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Rachel Reeves is set to announce a package of relief for pubs in the coming days that will include tweaks to the business rates system as well as a more relaxed licensing system.
The UK chancellor commissioned government officials and junior ministers to examine the impact of her Budget on the sector in recent weeks after a backlash from landlords, according to officials.
Reeves has concluded that pubs need relief from the full impact of changes to business rates that were announced in the November fiscal event. In addition, there will be changes to licensing to allow later hours and more pavement drinking.
That package of measures could be announced as early as Friday, according to government figures.
It will be the latest of a series of U-turns by Sir Keir Starmer’s government, following the prime minister’s decisions to change tack over the removal of winter fuel payments, an attempt to cut billions in disability welfare payments and higher inheritance tax on farm estates.
Pub groups and independent landlords have been furious about the changes to the business rates system, arguing that they would cause huge jumps in payments over the next three years. More than 1,000 landlords have said they are banning all Labour MPs from their premises.
Steve Haslam, a pub landlord of seven family owned sites, said: “The reversal of the previous stance on business rates is a welcome start to rebuilding hospitality but there’s a mountain to climb.”
At least 30 Labour MPs had expressed concern about the impact of the Budget on the sector. Rachael Maskell, Labour MP for York Central, has been organising a “business rates summit” for the end of this month.
Industry leaders met Treasury minister Dan Tomlinson this week to discuss the burden of business rates on the hospitality sector.
Emma McClarkin, chief executive of the British Beer and Pub Association, said the government’s decision to “look again at business rates increases is potentially a huge win for pubs across the country”, and could mean “publicans can breathe a huge sigh of relief”.
But there have already been questions as to why only pubs have been singled out for help.
Kate Nicholls, chair of UKHospitality, a lobby group, said: “The entire hospitality sector is affected by these hikes — from pubs and hotels to restaurants and cafés.
“We need a hospitality-wide solution, which is why the government should implement the maximum possible 20p discount to the multiplier for all hospitality properties,” she added.
The increases in pubs’ costs stem largely from higher “rateable values” — estimates of a premises’ annual rent used to calculate rates — which have risen considerably since the last pandemic-era valuation.
In some cases, rateable values have doubled or trebled, although a typical increase is about 30 per cent. Pubs are also facing the withdrawal of Covid-19 support, which offered 40 per cent relief on rate bills.
Andrew Griffith, Conservative shadow business secretary, said the Budget was “falling apart” and that Labour had been “wrong to attack pubs”.
“But this humiliating about-face does nothing for shops, restaurants, hotels and markets, which all face a more than 50 per cent increase. This is not the stability Rachel Reeves promised — it is a recipe for economic disaster,” he added.