New licensing powers for City Hall must be paired with a reduction in the tax burden to revive London’s nightlife scene, ministers have been told.
Credit: Caroline Teo/GLA
New licensing powers for City Hall must be paired with a reduction in the tax burden to revive London’s nightlife scene, ministers have been told.
New rules allowing the Mayor of London to intervene in licensing applications deemed strategically important came into force earlier this week.
Sir Sadiq Khan said the extended powers “create an opportunity to further champion London’s amazing venues, particularly our hospitality industry”, despite concerns that powers were being shifted from councils to City Hall.
It comes after years of the capital’s venues struggling to stay afloat, primarily due to soaring operating costs, high business rates and inconsistent licensing laws.
Hospitality and business groups welcomed the latter being addressed, although they have now called for levies on London’s hospitality sector introduced last year to be reversed.
57% of London’s pubs and clubs will shut down by 2030, according to a forecast last year from credit card firm Capital on Tap.
Last April, former Chancellor Rachel Reeves faced heavy criticism for choosing to top up the public finances with an extra tax on businesses.
The policy, intended to raise £25 billion from companies nationwide, saw National Insurance (NI) rates increase from 13.8 per cent to 15 per cent, while the payment threshold fell from £9,100 to £5,000.
Asked if he would lobby for lower taxes on nightlife venues to help boost the sector, Sir Sadiq told the Local Democracy Reporting Service (LDRS) that City Hall managed to stop the bleeding when he came into office but admitted the sector has struggled since the pandemic.
“Before 2016, there was almost a 50 per cent reduction in nighttime venues in London, including grass roots venues,” he said. “We managed to first plateau that, and then have an increase of nighttime venues in London, and then the pandemic happened. Brexit was bad enough, and then the pandemic compounded it.
“The good news is, in the recent past, we’ve seen new venues opening in London.
“We’ve managed to keep the specialist venues, but it’s been really hard for them for a combination of reasons.
“Yes, the cost of doing business – you are right to recognise that, but also the consequences of a lot of their staff leaving because of Brexit. High interest rates, caused by Liz Truss’s Budget.
“I’m really pleased that Andy Burnham’s recognised the challenges in hospitality with the VAT reduction and the business rates reduction.
“We’ve got to be supporting the sector. I’m hoping, also, that the work Alan Milburn is doing around getting more young people who are not in employment, education, and training will be a wake up call to the importance of this sector, because for many people, this is a first job.”
In September the Prime Minister introduced a 20 per cent cut in business rates specifically targeting pubs, clubs, and live music venues, but many businesses say this is not enough to keep them afloat.
The Mayor has now faced increasing calls to press his party colleagues in government to stop “taxing [nightlife] out of existence”.
Michael Kill, CEO of the Night Time Industries Association (NTIA), said: “The Mayor’s new licensing powers represent a significant opportunity to reset the relationship between London’s nightlife and those responsible for regulating it. However, regulatory reform alone will not be enough to reverse the pressures facing the capital’s night-time economy.
“Venues across London are already grappling with an increasingly unsustainable tax burden, rising operating costs and mounting financial pressures. It is contradictory to talk about unleashing London’s nightlife while businesses are being weighed down by punitive taxation that threatens their very survival.
“We would absolutely urge the Mayor to use his influence to lobby the Government to review and reverse these damaging tax measures. If we are serious about restoring London’s position as a world-leading 24-hour city, we need a joined-up approach that combines progressive licensing reform with meaningful fiscal support.
“The Mayor now has an opportunity to champion the sector not just through licensing powers, but by making the case to Westminster that nightlife is a vital economic, cultural and social asset.”
Kate Nicholls, the chair of UKHospitality, told the LDRS that the tax burden needs to be kept “as low as possible” to help nightlife thrive in London.
“Undoubtedly, you’ve got a problem with national government,” she said. “The cost of doing business that has gone up exponentially.
“If businesses can’t afford to operate and open late at night, then you do have challenges there, and two thirds of our businesses say they’re restricting their capacity, their occupancy, or their hours of opening because of the tax burden. That’s where we want to work with the boroughs, with the mayor, and national government to make sure that we’ve got the best framework possible to help these businesses thrive and grow, because culturally, economically, socially, they’re so important.”
Sam Spencer, Director of Live Operations at Broadwick Live and a Member of City Hall’s London Nightlife Taskforce, added: “Giving the Mayor a stronger role in licensing is a positive step. In the Nightlife Taskforce report, we called for a clearer, more consistent approach across London that recognises what nightlife brings to the city.
“Our industry is being given seats at the table locally and nationally. Now we need those conversations to deliver financial breathing room for the people running venues. National government has a big part to play in that.
“Everyone celebrates what British nightlife has given the world. Now we have an opportunity to back the people creating its future.”
Earlier this year Sir Sadiq’s Deputy Mayor for Business, Howard Dawber, refused to outright condemn the tax rises, instead suggesting it was necessary to balance the books in the early years of the Labour government.
Emma Best, Deputy Leader of the City Hall Conservatives, admitted that new licensing powers are “welcome” but said the Mayor now needed to “lobby his own Government to fix some of the greatest root causes of decline in the hospitality sector” to ensure businesses survive.
“Without fundamental change, granting him licensing powers is no different than rearranging deckchairs on a sinking ship.”
A Treasury spokesman said: “We’re giving business more breathing space. This Budget means retail, hospitality and leisure properties will see their business rates frozen in real terms, reduced or cut to zero next year, with over half of the high street not paying business rates at all.
“We’re also capping Corporation Tax at 25 per cent, helping businesses with the cost of hiring young people and backing firms to take on apprentices, as part of our wider plan to support businesses to invest, grow and create jobs.”
