Pubs, clubs and live music venues in England will receive a 20% cut to their business rates bills from April under plans unveiled by Andy Burnham as part of a £10m package aimed at supporting high streets and easing cost of living pressures. The prime minister said the package would be fully funded, including through a review of relief for businessesdeemed not to make a positive contribution to communities, such as vape shops. Other cost of living measures announced this week – capping bus fares at £2 and cutting VAT on electricity bills – have prompted questions about how they will be funded, with the new administration under pressure to set out the detail of its plans.

Burnham, who took office on Monday, has promised to give people “more breathing space” on living costs through a series of policy interventions, as he attempts to demonstrate to an often sceptical public that government can deliver meaningful change. The business rates cut will benefit almost 32,000 pubs, clubs and live music venues, according to the government, with the typical pub expected to save an estimated £1,100 in the next financial year. The support will be targeted so that the largest live music venues are excluded.

Hospitality groups are expected to welcome the announcement, which they have argued will create much-needed certainty for businesses looking to invest, grow and create jobs during a period of growing financial pressure. The measure builds on the 15% business rates relief for pubs and live music venues announced by Rachel Reeves this year, as Covid-era relief ended and new revaluations took effect, with bills frozen in real terms for a further two years. “For too long, governments have stood by while cherished venues have disappeared from our local high streets.

So today I am changing that,” the prime minister said. “This government will back the businesses that people want to see in their communities. I said I would protect pubs and local high streets – the beating heart of our communities – and that’s what we will do.” The new chancellor, John Healey, said the government remained committed to overhauling the wider business rates system, including relief for small businesses, at the budget.

Ministers also plan to crack down on businesses that sell through online marketplaces but do not comply with their tax obligations, putting them at an unfair advantage over those that do, and is consulting on measures to make those marketplaces more responsible for this. Tina McKenzie, the policy chair of the Federation of Small Businesses, welcomed the proposal but said it must be a “downpayment” on further action to help small businesses more broadly at the next budget. “Failure is not an option,” she said.

“We are encouraged at the signal from the prime minister today, instructing his government to plan for a significant increase in small business rates relief at the heart of the next budget,” McKenzie added. “This would deliver on promises made campaigning for the role, and fix the damage caused by business rates decisions that sent bills up and are holding back SME growth and jobs in every postcode.” Kate Nicholls, the chair of UKHospitality, gave the announcement a qualified welcome.