Andy Burnham has pledged to cut business rates for pubs by 20 per cent if he becomes Prime Minister, setting out his first major policy proposal amid growing speculation over Labour's leadership.
The Greater Manchester Mayor, who is standing in the Makerfield by-election, also proposed abolishing business rates entirely for cafés, hairdressing salons and retail shops.
In a criticism of Labour's approach to high street taxation, Mr Burnham said: "I am willing to be honest about where we have fallen short and say that my party has got this wrong in Government."
The Makerfield candidate added that Labour had "undervalued the contribution these businesses make to our livelihoods and our communities".
Small businesses have faced a series of increased costs since Sir Keir Starmer and Chancellor Rachel Reeves entered Government in July 2024.
The Chancellor increased employers' National Insurance contributions in November while also raising the minimum wage, adding to costs for hospitality and retail businesses.
Changes to the business rates system have also seen properties revalued and pandemic-era relief measures withdrawn.
UKHospitality warned earlier this year that the average pub could face a 15 per cent increase in business rates bills.
Andy Burnham pledges pub business rates cuts as leadership speculation grows
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Some industry estimates suggested bills for certain establishments could rise by as much as 37 per cent.
An average of four pubs per day have announced closures since January despite support measures introduced by the Government at the start of the year.
Mr Burnham said the proposed tax reductions would be funded through higher taxes on major technology companies and their warehouse operations in Britain.
Online retailers have experienced significant growth since the Covid pandemic, leading to criticism from some business groups that they pay less tax relative to traditional high street operators.
The proposed additional 20 per cent reduction in business rates from 2027-28 would cost an estimated £100million.
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Mr Burnham has been out campaigning in Makerfield ahead of the by-election
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Mr Burnham also proposed increasing the rates-free threshold from £12,000 to £18,000.
He said: "Reconnecting Labour to working-class Britain means backing our high streets and reconnecting with our local family-run businesses."
Mr Burnham added that he wanted to ensure "family-owned businesses, as the heart and soul of this country, are protected and given the chance to thrive".
The policy package has been presented as an attempt to create what he described as "a fairer tax system" for businesses in Makerfield.
Mr Burnham also confirmed during a television appearance on Thursday evening that he would consider entering a future Labour leadership contest.
He said: "I think Wes Streeting seems to have launched a leadership contest, so if that is running, I would seek to join it."
Nearly 100 Labour MPs have reportedly urged the Prime Minister to provide a timetable for his departure following last month's local election losses.
Mr Streeting, who is positioned on the party's Right, resigned as Health Secretary last month and has indicated he would consider standing in any future leadership contest.
Downing Street rejected suggestions Sir Keir could step aside, stating that Britain did not need the "distraction" of a leadership battle and insisting the Prime Minister would not "walk away".
The latest polling in Makerfield placed Labour on 49 per cent, giving the party a 10-point lead over Reform UK.