Chancellor Stands Firm on Pubs-Only Rate Relief Amid Hospitality Sector Pleas
Chancellor of the Exchequer Rachel Reeves has firmly rejected calls to extend planned business rate relief for pubs to other hospitality firms, despite mounting evidence of significant job losses across the sector. The decision comes as the Treasury prepares to unveil a detailed support package in the coming days, following sustained pressure from businesses facing closure.
Pubs Face 'Far Different' Situation, Says Chancellor
Speaking at the World Economic Forum in Davos, Chancellor Reeves insisted that pubs confront a 'far different' situation compared to other hospitality businesses such as hotels, restaurants, and cafes. She emphasised that the government is focused on 'getting the package right' before announcing specifics, which are expected imminently.
This stance persists despite recent Office for National Statistics (ONS) data revealing a 70,000 drop in payrolled employees in 2025, with nearly 9,000 jobs lost in December alone. High street businesses have been lobbying intensively for broader support to navigate the changing tax landscape.
Budget Announcements and Subsequent Campaigns
At the budget, Ms Reeves announced that a Covid-era business rates relief package for pubs would conclude in April. Concurrently, a business rates revaluation is set to take effect, likely increasing rates for many properties. To assist pubs in transitioning away from pandemic support and managing higher rates, the Chancellor introduced a £4.3 billion transitional support package, extending until 2029.
However, this move sparked considerable backlash:
- A sustained campaign by pubs led to Labour MPs being banned from local establishments nationwide, with warnings that the relief was insufficient and would precipitate closures.
- The Conservatives, Reform UK, and various newspapers joined in criticising the budget measures.
- In early January, the Treasury hinted at a potential U-turn, suggesting more support for pubs would be forthcoming.
Broader Hospitality Sector Appeals for Inclusion
Pharmacies, hotels, cafes, and other businesses have urged the government to extend rate relief beyond pubs. Marvin Rust, managing director of consultancy firm Alvarez & Marsal, argued that 'hotels, restaurants and cafés are exposed to the same revaluation shock, the same withdrawal of Covid-era reliefs, and the same structural flaws in the business rates system.'
Rust further noted that with the distinction between pubs and restaurants increasingly blurred—especially as many operate as gastro-led venues—relief should reflect the reality of the wider hospitality and leisure ecosystem, not just one segment. He questioned the justification for providing relief to one part of hospitality while leaving others to absorb substantial increases overnight.
Treasury Offices to Benefit from Reduced Rates
In a related development, it has emerged that the Treasury's own offices are set to benefit from reduced business rates. Analysis by tax firm Ryan of official Government figures indicates that 1 Horse Guards Road, home to HM Treasury, will see its annual bill decrease by £288,180 in the 2026/27 financial year.
Despite a 4% increase in property value, the Treasury's bill will drop to £9.62 million next year, owing to changes in the multiplier used to calculate rates and adjustments to the tax base of rateable properties. A Treasury spokesman clarified that property valuations are independently calculated by the Valuation Office Agency, and HM Treasury will pay a higher multiplier next year to help fund a lower rate for the high street, as part of the government's commitment to rebalancing the business rates system.
This reduction occurs even as most large offices across Central London face increased tax liabilities from April, highlighting the complex and often contentious nature of business rate reforms.
