The Labour government is preparing to perform a significant policy reversal by announcing a financial support package specifically for pubs within days, Sky News has learned.
Political Pressure Forces a Change of Heart
This expected U-turn comes after intense political pressure and a growing backlash from the hospitality industry. The sector is grappling with a double blow: the end of COVID-era support schemes and a substantial hike in business rates introduced in Chancellor Rachel Reeves's November budget.
The issue was raised during Prime Minister's Questions on Wednesday, and House of Commons leader Sir Alan Campbell later acknowledged backbench concerns. He stated, "The prime minister has been absolutely clear on this, [we are] listening and that he's actively, we are actively looking at, further measures, to help pubs and the hospitality industry."
Sky's deputy political editor, Sam Coates, reported that rumours of a targeted announcement began circulating in the industry just hours after PMQs. He suggested the focus on pubs, to the potential exclusion of other venues like hotels, might be because pubs are seen as "more politically sensitive."
"Too Little, Too Late" vs. "A Huge Win"
The anticipated move has already sparked a political row. Conservative leader Kemi Badenoch, who has pledged to scrap business rates entirely, condemned the expected reversal. She posted on X, calling it "too little too late" and accusing Labour of "killing Britain's pubs." She labelled it as the government's first U-turn of 2026.
In stark contrast, Emma McClarkin, CEO of the British Beer & Pub Association, welcomed the news. She said a row-back "is potentially a huge win for pubs across the country" and shows the government has "listened to our concerns but acted." She added that it could save local pubs and jobs, allowing publicans to "breathe a huge sigh of relief."
Underlying Crisis Remains for Hospitality
Despite the expected reprieve for pubs, the fundamental issue with business rates remains unresolved for the wider sector. The November budget changes, which introduced a new band for retail, hospitality and leisure, ended the relief scheme first launched during the pandemic.
The industry argues the new rates, while lower than pre-COVID levels, are still unfairly high. The tax is based on rateable property values, which disproportionately affects businesses with physical premises like pubs and restaurants compared to online giants.
Sam Coates noted on the Politics at Sam and Anne's podcast that a one-off grant would be expensive and does not solve the underlying problem, which will intensify in three years' time. He pointed out that hotels are amongst the worst affected and face the biggest increases when the transition period ends, leaving them exposed.
The discontent has already turned into direct action, with several pubs reportedly barring Labour MPs in protest at the changes. The government has also been accused of warning businesses against protesting if they hope to receive any concessions.
