The government is expected to announce a partial U-turn on threatened rises in business rates for pubs within days, as concerns grow about the financial pressures facing the hospitality sector.
According to Sky News, ministers are preparing a targeted rescue package designed to protect pubs from steep rises triggered by business rates reassessments and the withdrawal of Covid-era relief. However, the measure is only expected to apply to pubs, meaning other hospitality businesses such as hotels, restaurants and leisure facilities may face significant cost increases.
The development follows warnings that some hospitality businesses face a rise of more than 100 per cent in business rates in the coming years as temporary pandemic support is withdrawn and rateable values ​​are reassessed.
Sky News deputy political editor Sam Coates said there was growing unease within the government about the extent of the impact. He reported that Rachel Reeves’ colleagues were “not happy” with the situation as pressure mounted from MPs and industry figures concerned about closures, job losses and declining high streets.
In the November Budget, the Chancellor announced a major 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 aid program, which was first introduced in 2020 at the height of the pandemic.
While ministers argue that the new framework leaves hospitality businesses better off than they were pre-COVID, industry leaders have repeatedly warned that it does not reflect the structural disadvantage facing brick-and-mortar operators, particularly compared to online-only competitors.
Pubs, restaurants and hotels remain at high risk due to their reliance on physical spaces, high energy consumption and labor-intensive operations. Many are already affected by rising wages, higher social security contributions from employers and weakened consumer demand.
The prospect of intervention limited to pubs only has raised concerns about fairness within the sector. Hotels and other hotel operators fear they will have to bear the burden of rate increases at a time when margins remain thin and the recovery is fragile.
Coates also reported that parts of the business community had been privately warned by government officials to avoid public protests if they wanted concessions. An industry source told Sky News that ministers had described farmers as an example of “good, fair negotiators” who had pushed through policy changes without launching a large-scale campaign.
If the pub-focused rescue package is confirmed, it would be a significant political shift after months of resistance to calls for wider reforms. But divisions within the hospitality sector risk deepening, with many operators questioning why one part of the sector should be protected while others may face crippling cost increases.
