Industry groups say Chancellor Rachel Reeves’s £1.7bn property tax plan could accelerate closures of major shops, hotels and restaurants across the UK.
Retail and hospitality leaders have warned that the government’s planned overhaul of business rates could cost up to 120,000 jobs and lead to hundreds of high street closures, amid growing concern over Chancellor Rachel Reeves’s proposed £1.7bn property tax increase.
The British Retail Consortium (BRC) and UKHospitality said the new measures — which will raise taxes for large premises such as superstores, hotels, and restaurants — threaten to “reverse progress” on town centre regeneration. The organisations claim the policy could lead to widespread closures of so-called “anchor” stores, which help sustain footfall for smaller businesses.
“Ministers must exempt large retailers from higher business rates to safeguard hundreds of anchor stores and the vital jobs they sustain,” said Helen Dickinson, chief executive of the BRC.
£1.7bn plan aims to ‘revive’ high streets
Under the proposed system, due to take effect from April next year, companies with larger properties will face higher business rates, while smaller premises will see reduced levies. The Treasury has said the reform is designed to “level the playing field” between traditional high street businesses and online giants with vast warehouse operations.
Labour argues the changes are part of a strategy to revitalise city centres by supporting smaller retailers and local entrepreneurs.
However, major firms including Tesco and Sainsbury’s have already warned that the plan could have the opposite effect, potentially forcing larger retailers to close sites and reducing consumer choice on the high street.
‘Ferocious tax disadvantage’ for pubs and restaurants
Hospitality bosses have also voiced alarm. Kate Nicholls, chair of UKHospitality, said the Chancellor should “back businesses so they can develop locations where people want to live, work and invest.”
Sir Tim Martin, the founder of JD Wetherspoon, described the changes as a “ferocious tax disadvantage” that would place further strain on pubs already struggling with high energy costs and lower footfall.
The sector’s financial pressures have mounted over the past year, with new packaging taxes, higher employer national insurance rates and an increase in the national living wage adding an estimated £10bn in combined costs for retail and hospitality businesses, according to BRC data.
Retail sales slump ahead of autumn budget
Fresh figures from the Confederation of British Industry (CBI) reveal that retail sales were 27% lower in October than a year earlier, reflecting weak consumer confidence and reduced discretionary spending.
Martin Sartorius, principal economist at the CBI, said: “Consumer confidence remains poor, compounded by elevated caution ahead of next month’s Autumn Budget.”
Business leaders have held meetings with Treasury officials in recent weeks, urging them to reconsider or delay the implementation of the higher business rate brackets.
One supermarket executive said the government had been warned the move could “push up food prices,” which have already risen by nearly 5% over the past year.
Treasury defends reforms
A Treasury spokesperson said the changes would make the business rates system fairer by ensuring the largest commercial properties contribute more.
“We’re making business rates fairer by introducing permanently lower rates for retail, hospitality and leisure from April, funded by a higher rate on less than 1% of the most valuable business properties,” the spokesperson said.
They added that the government had also capped corporation tax at 25%, “the lowest in the G7,” and highlighted that interest rates have been cut five times since the election to support British businesses.
Despite government assurances, industry figures warn that unless ministers revise the plans, the property tax shake-up could deepen the high street’s long-term decline and threaten tens of thousands of jobs across the UK’s struggling retail and hospitality sectors.
