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Ministers are preparing to U-turn over changes to business rates for pubs after a wave of disquiet from the hospitality industry, the Guardian has been told.
In yet another government climbdown on a contentious policy, details of revisions to the changes to business rates, which were set to particularly affect the hospitality industry, are to be announced in the next few days.
The move would be an attempt to “recognise issues with how business rates are collated”, a government source said. It will be part of a wider Treasury package also including measures to help pubs with areas such as licensing, opening hours and wider efforts to reduce red tape.
The pub industry has been putting pressure on ministers to act, with Keir Starmer also facing concern from a series of Labour MPs. Some pubs have even put up signs barring Labour MPs, as a protest.
In the budget in November, Rachel Reeves, the chancellor, committed £4.3bn over three years in financial support for the retail and hospitality industries but also announced the end of business rate discounts in place since Covid.
This would exacerbate the impact of a revaluation of property valuations, the basis for business rates, which has caused a rise in the taxable value of pubs and restaurants from their Covid-affected lows.
Starting from April, rates will rise by 115% for the average hotel and 76% for a pub, compared with 4% for large supermarkets and 7% for distribution warehouses. Whitbread, which owns pubs, restaurants and the Premier Inn hotel chain, says it will have to pay between £40m and £50m in tax as a result.
The change of plan follows discussions with pub and hospitality trade bodies about the impact of the revaluation. Reeves commissioned work before Christmas on a possible package of support for pubs, led by Dan Tomlinson, a Treasury minister.
While the change is likely to be welcomed by both the pub trade and opposition parties, which have called for more help for pubs, it will be another U-turn, following those on curbs to winter fuel payments for older people, and on changes to inheritance tax for farms, the latter announced two days before Christmas.
Emma McClarkin, the 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.”
