Since taking power on Monday, Andy Burnham has also said he will remove a tax from domestic electricity bills and cap bus fares, eager to show that he can act more decisively than his predecessor Keir Starmer.
"This government will back the businesses that people want to see in their communities," said Burnham, a former mayor of Greater Manchester.
Finance minister John Healey, who also started his job this week, said he wanted to go further on reducing the cost of doing business in Britain to lift pessimism around the economy.
Burnham said the cut to hospitality business rates would save the typical pub about Stg1100 ($A2100) in 2027, benefiting nearly 32,000 venues.
The policy will cost the government Stg100 million a year, and is sure to be welcomed by small independent venues as well as pub groups such as JD Wetherspoon, Marston's and Fuller, Smith & Turner.
But it falls short of the hospitality industry's demand for a halving of the sales tax for the sector.
The government said the tax cut would be funded by a review of relief for businesses such as vape shops that "do not make a positive contribution to local communities", and a tax crackdown on businesses that sell through online marketplaces.
Burnham had previously floated the idea of hiking business rates on warehouses used by online giants such as Amazon to help businesses on traditional high streets.
While the cost of support being granted is small, Burnham is trying to show he can move more quickly than Starmer who, in 2024, spent the first few months of Labour's first government in 14 years commissioning reviews into possible policy changes.
Burnham also needs to rebuild relations with the business community, which has complained that taxes on employment and energy, in addition to higher wages, have hammered their ability to invest and grow.
The recent resurgence of the Iran war has spurred fresh concerns about higher energy prices and possible interest rate increases, hitting business confidence.
Healey said he understood the frustration among employers and was as worried about the high cost of doing business in general as he was about the cost of living.
"This is just the start," he told an event at Bloomberg in the City of London financial district.
"We know we've got a lot further to go."
