The government is expected to announce a partial U-turn on looming business rates increases for pubs within days, amid growing alarm over the financial pressure facing the hospitality sector.
According to Sky News, ministers are preparing a targeted rescue package that would shield pubs from steep hikes triggered by business rates revaluations and the withdrawal of Covid-era reliefs. However, the move is understood to apply only to pubs, leaving other hospitality businesses such as hotels, restaurants and leisure venues exposed to potentially severe cost increases.
The development follows warnings that some hospitality venues face business rates bills rising by more than 100 per cent over the coming years, as temporary pandemic support unwinds and rateable values are reassessed.
Sky News’ deputy political editor Sam Coates said there was growing unease inside government about the scale of the impact. He reported that colleagues of Rachel Reeves were “not happy” about the situation, as pressure mounts from MPs and industry figures concerned about closures, job losses and declining high streets.
In November’s Budget, the chancellor announced a significant overhaul of the business rates system, including the introduction of a new band for retail, hospitality and leisure. This marked the formal end of the relief scheme first introduced in 2020 at the height of the pandemic.
While ministers argue that the new framework leaves hospitality businesses better off than before Covid, industry leaders have consistently warned that it fails to reflect the structural disadvantage faced by bricks-and-mortar operators, particularly when compared with online-only competitors.
Pubs, restaurants and hotels remain highly exposed because of their reliance on physical premises, high energy usage and labour-intensive operations. Many have already been hit by rising wages, higher employer national insurance contributions and subdued consumer demand.
The prospect of a pubs-only intervention has raised concerns about fairness within the sector. Hotels and other hospitality operators fear they will be left carrying the burden of rate increases at a time when margins remain thin and recovery fragile.
Coates also reported that parts of the business community have been privately warned by government figures to avoid public protest if they want concessions. One industry source told Sky News that ministers had pointed to farmers as an example of “good, fair negotiators” who secured policy changes without mounting a high-profile campaign.
If confirmed, the pubs-focused rescue package would represent a significant political shift after months of resistance to calls for broader reform. However, it risks deepening divisions within hospitality, with many operators questioning why one part of the sector should be protected while others face potentially crippling cost increases.
Read more:
U-turn on pub business rates hike expected within days, ministers signal