Labour faces tearing up its crippling business rates rise for the whole hospitality sector after proposing a carve out to save struggling pubs.
Hotels, shops and other small businesses piled pressure on Chancellor Rachel Reeves to find a solution for them following the U-turn on pubs.
Mutinous Labour MPs, flying the flag for pubs in their constituencies, were told this week that Ms Reeves will announce a package of emergency help ‘within days’ in a bid to head off a brewing revolt.
But a string of other hospitality sectors are now pressuring the Government to extend support to all areas of hospitality.
One hotel magnate revealed he faces a £12.4million increase to his rates bill for a single establishment.
Chris Webb, Labour MP for Blackpool South, whose coastal constituency has been hit hard by increases to business rates, said Treasury minister Dan Tomlinson was ‘responsive’ to reducing business rates for hospitality more broadly in a private meeting on Thursday night.
‘My conversations last night were, “the whole sector has to be included,” and what I got back was they are looking at all aspects of hospitality,’ he said last night.
He added: ‘Nothing is off the table, and they’re continuing to engage and listen to the sector whilst they’re looking at any possible changes.’
Pubs were offered temporary relief from paying full business rates during Covid, but the Chancellor’s decision to scrap the discount in the Budget left many landlords contemplating closure.
Amid a furious backlash, and to see off a potential Commons rebellion on Monday, the Treasury signalled a climbdown, but is still said to be working out quite what.
A number of pubs launched a nationwide campaign to bar entry to Labour MPs in protest at the Government’s hikes to business rates
Hotels, restaurants and small businesses in coastal towns like Blackpool have been particularly effected by hikes to business rates
Live music venues are living ‘hand to mouth as it is’, says one Labour MP
Hotels have been particularly affected by business rates, which will see all commercial properties due to pay higher bills from April.
Where pubs face a 76 increase in 2028 from the current average business rate paid, hotels face a 115 per cent increase by that time.
Surinder Arora, who operates a number of hotels in the UK, told BBC Radio 4’s Today programme that the business rates bill for just one of his hotels increased by £12.4millon after discounts were scaled back.
The chief executive of the Arora Group labelled a potential carve-out for pubs only as ‘not right or fair’.
‘The new numbers are eye-watering,’ Mr Arora told the BBC, warning that ‘belt-tightening’ was inevitable, and that higher costs would be passed on to customers.
While he said he supported the chancellor’s growth ambitions, higher taxes mean instead of expanding the business, it ‘could be going the other way’.
The live music industry – which does not fit neatly into a ‘pubs’ category of taxation yet relies on sales of alcohol – could be the next to seek the Chancellor’s support.
‘One thing particularly I’m concerned about is the impact on the live music venues across the country; they’re living hand to mouth as it is,’ Labour MP for Southport Patrick Hurley told the Daily Mail.
‘I’d be very pleased to see something be done to support them. I know that a lot of them have got alcohol licenses, and they may be included in this change to the tax interpretation of pubs. But I think more generally, the whole live music industry is struggling.’
More than 30 Labour MPs were preparing to vote in favour of an amendment to the finance bill on Monday that would have reduced rates for hospitality businesses before Government indicated support for pubs.
Another Labour MP said they are ‘keeping their powder dry’ to see how Government could help support the whole hospitality sector before putting forward any amendments.
Labour chairwoman Anna Turley defended her party’s U-turn on tax increases for pubs as a ‘sign of a confident Government’
But Labour chairwoman Anna Turley yesterday defended her party’s U-turn on tax increases for pubs as a ‘sign of a confident Government’.
Ms Turley said: ‘I don’t buy this is a U-turn. This is actually about listening. I think it’s a sign of a Government that is actually in touch with people, that is listening to people, and that is responding.’
The Conservatives have seized on what constitutes another policy climbdown for the Labour Government.
Leader of the Conservative Party Kemi Badenoch said: ‘This shambolic U-turn on pubs does nothing for the rest of the hospitality sector – cafes, restaurants, shops and gyms – who are also staring at an enormous tax hike under this government.
‘Labour MPs came back from Christmas after being banned from their local pubs, and forced Keir Starmer and Rachel Reeves into another embarrassing, last-minute policy change. Will the rest of the retail, hospitality and leisure sector have to ban Labour MPs before this Government finally does the right thing?’
A joint letter penned by shadow cabinet members Mel Stride, Andrew Griffith and James Cleverly to Ms Reeves, sent yesterday, called for urgent support for the wider high street ‘on a permanent basis’.
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