Keir Starmer is poised for yet another U-turn amid rising fury over business rate hikes for pubs.
Ministers are scrambling to assemble a rescue package to ease the pressure on the hospitality sector, with an announcement expected within days.
The looming climbdown is the latest humiliation for the PM and Chancellor Rachel Reeves – who was said to be resisting any more concessions.
Pubs have been sounding the alarm about mass closures since Ms Reeves 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 pubs have been facing rates doubling.
There have been rising demands from Labour MPs for a change, after many were banned from their locals as part of a campaign by incensed landlords.
Sir Keir had already hinted that pubs might be allowed to stay open longer to help them cope with the eye-watering extra costs.
But crucially it appears there will now be concessions on the way that their rates are calculated.
The reforms are expected to be specifically for pubs, despite warnings that other hospitality businesses such as hotels are in the firing line.
The Treasury has yet to finalise the package, with frantic work going on behind the scenes.
But industry bodies and Labour MPs are still pushing for wider reliefs for affected businesses.
Work and Pensions Secretary Pat McFadden said this morning that the Government was ‘talking to the pub industry’ about its worries.
He told BBC Radio 4’s Today programme: ‘Let me just explain to listeners there are three different things happening with pubs right now: the actual rates that are charged, those levels have been reduced, but at the same time there’s been a revaluation which has pushed up bills, and some of the Covid support that was put in place a few years ago has been withdrawn.
‘Left with no action from the Government, the combined effect of all of those three things would be a very steep increase in the bills for pubs.’
The Government ‘saw that coming’ and put in place a £4.3 billion transitional relief fund, the senior minister said.
He continued: ‘Now, since we did that, pubs, the trade association, pub owners themselves, have said that’s not enough, you must understand our difficulties.
‘We appreciate how important the pub industry is economically and culturally to the UK, so we’ll keep talking to the pub industry. We really value the role of the pub in British life. We want to help pubs.’
Pressed whether this meant the Government planned to U-turn on withdrawing the Covid-era tax breaks, Mr McFadden replied: ‘I’m not going to predict anything, but I do say to your listeners, we do appreciate the role of the pub in British life, it is something we value.
‘Believe it or not, we’re human beings as well as politicians, so we understand the role that pubs play.’
Kemi Badenoch said: ‘Yesterday Keir Starmer told us Labour had ”turned a corner”.
‘Well, it looks like they’ve turned the corner straight into their first U-turn of 2026.
‘Labour are killing Britain’s pubs. This rumoured U-turn is too little, too late. It’s time to back our local pubs.’
Emma McClarkin, chief executive of the British Beer and Pub Association (BBPA), said: ‘News that the Government is going to look again at business rates increases is potentially a huge win for pubs across the country and shows Government have not only listened to our concerns but acted.
‘This could save locals, jobs, and means publicans can breathe a huge sigh of relief.
‘The BBPA has worked closely with ministers on a pub-specific solution that would ensure that bills are reduced in line with the Government’s previous promises to pubs.
‘We now keenly await to see the detail of the upcoming announcement.’
Shadow business secretary Andrew Griffith said: ‘The Government might be about to reverse another one of Rachel Reeves’s mistakes.
‘But it won’t fix her damage. 10,000s of pubs, hotels, restaurants and high street businesses are facing terminal costs. The Chancellor got this wrong. We need a full U-turn now.’
The boss of supermarket giant Tesco became the latest to condemn ‘unfair’ property taxes today.
Chief executive Ken Murphy called on the Government to completely overhaul the business rates system, which he branded ‘fundamentally unfair’.
He said the group ‘would absolutely advocate that the rates system is reformed for everybody, including pubs’ and is a strong supporter in campaigning ‘on behalf of the hospitality sector for a fairer rates system’.
He said while retailers pay a disproportionate amount of business rates, pubs and hospitality firms have been hit particularly hard by the recent changes announced at the autumn budget.
He said: ‘They are suffering from the end of the Covid era relief that they had… and their rates bills are also going up.
‘I believe that the Government needs to look at a rates system overhaul.’
The supermarket sector narrowly avoided further business rates pain at the recent November 26 budget.
But Mr Murphy pointed out that the retail sector has about 5 per cent of the rateable properties in the UK, but ‘pays 20 per cent of the rates bill’.
Tesco is one of the largest rate-payers in the UK, with a bill of around £700 million a year.
He said while the group’s rates bill ‘didn’t go up’ as a result of the recent changes confirmed in the budget, ‘they didn’t go down either’.
John O’Connell, chief executive of the TaxPayers’ Alliance, said: ‘This is a pitiful sticking plaster from a government that claims to support pubs and hospitality while strangling the sector with punishing taxes and costs.
‘After hiking business rates and whacking employers with higher national insurance, ministers are now offering a token retreat and hoping struggling publicans will be grateful, even as many are being pushed closer to the brink.
‘If the government is serious about saving pubs, it must reverse the business rates grab and scrap the employers’ national insurance hike in full, instead of drip-feeding half-measures while the sector bleeds out.’
