After pubs, here are the next climbdowns for the Chancellor

Rachel Reeves must make more policy reversals before they crush entrepreneurs and small businesses Daily Telegraph 10/01/26 Far from an “iron Chancellor”, Rachel Reeves should probably now be called the “marshmallow Chancellor”.

She has proven once again that as soon as it becomes painfully clear how much pointless damage one of her idiotic policies is doing to the economy, she will be as pliable as the sugary snack and perform a screeching about-turn. Over the next few days, a support package for pubs will be unveiled after she imposed punishing increases in business rates in her Budget three months ago. It follows reversals on the winter fuel allowance and on inheritance tax on farmers. Yet there are at least four more major reversals that Reeves needs to make before they crush entrepreneurs and small businesses – and the sooner she changes her mind, the better. It remains to be seen whether the rescue plan for pubs actually works. It is extraordinary that Reeves could not work out in advance that the rise in business rates announced in the Budget at the end of November would hammer a sector already reeling from higher National Insurance charges, an inflated minimum wage, and electricity costs that net zero targets have sent soaring out of control. Even some temporary reliefs may not be enough to prevent mass closures, and many publicans may decide, quite understandably, that it is impossible to run a business subject to the whims of an inept Government, and decide to sell up or close down instead. Still, it is better than nothing. Just as with scrapping the winter fuel allowance for pensioners, and imposing inheritance tax on farmers, the Chancellor is at least willing to reverse some of her demented policies. But why stop at pubs? First, the Employment Rights Act needs addressing. It should surely be clear to everyone by now that the huge increase in employment rights set out in one of Labour’s flagship pieces of legislation is going to backfire spectacularly. Measures such as limiting zero-hours contracts, and giving full employment rights after only six months, plus an automatic right to demand flexible working hours, means that many companies, and small ones in particular, will conclude it is no longer worth the hassle and risk of employing someone in Britain. It is better to use a machine instead, if you can, or just keep the business smaller if you can’t. We are already seeing the results of that, with unemployment climbing, vacancies in freefall and the graduate recruitment market in its worst state in a generation or more. There has already been one minor about-turn, with full employment rights no longer kicking in on day one. But as the employment catastrophe unfolds, much of the bill will have to be scrapped. Next, inheritance tax on family business. The farmers now have a higher threshold. But it is insane that if any of Britain’s five-million plus family businesses get passed from one generation to the next, their heirs will have to find 20pc of its value to pay in taxes. Indeed, as Sir James Dyson has pointed out, it is actually worse than that, since a dividend will have to be paid to cover the tax bill, making the effective rate more like 40pc. The result? Well run, stable companies, making good products and providing well-paid jobs, will have to be sold off instead, while younger entrepreneurs will flee for Dubai or Milan while they still can. Almost every country in the world exempts family firms from death duties, and Britain will have to do so as well. Thirdly, the war on landlords has surely gone too far. The extra 2pc tax on rental income imposed in the Budget will be the last straw for many property owners. Alongside restrictions on deducting mortgage costs and extra compliance bills, it is no longer possible to make any money on many buy-to-let properties. As landlords sell up – and quit the market – we will face a huge shortage of places to rent, especially in the big cities and the university towns, where they are a crucial part of the market, and rents will soar out of control. The Home Office won’t even be able to find anywhere to park all the asylum seekers. Portugal has just introduced a lower rate of tax on landlords to encourage more investors into the market, with incentives to let apartments out at slightly less than market value. It might seem unlikely now, but Britain will eventually have to at least scrap the Budget’s tax rise on landlords – or the market will collapse. Finally, the completely insane “making tax digital” reforms will have to be scrapped. The Treasury is determined to squeeze more tax out of the 4.4 million self-employed workers in the country by making them file returns four times a year as well as using complicated software to update HMRC on their earnings. Some landlords may have to file 10 or more returns over the next 18 months as they transition to the new system. Officially, they are not supposed to pay more tax. In reality, the bills will rise, and so will the time and cost of compliance. The self-employed are typically the hardest working people in the country. Many of them will simply decide it is no longer worth the hassle, and wind down their hours, while plenty who can afford it will decide to retire early. The country will barely function without them, and an about-turn will be needed on that as well. It might not stop there. The windfall tax on oil and gas may have to go. So might the increase in air passenger duty as smaller regional airports close. Shops will need relief from business rates, while next year’s carbon border tax – effectively a green tariff – is another looming disaster. We can expect a whole series of reversals. Of course, it would be far better for everyone if the Government didn’t impose half-baked, poorly designed tax raids in the first place. That is probably too much to hope for. But at least the about-turns mitigate some of the damage – and there are a lot more of them on the way.