Rachel Reeves set to U-turn on business tax relief cut in much-needed win for pubs

Labour MPs who are concerned about soaring business rate for pubs have told GB News they are hoping the Government will announce a package for pubs "very soon".

One said that a proposal from Prime Minister Sir Keir Starmer to extend licensing hours to allow pubs to trade for longer would be "pathetic" compared with the hike in business rates which are set to increase by 75 per cent over the next three years.

The news came after 30 Labour MPs wrote to the Chancellor Rachel Reeves demanding action for pubs, many of which could close if the rates increase - driven by re-evaluation and the end of Covid support - goes ahead in a few months' time.

Number 10 told reporters today: "We are engaging with the industry, listening to their concerns and finding out how best to help them” adding that £4.3billion in support has already been ear-marked for hospitality businesses.

The Chancellor and Prime Minister have faced scrutiny over its business tax agenda, with hospitality industry representatives claiming that one pub has closed every day since Mr Starmer took office in July 2024.

During her Budget, Ms Reeves confirmed plans to scale back business rate discounts that have been in effect since the Covid-19 pandemic from 75 per cent to 40 per cent.

Furthermore, the Chancellor previously announced that there would be no tax discount at all for businesses from April, pushing costs up for thousands of entrepreneurs.

However, ministers have informed The Independent that Ms Reeves is now expected to partially reverse her plans, with one claiming: "There’s going to be a U-turn on pubs."

Speaking to GB News, Reform deputy leader Richard Tice said: "Another day, another U turn as Labour sees the huge damage of their anti-business, anti-growth, anti-jobs policies. They are unfit to govern in so many ways. Only Reform can be trusted to cut wasteful, inefficient spending & get growth flowing again."

Last month, the British Beer & Pub Association (BBPA) urged the Government to introduce a 30 per cent pub-specific business rates relief to prevent widespread closures and protect approximately 15,000 jobs.

According to the trade association, an estimated 4,800 of the smallest pubs in Britain would have been hit by the business rates hikes for the first time, making them at risk of closure.

The BBPA calculated the average community pub would have been slapped by the 30 per cent increase in rateable Value (RV) and the loss of the vital 40 per cent, resulting in a 63 per cent bill increase.

This would have been a £6,000 hike in operating costs annually, with some pubs having seen their rateable values double or even triple in recent years. In comparison, distribution warehouses often used by online giants face increases of just seven per cent.

In a letter to Government, the group of pubs said this move would require minimal changes to the current package, build on clear precedent from previous targeted reliefs, recognise the unique economic and social role pubs play and provide immediate reassurance to thousands of operators.

Emma McClarkin, the chief executive of the BBPA, said: “This Budget left publicans petrified and many fearing there is no way they can survive these sky-high bill increases or keep their home.

"The situation is so grave that it requires immediate action as the very existence of thousands of pubs is at stake. Without urgent intervention, communities will lose their pubs at an alarming rate and take with them livelihoods and jobs.

"A 30 per cent pub-specific relief is the simplest, fairest and fastest way to protect Britain’s locals, and we want to work with Government so we can ensure the sector survives."