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Chancellor Rachel Reeves’ climbdown over the taxation of Britain’s pubs is the government’s latest high-profile retreat, leaving her vulnerable to the charge that when the political heat is on she will cave in.
Reeves’ decision to announce a package of relief for pubs just six weeks after her Budget comes after a fierce backlash from landlords, who banned Labour MPs from about 1,000 pubs.
Before Christmas, Reeves performed a U-turn over her inheritance tax plans for farmers after months of protests and the regular sound of tractor horns blaring in Parliament Square.
That followed much more expensive retreats over an ill-fated plan to remove winter fuel support from 10mn pensioners and the biggest U-turn of all, last July’s abandonment of £5bn of welfare cuts in the face of opposition from Labour MPs.
“I’m not comfortable with this,” said one minister. “Once you do one U-turn, it’s not long before people think they can force you into another one.”
Reeves’ Conservative critics now portray her as both incompetent and weak.
“Just a month on and the Budget is already falling apart,” said Andrew Griffith, shadow business secretary. Kemi Badenoch, Tory leader, joked that when Sir Keir Starmer talked about Britain “turning a corner” in 2026, he was actually referring to another U-turn.
David Gauke, a former Conservative Treasury minister, said: “Governments often have to make unpopular choices and there are times when it makes sense to retreat.
“But if a government gets the reputation of always retreating when put under pressure, it is simply inviting more pressure the next time it makes an unpopular choice.”
The chancellor’s allies deny this and insist that the climbdown on pubs was simply a reflection of the fact that changes to business rates in the Budget were “highly complex”, affecting different sectors in different ways.
“We realised there was a problem with pubs within a matter of days of the Budget and we’ve been working ever since to put together a package to help them,” said one ally.
One minister described the decision as “one of our better U-turns” compared with the other reversals over welfare and farms, with Reeves and Number 10 listening to concerns raised by landlords and Labour MPs.
“At least this time they moved quickly, it only took them a few weeks to realise that they needed to change tack, whereas with winter fuel payments and the farmers they held the line for a year before realising it was better to back down,” they said. “U-turns aren’t always bad, what matters is how you execute them.”
Even if the retreat on pubs was more orderly than some of Reeves’ other U-turns, it is still an embarrassment for a chancellor whose poll ratings are already at record lows.
Last year, Starmer strengthened his economic team in Number 10 in a move seen by Labour insiders as an attempt to get a grip on potential problems before they arose.
The decision, late in the preparation of Reeves’ November 26 Budget, to abandon the Treasury’s plan to raise income tax was an attempt to head off a massive row over what would have been a breach of Labour’s manifesto.
Reeves’ allies insist that in the case of pubs, the chancellor and prime minister had worked “in lockstep”.
They insist that on most of the big issues, the chancellor has faced down her critics, for example sticking with her plan to increase employers’ national insurance by £25bn and pushing back against lobbying to abandon tax changes that hit wealthy non-doms.
Indeed, Treasury officials had been congratulating themselves before Christmas that Reeves’ latest Budget had not unravelled and that the main line of Conservative attack was on the “process” around the fiscal event, including leaks.
Yet while the U-turn is likely to defuse the anger of many Labour MPs, Reeves is not yet out of the woods over this particular issue.
Kate Nicholls, chair of lobby group UKHospitality, said it was wrong to single out pubs for assistance when the entire hospitality sector was affected by the business rates changes.
Rachael Maskell, the Labour MP for York Central, told the FT: “My understanding is that this [reprieve] is only for pubs, when [changes to business rates are] a problem for the wider hospitality sector . . . my concern is that pubs are well organised and have a loud voice whereas lots of independent cafés and shops are still going to suffer a large rise in bills.”
John McTernan, former political secretary to Labour prime minister Sir Tony Blair, said that “U-turns are part of the art of politics”, adding that “if you don’t bend you break”.
But he said the fundamental problem with Starmer’s government was that it was “rudderless politically” and incapable of setting a clear “case for who it’s fighting for and who it’s fighting against”.
“They’re to survive, but for what purpose? Is it to execute a long-term strategy or is it just so that in a year’s time [Starmer] can say I’m still here. We’re here because we’re here because we’re here,” he said.