Last orders for Rachel Reeves – this could be the final straw for the embattled Chancellor
The Chancellor’s job could been on the line over the latest debacle
Rachel Reeves could be facing yet another backlash (Image: Daily Express/PA)
Could Rachel Reeves’s time inside No 11 finally be up? A brewing Cabinet revolt over the upcoming business rates increase has again turned up the heat on the beleaguered Chancellor.
After a slew of humiliating U-turns on welfare cuts, scrapping the universal winter fuel payment and the farm tax, Ms Reeves would have been hoping for a quieter start to the new year. But her business rate plans have clobbered one of Britain’s great institutions – pubs. And they are calling last orders on the changes amid fears that they could be driven out of business.
Keir Starmer and Rachel Reeves are said to disagree over the business rates increase (Image: Getty Images)
Jeremy Clarkson opposed Labour on the farms tax (Image: Jonathan Buckmaster/Daily Express)
Worse still for Ms Reeves is that her next-door neighbour, the Prime Minister, doesn’t quite see eye-to-eye on the matter.
In November’s Budget, the Chancellor announced a shake-up to how business rates are calculated.
She said there will be a new band for retail, hospitality and leisure, bringing an end to the relief scheme first introduced in 2020 during the pandemic.
But the sector argues that the new business rates, while lower than before Covid, do not go far enough.
They say that because the tax is based on rateable property values – an official estimate of a commercial property’s annual rental value – they are disproportionately affected because they have physical stores, restaurants and pubs, unlike online giants.
Some village pubs face paying business rates for the first time under the revaluation.
A growing backlash has resulted in Labour MPs being barred from dozens of pubs and restaurants across Britain.
Ms Reeves herself has been banned from her local in Pudsey, West Yorkshire.
Sir Keir Starmer has offered “licensing reforms” to soften the blow of higher business rates, but publicans have said they need a reduction in the steep increase in tax bills planned for April for establishments to survive.
One Labour insider said: “Keir has stood by Rachel through thick and thin, but this may well be the beginning of the end.
“He is already weakened, and if the Cabinet are in revolt over this, then he may well be strong-armed into changing direction – and that means a new Chancellor.”
With his own job on the line, Sir Keir will be determined that the Government doesn’t get into another high-profile battle like with the farm tax, which saw celebrities Jeremy Clarkson, Kaleb Cooper, Kirsty Allsopp and Andrew Lloyd Webber protesting against the change.
The amount Tom Kerridge has to pay will rise sharply (Image: Jam Press)
He will have winced this week when Michelin-star chef Tom Kerridge revealed on LBC that a government minister looked at his new business rates with “concern” after it emerged he faces a 100% tax hike.
Mr Kerridge, who owns four separate gastropubs in England, said he was presented with a sheet of paper by Business Secretary Peter Kyle during a recent meeting, which showed the new rateable tax amount on his Coach restaurant had risen from £50,500 to £106,000.
In the Budget, Ms Reeves announced a 5p tax discount for pubs, restaurants and hotels.
The new approach has overlapped with what is in effect the first re-evaluation of the size of hospitality businesses for six years, which alone would also mean a jump in tax bills.
The Treasury is confident that so-called “transition” measures, such as capping bill increases next year at 15%, are sufficient to help pubs ride out the reforms.
But industry figures are rejecting that position and the idea that changes to licences alone will be enough to protect pubs from the major business rate bill increases over the coming years.
Ms Reeves has overseen more than £60billion in annual tax rises in the two Budgets she has unveiled since taking up the post in July 2024.
