Andy Burnham warned to ditch 'sin tax' or risk breaking Labour manifesto

Andy Burnham risks breaking one of Labour's key election promises unless he goes further with business rates reform, industry leaders have warned.

Hospitality bosses argue the current system unfairly penalises businesses that employ large numbers of staff and operate from physical premises, describing business rates as a "sin tax".

Allen Simpson, chief executive of UKHospitality, said it was "vitally important" that the Government follows through on Labour's 2024 manifesto commitment to "scrap the business rate system and replace it with something else".

Mr Simpson argues that the incoming Prime Minister must overhaul the current system or risk failing to deliver on the party's pledge to replace business rates altoget

He warned that failing to reform the system could add to the 130,000 job losses already seen across the hospitality sector.

Labour's 2024 manifesto pledged to replace the business rates system and create a fairer tax regime between high street businesses and online retailers.

Mr Burnham has already announced plans to expand business rates relief for smaller firms, funded by higher taxes on large out-of-town warehouses.

However, Mr Simpson said the proposals were only "a good start" and urged the Government to go further by extending support to larger hospitality businesses as well.

"Our tax system doesn't pick on small business; it picks on people-heavy business and place-heavy business," he told City AM.

He argued the current system unfairly penalises businesses that employ large numbers of staff and operate from physical premises, describing business rates as a "sin tax".

"It encourages you to shut down your restaurant on a high street and open a dark kitchen on an industrial estate," he said.

The group, which includes the Institute of Directors and the British Independent Retailers Association alongside UKHospitality, argues the current system unfairly benefits online sellers.

They say calculating tax based on property values rather than how much profit a business makes creates an uneven playing field.

The Alliance claims the Treasury could slash business rates bills for physical shops by 37 per cent through introducing a two per cent levy on online sales.

Ros Morgan, who chairs the group, explained she has already been in contact with Mr Burnham's team and is working to arrange a direct meeting with him.

She said the proposal would "make an enormous difference to his leadership, the finances of the country and also in terms of business growth and employment".

Ms Morgan dismissed Labour's previous attempts to address business rates as "sticking-plaster solutions" that only created more "confusion" for companies.

Budget changes announced by Rachel Reeves last year pushed up bills for thousands of hospitality businesses, sparking a backlash that led to a £300million relief package for pubs.