The Labour government is poised to announce a significant reversal of its policy on business rates for pubs, following a fierce backlash from the hospitality industry and its own backbenchers.
Budget Decision Sparks Widespread Anger
In the November budget, Chancellor Rachel Reeves committed £4.3bn in support for retail and hospitality over three years. However, she also confirmed the end of business rate discounts introduced during the Covid-19 pandemic. This change, combined with a property revaluation, was set to cause dramatic increases in the tax bills for pubs, restaurants, and hotels from April.
The figures were stark: business rates were projected to rise by 115% for the average hotel and 76% for a pub. In contrast, large supermarkets faced a mere 4% increase, and distribution warehouses just 7%. Whitbread, the parent company of Premier Inn and numerous pubs, warned it would face an additional tax burden of between £40m and £50m.
Pressure Mounts from Industry and MPs
The planned changes triggered immediate and vocal opposition. The pub industry launched a concerted campaign, urging ministers to reconsider. The discontent spread to the Labour backbenches, with Keir Starmer facing concern from a series of Labour MPs. The protest became visibly acute, with some pubs even putting up signs barring Labour MPs from entering.
In response to the outcry, Rachel Reeves commissioned work before Christmas on a potential support package for pubs. This was led by Treasury minister Dan Tomlinson, following discussions with trade bodies.
Another Government Climbdown
The forthcoming announcement, expected in the next few days, will represent yet another policy reversal for the government. It follows recent U-turns on curbs to winter fuel payments for older people and on changes to inheritance tax for farms. A government source stated the move was an attempt to "recognise issues with how business rates are collated."
The Treasury package is also expected to include measures to assist pubs with licensing, opening hours, and reducing red tape. Emma McClarkin, chief executive of the British Beer and Pub Association (BBPA), welcomed the news: "This could save locals, jobs, and means publicans can breathe a huge sigh of relief. The BBPA has worked closely with ministers on a pub-specific solution."
While the change will be welcomed by the beleaguered pub trade and opposition parties, it underscores the political sensitivity of the hospitality sector and marks a significant retreat for the Chancellor's initial fiscal plans.
