The government is set to climb down on forthcoming business rate hikes on pubs, with a package expected in the coming days.

The change will attempt to recognise issues with business rates as part of a wider package to support pubs, a report in The Guardian said, as the government backtracks following fierce backlash.

Treasury officials reportedly said they recognise the financial difficulties many pubs are facing after sharp rises in the rateable value of their premises.

In her November Budget, chancellor Rachel Reeves scaled back business rate reliefs that came into effect during the Covid pandemic from 75% to 40%, and said that support would end completely from April.

This combined with new business rate multipliers also set to come into affect in April has led to an outcry from a number of sectors, including hospitality and leisure, with pubs in particular named one of the ‘losers’ of the recent changes alongside industrial, office and hotel assets.

Sky News reported on Tuesday (6 January) that an “ongoing Cabinet-level opposition” to the government’s changes was brewing and the issue was then raised by Labour MP Rachael Maskell at Prime Minister’s Questions on Wednesday (7 January).

Maskell called on prime minister Sir Keir Starmer to “urgently review” the proposals announced in the Budget to “avert a high street crisis”, warning that incoming business rate hikes would mean doors closing and trade ceasing.

Responding, Starmer said he was “continuing to work with and talk to the sector on that support and what further support and action we can take”.

Further news from the government on the package is expected in the next few days.

From April, rates are set to rise by 115% for the average hotel and 76% for a pub, with hotel, pub and restaurant owner Whitbread warning before Christmas that it will have to pay between £40m and £50m in rates as a result.

John Webber, head of business rates at Colliers, said he was pleased ministers were looking to backtrack, but added it “beggars belief that the government did not think about the consequences of its policies when it introduced them”.

“Based on massive increases in rateable value and a smaller multiplier that was just not small enough, the current policy would lead to some pubs facing over 100% rises in their business rates bills over the next three years. This would do nothing to halt the rate of closure of pubs we are seeing across the country.

Webber added: “And if the government acknowledges business rates are too high for the pub sector, what about all the other sectors seeing steep rises, such as independent retailers, restaurants, hoteliers and offices and industrial occupiers, too? Rather than bringing in fundamental reform, the government used its Budget to inflict a 10.2% increase on business rates bills on UK plc next April, increasing the tax take from £33.6bn to £37.1bn. This is unsustainable given all the other costs UK businesses are facing.”

Emma McClarkin, chief executive of the British Beer and Pub Association, said the reports were “potentially a huge win for pubs across the sector” and show the government has “not only listened to our concerns but acted”.