Labour to U-turn on pub tax rises after outcry

Rachel Reeves has avoided another damaging rebellion against her economic policies with the promise of a U-turn on controversial tax rises for pubs in England, after weeks of protest from her colleagues and the hospitality industry.

- Kiran Stacey Peter Walker Rob Davies

Government sources said yesterday that the chancellor was finalising a support package for the struggling industry that would include reductions to business rates for pubs, which had been facing a 76% rise on average over the next three years.

Industry figures welcomed news of the latest U-turn, which comes after similar climbdowns over cuts to winter fuel payments, cuts to disability benefits and a rise in inheritance tax for farmers.

But with the Treasury yet to publish details of the support package, Reeves's colleagues say they are willing to push ahead with an amendment to the government's finance bill if they feel it does not go far enough.

Tonia Antoniazzi, the Labour chair of the all-party parliamentary group on beer, said: “I am over the moon. Things are moving in the right direction.” But she added she and her colleagues were still prepared to rebel against Reeves's finance bill at a later stage if the new support proved insufficient.

A government source said the new plan would “recognise issues with how business rates are collated”, and would be part of a wider package including measures to help pubs with licensing, opening hours and red tape more generally.

Reeves's decision to back down comes after weeks of campaigning by publicans and MPs from across the Commons against changes she made in November's budget.