Treasury Prepares £100m Annual Support Package for Struggling Pub Sector
The Treasury is expected to unveil a financial support package worth approximately £100 million per year for the pub sector, following mounting concerns about venue closures and job losses across the industry.
The relief package, which expected to be announced imminently, comes after government officials acknowledged they had underestimated the impact of November’s Budget on licensed premises.
Chancellor Rachel Reeves has faced increasing pressure to provide assistance to struggling pubs after the Autumn Budget’s business rates changes triggered a fierce backlash from the sector. The controversy has led to some landlords barring Labour MPs from their venues, including Reeves herself being banned from the Marsh Inn in her Leeds West and Pudsey constituency.
According to analysis from UKHospitality, pubs across the UK are facing an average 76% increase in business rates bills over the next three years, while hotels face an even steeper 115% rise.
The situation has been compounded by multiple factors: the first property revaluations since the pandemic, the ending of Covid-era relief schemes, and additional cost pressures from National Insurance increases and minimum wage rises.
Speaking at the World Economic Forum in Davos last week, the Chancellor suggested pubs were in a unique situation compared to other parts of the hospitality sector. “The situation the pubs face is different from other parts of the hospitality sector but we will be setting out the detail in the next few days,” Reeves said.
The £4.3 billion support package announced in the November Budget, which included transitional relief designed to stagger bill increases, has proven insufficient to offset the overall tax burden on licensed premises.
Under the current transitional relief caps, a business with a £200,000 property faces a 15% increase next year, 25% plus inflation in 2027/28, and 40% in 2028/29. Many operators have described these increases as unsustainable, particularly when compounded with other rising costs.
Industry experts had previously estimated that providing pubs with 30% relief from new business rates bills could cost the Treasury £200 million annually by 2029. However, extending similar support to the entire hospitality sector could amount to £1.2 billion.
Despite recent calls from high profile chef/operator Tom Kerridge for the government to slash VAT on hospitality from 20% to 10%, the Treasury is not expected to reduce the tax on beer, spirits and wine as part of this support package.
The government is instead expected to emphasise licensing reforms, including extended opening hours, as additional measures to help the trade.
Emma McClarkin, chief executive of the British Beer and Pub Association, welcomed signs of government action while calling for more comprehensive long-term reform.
“We welcome the government looking at ways to support pubs, which have unique social value and are a vital employer,” she said. “In the long term we want to work with government to help pubs thrive through permanent, meaningful business rates reform, a beer duty cut, a fundamental regulatory reset and mitigation of soaring employment costs.”
Other hospitality businesses, such as restaurants, cafes and hotels, are however expected to miss out despite also warning over soaring bills.
Kate Nicholls, chief executive of UKHospitality, has urged the government to ensure any support extends beyond pubs to include restaurants, cafés and hotels facing similar pressures. “It absolutely needs to be a whole sector solution. Something just for pubs isn’t enough when restaurants are also hammered and hotels worst of all,” she stated.