In a significant policy reversal, Nigel Farage's Reform UK has abandoned its previous backing for Labour's plan to scrap the two-child benefit cap, instead unveiling a £3bn tax cut package aimed at supporting Britain's struggling pub industry. The move represents a strategic pivot as the party seeks to capitalise on growing discontent among pub landlords with the current government.
Policy Shift on Benefits Cap
Just last year, in May 2025, Farage had publicly supported lifting the two-child benefit cap as part of broader proposals to boost national birth rates. However, in a dramatic about-face, Reform UK now plans to reinstate the cap, using the estimated savings to fund substantial tax relief for pubs facing mounting financial pressures.
The two-child benefit cap, which restricts child tax credit and universal credit to the first two children in most households, was set to be removed from April following measures announced in last year's Budget. Labour's decision to lift the cap came after significant pressure from backbenchers and party members, with approximately 510,000 families expected to benefit.
£3bn Tax Cut Package for Pubs
Reform UK's new proposals include several key measures designed to alleviate the burden on pub operators:
- Beer Duty Reduction: Cutting beer duty by 10 per cent from its current rate of 49 per cent
- VAT Alignment: Reducing the current 20 per cent VAT rate and ensuring hospitality enjoys similar tax advantages to supermarkets
- National Insurance Exemption: Exempting pubs from employers' national insurance hikes introduced by Chancellor Rachel Reeves, estimated to have added £1bn to hospitality labour costs
- Business Rates Relief: Offering temporary 15 per cent discounts on new tax rises affecting pubs
Political Context and Pub Industry Discontent
The announcement comes amid ongoing tensions between the government and pub landlords. Recent weeks have seen Labour MPs banned from numerous establishments as part of the Wonky Table campaign led by Andy Lennox, with thousands of pubs facing business rates increases amounting to thousands of pounds over the next three years.
Following last week's government U-turn on business rates, Lennox demanded further action, calling for VAT reductions to bring British pubs in line with their European counterparts. Pub operators have criticised existing measures as insufficient, claiming they lack adequate guarantees for the industry's future.
Broader Political Strategy
Farage and Reform UK MP Lee Anderson are scheduled to host a press conference at a central London pub on Tuesday to formally unveil these proposals. The wider package forms part of Reform UK's concerted effort to connect with voters nationwide through radical policies aimed at reducing living costs for drinkers and winning over disillusioned pub landlords.
Beyond the hospitality sector, Reform UK has been actively courting other groups dissatisfied with Labour policies, including farmers and City investors. The party is also preparing to announce proposed changes to financial markets, particularly concerning pensions, taxation, regulation, and small businesses' access to capital.
This strategic repositioning demonstrates Reform UK's willingness to adapt its policies in response to shifting political landscapes and economic pressures, as it seeks to establish itself as a credible alternative for voters across multiple sectors of British society.
