The chancellor has said she is “particularly concerned” about the impact of business rates on pubs, as she hinted she was resisting calls for more support for the rest of the hospitality sector.
Rachel Reeves confirmed an announcement to soften the effect of looming rate rises on pubs was coming in the next few days or weeks.
But asked if this would extend to cafes, small hotels or independent restaurants, she told Breakfast the “biggest concern” was around pubs, which she said were badly hit during the pandemic and were facing a particular increase in business rates.
Businesses have warned they will struggle to pay higher rates, after Covid-era relief ends in April and sites are revalued.
The government has already announced a £4.3bn fund to help businesses as the relief is phased out.
Reeves confirmed “there is additional support coming” for pubs before new rates come into effect in April.
“I think most people would accept that now the pandemic is over, some of that temporary support does need to come away,” she told the .
“But it’s about the speed at which you do that.”
However, other businesses including shops, pharmacies, hotels and music venues have also called for more help to cope with increased rates, along with the Conservatives and some Labour MPs.
Asked what support other smaller hospitality businesses would get, Reeves said: “I think that people can see that the biggest impact and the biggest concern right now is around pubs.
“Some of the smallest businesses, particularly some cafes, don’t pay any business rates at all because they’re not big enough to do so.”
The climbdown on pub business rates is one of a number of U-turns by the government in recent months, including on inheritance tax for farms and this week’s reversal of plans to make digital ID mandatory to prove the right to work in the UK.
Business rates will increase sharply over the next three years as Covid-era support is phased out and property values are adjusted to reflect a return to normal business after the pandemic.
Business rates are a tax based on the “rateable value” of a firm’s premises, which is reassessed every five years.
On Tuesday, Jonathan Russell, chief executive of the Valuation Office Agency, said that while pubs had seen their valuations jump by an average of 32%, more than 5,000 had seen their rateable values at least double.
Ministers have argued they did not have access to all the information about the impact of revaluations on individual businesses before the chancellor announced changes in her November Budget.
However, Russell told MPs on the Commons Treasury Committee that his agency had been clear about the impact on different sectors before the Budget.
The government is expected to make changes to how business rates are calculated for pubs, resulting in smaller increases.
However, industry body UKHospitality has said business rate rises will affect the whole sector and see venues forced to close.
It has estimated the average hotel faces an increase of 115% over the next three years, higher than its estimate for pubs of 76%.
The British Independent Retailers Association has said its members face the same challenges as pubs but have been left out of discussions about additional support.
The National Pharmacy Association has said the sector could face a 140% increase in rates, while the lobby group for gyms, pools and leisure centres said those businesses faced potential rate increases of 60%.
