Labour is gearing up for another humiliating U-turn – as ministers last night signalled a climbdown on tax hikes for pubs.
Mutinous Labour MPs were told that Rachel Reeves will announce a package of emergency help within days in a bid to head off a brewing revolt.
In an about-turn rapid even for this Government, Treasury sources confirmed the climbdown just six weeks after the Chancellor unveiled Budget plans which critics said would send tens of thousands of businesses in the retail and hospitality sector to the wall.
Officials said the package would deliver ‘a lifeline for pubs’, but were unable to say exactly how it will work – or what it will be worth – leaving publicans still worried.
And hotels, restaurants and independent retailers reacted with fury after ministers signalled that, for now at least, the business rates concessions will apply only to pubs.
Keir Starmer has now presided over a dozen major U-turns in his chaotic first 18 months in power.
Kemi Badenoch last night said the latest one was ‘too little, too late’ as she mocked the PM’s New Year claim to have ‘turned a corner’.
‘Keir Starmer told us Labour had ‘turned a corner’,’ she said. ‘Well, it looks like they’ve turned the corner straight into their first U-turn of 2026.’
Mutinous Labour MPs were told that Rachel Reeves will announce a package of emergency help within days in a bid to head off a brewing revolt. Pictured: Reeves visits a pub in the West Midlands on the 2024 General Election campaign trail
Beer, oh beer: Keir Starmer has now presided over a dozen major U-turns in his chaotic first 18 months in power
The Tory leader added: ‘Labour are killing Britain’s pubs.’
Shadow Chancellor Mel Stride urged Labour to bring in a wider bailout funded by welfare cuts.
‘The problem is far bigger than pubs,’ he said. ‘Businesses right across Britain are at breaking point because of Rachel Reeves’ choices.
‘Reeves must now go further and give the rest of the retail, hospitality and leisure sector the support they need.’
Labour-supporting celebrity chef Tom Kerridge, who has helped lead the campaign against the tax hike, gave a cautious welcome to the U-turn.
But he urged ministers to come forward with the details quickly, and said the sector needed further support to survive.
Speaking to LBC, he likened the move to the Government ‘saying we won’t punch you in the face, but we know you are still in trouble’.
Entrepreneur Steve Perez, founder of the UK’s biggest independent drinks manufacturer Global Brands, said: ‘This is the latest in a series of fiascos presided over by Rachel Reeves.
Tory leader Kemi Badenoch said the latest turnabout was ‘too little, too late’ as she mocked the PM’s New Year claim to have ‘turned a corner’
‘Ill-thought-out and damaging policies are briefed or announced after no consultation with anyone, harming confidence and growth, before the inevitable partial and unsatisfactory U-turns.
‘We’ve seen this over winter fuel payments, taxation of family farms and firms, income tax and now business rates for pubs.
‘The Chancellor’s credibility is shot to pieces and she should make way for someone who can do a better job.’
Changes to the business rates regime have left thousands of pubs, hotels and restaurants facing staggering bill increases.
Ms Reeves announced £4.3billion in ‘transitional relief’ at the Budget, leading many to believe they had been given a good deal.
But when the small print was examined in the hours that followed, the average pub was facing a 15 per cent increase in business rates in April, rising to 48 per cent next year and 76 per cent in 2028.
The scale of the increase triggered a furious backlash from the sector, with more than 1,500 pubs reported to have banned Labour MPs from their premises.
Dozens of MPs warned Labour whips they could rebel on the issue. Several ministers are understood to have raised concerns directly with the Chancellor.
Ms Reeves is still finalising the detail of the support package. But the Treasury decided to signal the U-turn early yesterday to head off a major Labour rebellion when MPs vote on the Finance Bill on Monday night.
South Shields MP Emma Lewell, who first raised the looming business rates crisis with the Treasury before the Budget, said ministers were too dismissive of backbench concerns.
‘The Government should listen to us and work with us before we reach crisis point and are forced to make a U-turn.
‘The harm and stress caused to hospitality businesses has already had an impact.’
The crisis has been triggered by the unwinding of Covid-era discounts on business rates for the retail, hospitality and leisure sectors, coupled with a rates revaluation.
Allies of Ms Reeves insist she became aware of the scale of the issue only after the Budget, because Treasury officials were barred from looking at the impact of the rates revaluation on individual businesses.
Last night’s U-turn was greeted with frustration by many because of its narrow focus on pubs.
Kate Nicholls, chairman of trade body UK Hospitality, said: ‘We need a hospitality-wide solution.’
Ros Morgan, chief executive of Heart of London Business Alliance, said: ‘Another temporary sticking-plaster solution aimed at just one sector won’t be enough.
‘Time and again we’ve seen piecemeal responses like this, but they won’t save our high streets.’
Andrew Goodacre, chief executive of the British Independent Retailers Association, said: ‘It’s an absolute scandal if it’s just pubs.
‘Small retailers face exactly the same challenges. If they just want shops to waste away and die, they are working towards it.’
In humiliating detail, the PM’s ELEVEN other U-turns
Family farm tax (announced Oct 2024 – junked Dec 2025)
Under changes announced in Labour’s first Budget, farmers were due to start paying inheritance tax from this year. Ministers caved in to pressure last month by raising the threshold so most farms would not have to pay it.
Employment rights Bill (July 2024 – watered down Dec 2025)
Labour’s manifesto committed it to increasing employment rights, including giving workers day-one rights to claim for unfair dismissal. Ministers abandoned this and other pledges last month.
Keeping the two-child benefit cap (Jul 2023 – junked Nov 2025)
Sir Keir vowed he wouldn’t ditch the cap on cost grounds before he became PM, but the Government announced at the last Budget that it would be scrapped.
Increasing income tax (hinted at Nov 4, 2025 – junked Nov 13, 2025)
Ahead of the last Budget, the Chancellor heavily hinted that income tax would be hiked – a clear manifesto breach. The idea was ditched nine days later.
Welfare reforms (Mar 2025 – junked July 2025)
The most significant of the PM’s U-turns and the point at which he began to lose authority. Sir Keir hoped to save £5billion but ditched the plan minutes before the vote following a backbench rebellion.
No more tax rises (Oct 2024 – reversed Nov 2025)
Ms Reeves promised at her first Budget that she would not ‘come back for more’, but froze income tax thresholds at her second Budget.
£28bn green pledge (Sep 2021 – ditched Feb 2024)
The Chancellor unveiled the pledge to spend this much every year on the party’s green energy investment pledge. But it was soon ditched under pressure over the cost.
Grooming gangs inquiry (pressure Jan 2025 – conceded June 2025)
Sir Keir accused those calling for an inquiry of ‘jumping on a bandwagon’ but later announced one would be held.
Winter fuel payments (Jul 2024 – junked June 2025)
The Chancellor announced she would restrict the allowance to those on benefits. She later U-turned.
National Insurance rises (Jul 2024 – junked Oct 2024)
Labour promised it would not increase National Insurance. The Chancellor then increased NI for employers.
Help for Waspi women (2022 – junked Dec 2024)
In 2022, Sir Keir vowed to help women who had lost pension payments. He later said they would get no compensation.
