Rachel Reeves’s pub reprieve is nothing for Labour to cheer about

Editorial: The government’s latest U-turn, over business rate relief, will be welcomed by publicans – but it only comes after a noisy nationwide campaign that saw MPs banned from more than a thousand boozers. It is sadly emblematic of how this administration goes about its business

Whether the government’s latest U-turn will make it easier for Labour members of parliament to buy a pint or two in their constituency boozers remains to be seen – but it is, at least, a sign that the government is listening, and responding, to the plight of the pub.

Ever since the landlord of The Larder House in Bournemouth decided to put up “No Labour MPs” signs last month, and hundreds of other establishments followed, the extreme financial pressures on the sector have become a matter of pressing political concern. It was a smart publicity move by publicans, and one that reflects more than mere special pleading.

While the sad decline of the traditional public house – a cultural institution unique to the British Isles – dates back some decades, the crisis was set to become still more acute in the coming months, spreading to the restaurant and hotel trades. The impact on town centres, village life and tourism would have been highly noticeable – and politically damaging.

It is hardly all the Starmer government’s fault, but it must take its share of culpability. An accumulation of decisions by the Treasury – to hike employers’ national insurance contributions, to raise the minimum wage, and to reform business rates – combined with high energy bills, post-Brexit staff shortages, the continuing cost of living crisis and a generational shift in drinking habits, has left many thousands of small business owners of all kinds facing closure and ruin. In a year heavy with elections, it was not a prospect ministers could face with equanimity – even with the aid of a stiff drink.

So severe is the predicament of the hospitality sector that, as The Independent reveals, the government has now decided to take the extraordinary step of extending relief on business rates for the sector – rather than cancelling it in April, as was the plan announced by Rachel Reeves in her last Budget.

That should help. Industry body UKHospitality says that the average pub faces a 15 per cent rise in business rates next year, with further increases amounting to £12,900 extra over the next three years. Hotels are hit even harder, with bills rising by a total of £205,200 on average per establishment by 2029. Many will be liable for even higher increases in their tax liabilities and wage bills, with custom looking slow for the foreseeable future.

Something certainly seems to have gone badly wrong with the government’s plan to reform business rates. The original aim was to level the playing field in retail and leisure. The idea was to protect and promote smaller concerns in physical premises on struggling high streets, while pushing more of the fiscal burden onto larger companies and the online giants. Even with some special provisions for retail, hospitality and leisure businesses, such has been the scale of the increase in business rateable values that it far outweighed the discount the chancellor had planned.

Rather like the arrival of the poll tax to replace the rates system almost four decades ago, this reform seems to have been very poorly thought through, and has created such outrageous anomalies that it has had to be reversed, if not entirely abandoned. Indeed, embarrassing as yet another U-turn is, it is far less damaging than ploughing on with such a disastrous policy. Sir Keir Starmer is of an age where he can well remember the lethal damage that the poll tax did to the career of one of his predecessors, Margaret Thatcher.

The U-turn on pubs also speaks to a certain pattern in the way this government goes about its business. Before the general election, the public was attracted to Labour’s proposal of an end to “chaos and confusion”, to zigzagging policies and ministerial teams, and to the sheer unpredictability of Tory rule. Yet now that the “grown-ups” have taken charge, they sometimes seem scarcely more able to get things right the first time.

Hence, for example, their continuation of their predecessors’ campaign to release the Egyptian political prisoner Alaa Abd el-Fattah, which ended in fiasco when his (public) social media history was discovered. Much the same goes for the planned (and now watered-down) reforms to inheritance tax relief for farms. In that case, it looked like the Treasury had simply refused to consult Defra or the farmers’ organisations about the real-life consequences.

It also looks as though, soon after taking office, the chancellor was bounced into scrapping the pensioners’ winter fuel allowance. And wider welfare reform was botched last year, when it could have been a turning point in making the social security system sustainable.

“Listening” and coming to the right decisions in the “wrong” way is clearly better than the alternative – but the voters must wonder what happened to the rational, evidence-based, judicious policymaking that Labour once promised. It’s a promising topic for a lively discussion over a few bevvies at The Larder House, or at any of the other fine venues that have a local Labour MP.