The Treasury has unveiled a support package worth more than £80m a year for pubs and live music venues in England, in a climbdown that follows a fierce backlash against plans to overhaul business rates.

Trade bodies had warned that Rachel Reeves’s changes to business rates, announced at the chancellor’s November budget, would trigger widespread closures and job losses in the hospitality sector, particularly in pubs.

On Tuesday, the government announced financial support to mitigate the effect of the rates shake-up, after officials admitted that they had not foreseen its total financial impact.

The package is expected to be worth more than £80m a year, over three years, for pubs and gig venues. It will only apply to England but the government said extra funding would be freed up for Scotland and Wales to follow suit.

While pubs gave the U-turn a cautious welcome, several trade bodies warned that the measures either did not go far enough, or excluded other under-pressure businesses such as hotels and retailers.

Dan Tomlinson, the exchequer secretary to the Treasury, said pubs were the “cornerstone of so many communities” and pointed to a decline of 7,000 in the number of pubs under successive Conservative regimes between 2010 and 2024.

Pubs in England will save an average of £1,650 each thanks to a 15% discount on their new business rates bill from 1 April, he said. Bills will then be frozen in real terms, factoring in inflation, for a further two years.

Three-quarters of pubs will see their rates bill fall or stay the same next year, he said, while rates across the sector as a whole would be lower in 2028-29 than they are now.

Relief will only apply to pubs that allow customers to buy drinks without eating.

The government will review the methodology used to calculate how much pubs should pay in rates, amid claims by the industry that it is unfairly penalised. It will also review how business rates are levied on hotels.

The government has already moved to reform pub licensing rules and said on Tuesday that this would include allowing extended hours during the latter stages of this year’s men’s football World Cup and making it easier to expand their premises.

However, the government will not reduce the rate of VAT on beers, spirits and wine, one of the sector’s biggest bugbears.

Mel Stride, the shadow chancellor, said the measures were a “temporary sticking plaster” and the Conservatives would abolish business rates for thousands of hospitality businesses.

Several trade bodies also criticised the government for not going further, given the cost pressures caused by factors including rising wages, energy bills and VAT.

The Night Time Industries Association, which represents clubs and gig venues, called the relief a “drop in the ocean”, while the Federation of Small Businesses said many firms in the hospitality, leisure and retail sectors had been left “stranded” by measures aimed at pubs and live music.

The ale enthusiasts’ group Camra said it was “short-sighted” to think that a temporary measure would save pubs facing the threat of closure.

The pubs and hospitality sector has come under intense financial pressure in recent years, with significant cost increases from higher employer national insurance contributions, rises in the minimum wage, energy costs, and inflation.

Higher bills meant one pub a day closed for good in England and Wales last year, according to analysis of government statistics by the tax specialist company Ryan. It found the overall number of pubs, including those vacant and being offered to let, had fallen to 38,623 in 2025, down from 39,989 a year earlier.

In the budget Reeves announced a £4.3bn support package that included giving relief to businesses, intended to offset the end of a Covid support scheme that had reduced bills by 40%.

However, this did not offset a significant increase in property tax bills caused by the first revaluations of properties since the pandemic from April.

The transition in relief caps was designed to be implemented over several years, to stagger the rise in bills, but the industry had complained that the increase in the third year is unaffordable.

Pubs across the UK were facing an average 76% increase in their business rates bills over the next three years before Tuesday’s announcement. Hotels are braced for an average 115% rise, according to the industry body UKHospitality.

However, the boss of Waterstones, James Daunt, this week defended the government’s approach to the high street, arguing that changes to business rates were “sensible” and had benefited shops in struggling areas.