Chancellor Rachel Reeves is preparing to unveil a £300 million bailout for pubs pushed to the brink of bankruptcy by rising business rates, marking Labour’s 12th major policy U-turn since taking office.
The announcement is expected following backlash from Labour MPs and hospitality groups over budget changes coming into effect from April. Ministers are reportedly considering several ways to target support. Options include altering the methodology used to calculate pubs’ business rates, increasing discounts for small hospitality and retail businesses, or adjusting the “multiplier” applied to a property’s rateable value.
Under the current scheme, pubs face a 76% rates increase over three years. Treasury sources said the final cost will depend on the precise measures Reeves adopts, and will be scored by the Office for Budget Responsibility.
Calls for wider support
The move has prompted calls for similar support for other sectors, including hotels and live entertainment venues, which face steep rate rises in the spring. Hotels, for example, are projected to see a 115% increase over three years.
However, corner shops, newsagents, pharmacies, and other small businesses are also struggling, which raises the question: why is support being extended only to pubs? These businesses are woven into Britain’s history, with many British Asians establishing shops after immigrating.
Tina McKenzie, Policy Chair of the Federation of Small Businesses (FSB) said, “When the Government legislated for the power to reduce business rates bills for small businesses in retail, hospitality and leisure from April to match the equivalent of the 40 per cent discount that the Chancellor provided for April 2025, 230,000 small firms expected that to be confirmed.
“Instead, the Government is choosing to use only a quarter of the power in that formula - a 5p discount rather than 20p.
“With small firms in these sectors at breaking point, the Government should not withhold three quarters of the potential help it has at its disposal - a lever ministers have to hand that would work if they pull it.
“This would take the relief back to somewhere near its current rate of 40 per cent and mitigate some of the negative impacts of the revaluation which also comes into effect this April.
“This is not just about pubs. The loss of the 40 per cent lifeline across small retail, hospitality and leisure businesses – alongside other rising cost pressures - puts the viability of many of these businesses at risk, and with it the jobs they provide and their contribution to local economies and communities.
The contradiction in UK alcohol strategy
At the same time, the UK government has rolled out several initiatives to curb alcohol misuse. Measures include regulating sales through the Licensing Act 2003, restricting promotions, and consulting on minimum unit pricing. Public health campaigns like Change4Life raise awareness of harmful drinking, while local authorities coordinate prevention and treatment through Drug and Alcohol Action Teams. Clinical guidelines support therapies for dependence, and enforcement tools such as sobriety tags target alcohol-related crime.
Yet key government figures describe pubs as community cornerstones that help counter loneliness, indirectly supporting alcohol consumption. This raises a tension: how can the government promote responsible drinking while simultaneously subsidising establishments where alcohol is consumed? Even if pubs play a role in reducing social isolation, should there not also be initiatives to reshape these spaces into healthier, safer community hubs?
The planned bailout follows 11 previous Labour reversals, including changes to inheritance tax, day-one employment protections, the two-child benefit cap, income tax plans, and welfare reforms.
“This is not just about pubs. The loss of the 40 per cent lifeline across small retail, hospitality and leisure businesses – alongside other rising cost pressures - puts the viability of many of these businesses at risk, and with it the jobs they provide and their contribution to local economies and communities.”
