The Labour government is under mounting pressure to tear up its planned crippling rise in business rates for the entire hospitality industry, having signalled a partial U-turn aimed at saving struggling pubs.
From Pubs to Pan-Sector Pressure
Following the proposed carve-out for pubs, hotels, shops, restaurants, and other small businesses have piled pressure on Chancellor Rachel Reeves to find a solution for them. The Treasury has indicated that an emergency support package will be announced ‘within days’ in a bid to head off a brewing revolt among mutinous Labour MPs.
Chris Webb, Labour MP for Blackpool South, said Treasury minister Dan Tomlinson was ‘responsive’ to the idea of reducing business rates for hospitality more broadly during a private meeting. ‘My conversations last night were, “the whole sector has to be included,”’ Webb stated, adding that the response was that the government is ‘looking at all aspects of hospitality’ and that ‘nothing is off the table.’
"Eye-Watering" Hikes and Sector-Wide Fallout
The crisis stems from the Chancellor’s decision to scrap Covid-era temporary relief, leaving many businesses facing steep increases. While pubs face an average 76% rise by 2028, hotels are looking at a staggering 115% increase over the same period.
The scale of the hike was starkly illustrated by hotel magnate Surinder Arora, who revealed the business rates bill for just one of his hotels had increased by £12.4 million after discounts were scaled back. He labelled a potential pubs-only solution as ‘not right or fair,’ warning of inevitable belt-tightening and higher costs for customers.
The live music industry, which relies on alcohol sales but doesn’t fit neatly into the ‘pub’ category, is also pleading for support. Labour MP for Southport, Patrick Hurley, highlighted that venues are ‘living hand to mouth as it is’ and urged the Chancellor to act.
A "Confident Government" or a "Shambolic" Climbdown?
More than 30 Labour MPs were preparing to rebel on Monday by voting for an amendment to reduce rates for all hospitality businesses before the government indicated its shift on pubs. Another MP said they are ‘keeping their powder dry’ to see if support will be extended sector-wide.
While Labour chairwoman Anna Turley defended the move as a ‘sign of a confident Government’ that listens, the Conservatives have seized on what they call another policy reversal. Conservative leader Kemi Badenoch accused Labour of a ‘shambolic U-turn’ that does nothing for cafes, restaurants, shops, and gyms also facing enormous tax hikes.
The government now faces a critical choice: whether to placate a vocal rebellion by pubs alone or address the deepening crisis engulfing the UK’s broader hospitality and high street economy.
