Pubs handed a lifeline as Reeves set to U-turn on plans to scrap business rate relief
Rachel Reeves is ready to give Britain’s struggling pubs a lifeline by making a U-turn on plans to scrap business rates relief for the hospitality sector, ministers say Independent.
In what would be another humiliating fall for the government, the chancellor is expected to extend aid to help homeowners facing rising bills rather than cutting cash support from April.
It follows a furious backlash from the industry, which warned of widespread closures that have seen a pub close its doors every day since Sir Keir Starmer took office.
In the budget the chancellor announced plans to reduce business rates discounts, which have been in place since the pandemic, from 75 per cent to 40 per cent and said there would be no reductions from April.
But the ministers said Independent He said Ms Reeves was now expected to backtrack on her plans, with one of them saying: “There will be a U-turn in pubs.”
Another said the changes were “politically unsustainable” in a year when elections in May could decide whether Sir Keir survives as Labor leader and prime minister.
Bar owners reacted to the news with cautious optimism. Dawn Hopkins, 56, who runs the Rose Inn in Norwich, said the U-turn would be a “huge relief” for many pubs but there were still concerns about a reassessment of business rates.
“Getting the discount back would be a huge relief and anything helps at this point,” said Hopkins, who is also vice-president of the Pub Campaign. Independent.
“But a major problem is that they have done a reassessment of business rates, which are astronomical in many places,” he said. “So it would be great to get the reduction back, but we still need to look at revaluation.”
Chris Welch, 39, who runs Fishnet Tavern in North Tyneside, said: “It’s really positive news that this has happened, but I still think more needs to be done.”
Although it is unlikely that the Covid discount will be brought back in exactly the same way, it is understood that an alternative discount could be negotiated.
The hospitality industry had already been affected by increases in National Insurance contributions and the minimum wage; This reduced margins and meant that many people made losses.
UKHospitality analysis showed the average pub faces a 15 per cent rise in business rates next year, rising to £7,000 more by 2028/29 and £12,900 more within three years. Hotels are being hit even harder with bills set to rise by £28,900 next year and £111,300 in 2028/29; This adds up to a total of £205,200 extra over three years. Meanwhile, online giants, office blocks and out-of-town supermarkets are benefiting from much smaller increases.
UKHospitality Chairman Kate Nicholls said: “The government promised in its manifesto it would level the playing field between the high street and online giants. The plan to achieve this in the Budget is being rapidly unraveled and will deliver just the opposite.”
Speaking on Radio 4’s Today Programme, welfare minister Pat McFadden was challenged on the prospect of another U-turn but refused to rule out the possibility.
Hinting at future changes, he said: “Look, I’m not going to predict anything, but I say to your listeners, we appreciate the role of the pub in British life, believe it or not, we’re human beings and we’re politicians as well, so we understand the role that pubs play. You know, we value that very much. We’ll continue to talk about it.”
It will be the latest in a series of U-turns imposed on the chancellor by angry Labor MPs. He was forced to back down on plans to cancel winter fuel payments to around 10 million pensioner households, was forced to cut his £5bn cut to benefits, was forced to agree to end the two-child benefit cap despite initially opposing the move, and was forced to abandon plans to raise income tax in the Budget, which would have broken his general election promise.
The Chancellor was also forced to soften inheritance tax changes targeting family farms.
Labor MPs have pressed the government to help the struggling hospitality industry. York Central MP Rachael Maskell, who is leading the benefit cuts revolt, said: “Many independent business owners I meet fear the cumulative impact of the rate revision and benefit reductions. York will see a 41 per cent increase in average business rates for hospitality businesses, a 44.4 per cent increase for music venues and around a 27 per cent increase for many independent shops, which means doors closing and trading ceasing, which businesses simply cannot do.”
The issue was also raised by the Conservatives, who believe they are close to making another U-turn.
Don’t write TelegramConservative Party leader Kemi Badenoch said: “Pubs are part of the fabric of our nation – or at least they used to be. Because we’re losing a pub almost every day in Britain today.”
He has promised to go further than restoring Covid rate relief.
Vowing to scrap business rates altogether, she said: “Not cutting rates, not freezing them, not pausing them until a later date. Lifting them completely for thousands of people. The future of pubs is more important than a lot of the stupid things the Government is wasting money on at the moment.”
Reacting to the expected U-turn, he said: “Labour is killing Britain’s pubs. Rumor has it it’s too late for a U-turn. It’s time to support our local pubs.”
