Prime Minister Andy Burnham has indicated he will "go further" on business rates reform, building on his early announcement of property tax cuts for pubs funded by higher levies on vape shops.

Business rates — the tax levied on non-residential property in England, calculated based on the rental value of a property — have long been a source of tension between high-street operators and government, with retailers arguing the system places them at a structural disadvantage compared to online competitors who operate with smaller physical footprints.

In an interview with the BBC, Burnham said he is prepared to introduce more sweeping changes to the business rates system as part of broader efforts to address the cost of living. He confirmed that additional measures would be unveiled alongside Chancellor John Healey at this year's Budget, scheduled for 28 October.

A policy granting pub and nightclub landlords a 20 per cent relief on rates was among the first initiatives announced by Burnham after entering Number 10.

"I wouldn't want to promise the earth and say all can be solved because I think people can see I'm facing a difficult financial outlook and I won't bring forward things that I can't fully fund," Burnham said.

"We've made a move on pubs and business rates. I'm signalling going further on business rates. So there are things that we can do, and we'll do everything that is possible for us to do. But I think everyone knows that I'm in a position with limited room for manoeuvre."

Burnham's remarks suggest that further business rates reform could be a centrepiece of the new government's first Budget, echoing changes previously introduced by tax minister Dan Tomlinson.

In 2025, Rachel Reeves, Healey's predecessor as Chancellor, announced revisions to Covid-era reliefs and tax multiplier formulas. Those changes triggered significant backlash from pub landlords and airport operators, who faced sharp increases in their tax burdens. Reeves subsequently reversed course on pub-related changes by introducing a temporary 15 per cent discount on bills. Hotels, restaurants, and cafes also reported being adversely affected by the reforms. The episode underscored the political sensitivity of business rates changes, which can shift costs sharply between sectors depending on property values and relief formulas.

Campaigners Urge Online Sales Levy

The Real Rates Reform Alliance, a campaign group advocating for business rates overhaul, said it is "hopeful" that Burnham will deliver "desperately-needed" changes at the Budget.

"Every business that invests in physical premises, from retailers and manufacturers to offices, hotels, theatres and leisure businesses, is being held back by an outdated property tax that penalises investment, suppresses growth and puts jobs at risk," said Ros Morgan, chair of the Real Rates Reform Alliance.

"We are more than willing to offer our expertise and work with the government to achieve genuine and long-lasting change. The time is now."

The group has proposed that a small levy on online sales could help reduce business rates and enable firms to reinvest in physical premises. The proposal taps into a wider debate that has persisted since the growth of e-commerce, with successive governments under pressure to find a tax framework that treats online and physical retailers more evenly without discouraging digital commerce.