Retailers Warn £1.7bn Business Rates Hike Could Accelerate High Street Decline
Chancellor Rachel Reeves is preparing a £1.7 billion business rates overhaul in the autumn Budget, prompting warnings from major retailers that the move could worsen the decline of Britain’s high streets.
The plan aims to help fill a £5 billion gap in the public finances, partly caused by recent U-turns on welfare reforms and energy support measures. Under the proposal, larger retailers such as department stores and supermarkets would face higher business rates, while smaller shops would benefit from reduced bills.
Ministers argue that the changes will shift the tax burden towards online-focused firms and provide relief to independent high street businesses. However, final details of the new surcharge are still under review, and industry sources are concerned that Reeves may set the levy at its maximum level for larger premises.
The proposals have triggered a backlash from big retailers already under pressure from the rise in employer National Insurance contributions introduced by Reeves last year.
Critics warn the changes could be counterproductive. If more large stores close due to higher costs, vacant properties would pay no rates, potentially reducing overall tax receipts. Marks & Spencer is leading the opposition, warning that the so-called “shopping tax” would force it to raise prices and possibly close stores.
In evidence submitted to Angela Rayner’s department, which oversees local authorities and rate collection, M&S said that 111 of its branches would face increased bills and risk closure.
“Given larger retailers are often anchor tenants on the high street, taxing them to support smaller stores is a false economy. If larger shops close, smaller shops suffer,” the company stated.
“The proposed reforms could therefore accelerate the decline of the high street by encouraging retailers to close larger high street stores.”
The warning follows a stark report from the Office for Budget Responsibility, which described Britain as “living beyond its means” and flagged structural pressures on the economy.
Despite the fiscal strain, Prime Minister Keir Starmer reiterated in Parliament last week that Labour would not break its manifesto pledge to avoid raising income tax, VAT, or employee National Insurance.
