Labour is gearing up for yet another embarrassing policy backtrack, with ministers hinting at a rapid U-turn on tax hikes affecting pubs.
Following widespread backlash from the hospitality industry, Treasury sources confirmed that an emergency support package will soon be announced to address growing discontent over the planned increases in business rates.
Brewing Revolt and Growing Tensions
The move comes just six weeks after Chancellor Rachel Reeves unveiled controversial changes to business rates, which critics argued could devastate thousands of businesses in the retail and hospitality sectors.
The policy would have led to drastic increases in business rates for pubs, with some facing up to a 76% rise by 2028.
In an attempt to prevent a full-scale rebellion within her party, ministers indicated that the package, which could provide a “lifeline” for pubs, is in the works.
However, officials remain tight-lipped about the specifics of the plan, leaving publicans still uncertain about what kind of relief they can expect.
Labour’s Track Record of U-turns
The latest climbdown adds to the long list of policy reversals under Keir Starmer’s leadership.
In just 18 months, Labour has faced more than a dozen major U-turns, creating frustration among both backbenchers and the public.
Conservative figures, like Kemi Badenoch, have seized on the situation, ridiculing Starmer’s leadership, with Badenoch commenting, “It looks like they’ve turned the corner straight into their first U-turn of 2026.”
Tory leaders also accused Labour of “killing Britain’s pubs,” while Shadow Chancellor Mel Stride called for a broader support package to include not just pubs, but the wider hospitality and retail sectors, which are also facing significant challenges.
Industry Reactions to the Limited Focus
While the news of the impending U-turn was met with some relief by the pub industry, many are still frustrated by the narrow scope of the relief package.
Critics argue that a more comprehensive approach is needed to support the wider hospitality sector, which has been struggling under the weight of rising costs, Covid-era business rate changes, and general economic uncertainty.
Celebrity chef and Labour supporter Tom Kerridge, who has been vocal in opposing the original tax hikes, expressed cautious optimism about the U-turn.
However, he urged ministers to clarify the details quickly, stressing that the sector needs more than just a quick fix to survive.
A Disastrous Policy and Growing Backlash
The business rates hike originally announced in the Budget was expected to hit pubs hard, with many already dealing with the long-term effects of the Covid pandemic.
After initially announcing a £4.3 billion relief package, the Treasury quickly came under fire when it was revealed that many pubs would face an average 15% increase in business rates come April, with the figure set to rise dramatically in the years to follow.
In response, more than 1,500 pubs reportedly banned Labour MPs from their premises, while several Labour MPs warned party whips they might revolt on the issue.
The backlash was so severe that some ministers voiced concerns directly to Reeves, prompting the early signal of the U-turn to try and stave off a full-scale rebellion before the critical Finance Bill vote.
Criticism from Other Sectors
While the pub industry stands to benefit from the planned tax relief, the broader retail, hospitality, and leisure sectors have been left out in the cold.
Key figures in the hospitality industry, such as Kate Nicholls from UK Hospitality, have expressed frustration at the lack of a more comprehensive, sector-wide solution.
“Another temporary sticking-plaster solution aimed at just one sector won’t be enough,” said Ros Morgan, CEO of Heart of London Business Alliance.
“Time and again, we’ve seen piecemeal responses like this, but they won’t save our high streets.”
Independent retailers have also voiced their displeasure, with Andrew Goodacre of the British Independent Retailers Association calling it an “absolute scandal” that pubs alone are being offered relief.
He warned that small retailers face the same financial challenges and will likely be left to “waste away and die” without support.
The Pattern of U-turns Under Starmer
The latest reversal is just one in a series of about-turns that have marked Keir Starmer’s tenure.
Some of the most notable U-turns include the abandonment of a promised income tax rise, changes to family farm inheritance taxes, and the controversial welfare reforms that were scrapped after fierce backbench opposition.
The repeated policy reversals have left many questioning the Government’s ability to govern effectively and whether Labour is capable of making tough, long-term decisions.
Many have suggested that these frequent U-turns damage the party’s credibility and cause unnecessary disruption in the economy.
The Road Ahead
As Labour scrambles to address the growing concerns of both MPs and the public, many are left wondering if this latest U-turn is enough to stem the tide of dissatisfaction.
With the Finance Bill vote set for Monday, the party faces a pivotal moment—one that could determine the political future of Keir Starmer and his leadership.
For now, though, the fate of the hospitality and retail sectors remains uncertain.
While pubs may get a temporary lifeline, questions remain about whether the rest of the industry will receive the support it desperately needs to survive.
As Labour navigates these tricky waters, only time will tell if their latest policy about-face is enough to appease both their own MPs and the wider public.
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