Chancellor Rachel Reeves is facing significant pressure from within her own Cabinet to broaden a promised package of business rates support, as new figures reveal the wider hospitality industry faces a wave of closures.
Industry Warns of Widespread Collapse
Last week, the Treasury signalled a major policy reversal to help pubs after warnings that hundreds could be forced to shut due to a sharp increase in their rates bills. However, industry leaders are now sounding the alarm that cafes, restaurants, hotels, music venues, theatres, and independent shops are equally at risk.
Trade body UK Hospitality has issued a stark forecast, warning that without government intervention, more than 2,000 venues could close in the next year – an average of six every single day.
"A whole hospitality problem needs a whole hospitality solution," said Kate Nicholls, Chief Executive of UK Hospitality. The group's analysis shows the scale of the financial threat: the average hotel will see its business rates bill rise by £28,900 in the first year, and by a staggering £205,200 over three years. While the average pub faces an initial increase of £1,400 a year, totalling £12,900 over three years.
Cabinet Pressure for a Broader Solution
Ministers are now pushing for a more comprehensive support package to avoid a repeat of the recent pub-focused U-turn. One Government source indicated that Downing Street wants to "do it once and get it right."
Business Secretary Peter Kyle, who is set to discuss the issue with the Chancellor this week, has hinted that support should not be restricted to pubs alone. He told the BBC that the Government had been "in listening mode for some time" and described his conversations with the Treasury as "vigorous" but "collegiate."
This view is echoed by backbench MPs. Polly Billington, MP for East Thanet and chair of Labour's coastal MPs group, said ministers are having "genuine conversations" about support for small hospitality and retail businesses.
Treasury Digs In Amid Furious Backlash
Despite the mounting pressure, the Treasury is currently insisting there are no plans to extend rates relief beyond pubs. A source suggested that hotels and restaurants might benefit from wider licensing reforms instead, maintaining that help on rates would remain "pub specific."
This stance has provoked a furious reaction from the industry. Richard Bailey, Chairman of the Independent Family Brewers of Britain, accused the Government of a "wanton desire" to destroy pubs. He listed a barrage of financial pressures hitting the sector, including higher alcohol duty, minimum wages, National Insurance, VAT, and green levies.
"The measures taken by this government to increase tax and the burden of law on landlords and pubs will decimate this beloved and critical sector," Bailey stated. He warned that going to the pub is "becoming increasingly unaffordable" and that venues may not even be able to open every day. Some 1,500 pubs have already banned Labour MPs from their premises in protest following the Budget.
UK Hospitality is calling for the government to quadruple the level of business rates discount applied to hospitality firms to the maximum possible. As the Chancellor weighs her options, the future of thousands of community businesses hangs in the balance.
