Revealed: Pubs to be saved from closure over spiralling business rates by major Rachel Reeves U-turn

There could also be a default right for pubs to stay open if neighbours complain about the noise.

The review of business rates for pubs is expected to ensure longer term lower rates for the premises, recognising the vital social need pubs fulfil in UK communities.

There is speculation in Westminster that the timing of the announcement was driven by at least 30 Labour MPs pushing for a rethink.

The Tories are also looking at amending legislation on Monday to force a vote on the issue.

Critics will see the announcement as another Budget U-turn after the family farm tax was water down and plans to withdraw the winter fuel allowance for millions of pensioners were scaled back.

However Treasury sources told GB News they had been unaware of the scale of the tax increases faced by pubs from a business rates re-evaluation of the sector and the withdrawal of Covid support for pubs announced in the Budget.

During her Budget, 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.

Reeves and her team had thought that a £4.3billion package in the Budget would mean that most pubs would have seen a hike in business rates of four per cent.

However the scale of the revolution of business rates mean that some pubs have seen their bills double of even treble, adding tens of thousands of pounds to their costs.

Treasury sources said that the scale of the increase in business rates - which was clearly unacceptable - was not apparent when the Budget was announced due to individual taxpayer confidentiality.

Dan Tomlinson, a Treasury minister, has now been asked to review specifically pubs' business rates. Reeves wants a new business rates system for pubs to be up and running from 2029.

It is expected that short term funding will be offered between now and then to ensure that pubs are not forced to close.

Earlier today Number 10 said: "We are engaging with the industry, listening to their concerns and finding out how best to help them" adding that £4.3 billion 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 Sir Keir Starmer took office in July 2024.

During her Budget, 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.

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."