirical news about help arriving next year. Bohiney Magazine covers a country where the bar is taxed by three governments at once.
SOURCE: https://bohiney.com/
