Rachel Reeves is facing more woe today as MPs demand the pubs U-turn on business rates is extended to all hospitality.
Ministers signalled their latest embarrassing climbdown yesterday – despite claims the Chancellor was desperate to avoid footing the bill for extending reliefs.
The Treasury is now scrambling to finalise a package to save tens of thousands of pubs from going to the wall due to huge increases in rates. The bailout is expected to be worth around £300million, although details are still being decided.
However, Ms Reeves is under pressure to widen the scope of the assistance to the hospitality and retail sector. Hotels, high street shops and pharmacies have been warning they face catastrophic increases.
Pubs have been sounding the alarm about mass closures since the November Budget confirmed that Covid-era business rates relief is set to end in April. It had already been scaled back from 75 per cent to 40 per cent.
The same month will see the implementation of new rateable values for business properties, reflecting changes in the property market. Many outlets have been facing rates doubling.
A swathe of Labour MPs have been banned from their locals as part of a campaign by incensed landlords.
Party chair Anna Turley was sent out to explain the first big volte face of 2026 this morning, denying it was a U-turn and arguing the government was being ‘sensible and practical’.
She told Sky News: ‘I don’t buy this is a U-turn. This is actually about listening.
‘I think it’s a sign of a Government that is actually in touch with people, that is listening to people, and that is responding.’
She added: ‘I think listening to constituents isn’t being bullied or lobbied – that’s what we’re here to do.
‘We’re here to represent the people that we live amongst and, if a policy isn’t right, I think it’s a sign of a confident Government that says, ‘do you know what? we’ll step in, we’ll sort it out, we’ll make sure it works’.’
Treasury sources said the package would deliver ‘a lifeline for pubs’, but were unable to say exactly how it will work – or what it will be worth.
Labour MPs have been openly warning that small businesses are facing the same problems as pubs.
The UK Hospitality industry body said hotels, restaurants and cafes should also be covered by the package.
It suggested hotels in England face an average increase in business rates of 115 per cent by 2030, compared with a 76 per cent increase for pubs.
Surinder Arora, who operates a number of hotels in the UK, said just one of his properties was facing a £12.4million hike.
‘The new numbers are eye-watering,’ he told the BBC.
The National Pharmacy Association called for similar support for pharmacies, which chief executive Henry Gregg said face a 140 per cent increase in rates.
He said: ‘We’re urging the Government to exempt pharmacy businesses from business rates altogether, in the same way as GPs are.’
The British Independent Retailers Association (Bira) said high street shops ‘face exactly the same challenges as pubs but have been left out of discussions about additional support’.
Chief executive Andrew Goodacre said: ‘Perhaps independent retailers need to follow the pubs’ example and start banning MPs from their premises too.
Keir Starmer has now presided over a dozen major U-turns in his chaotic first 18 months in power.
Kemi Badenoch branded the shift ‘too little, too late’, mocking the PM’s New Year claim to have ‘turned a corner’.
‘Keir Starmer told us Labour had ‘turned a corner’,’ she said. ‘Well, it looks like they’ve turned the corner straight into their first U-turn of 2026.’
Shadow Chancellor Mel Stride said: ‘The problem is far bigger than pubs. Businesses right across Britain are at breaking point because of Rachel Reeves’ choices. Reeves must now go further and give the rest of the retail, hospitality and leisure sector the support they need.
‘It is remarkable that ministers now claim to be ‘listening’, when they chose not to listen before pressing ahead.
‘This has become a pattern. Labour announces policy first, only to confront the consequences later.’
