High Street left reeling after Chancellor’s ‘disastrous’ failure on enterprise charges

High Street shops and hospitality firms face a punishing rise in business rates after the Chancellor’s ‘disastrous’ failure to tackle the broken tax regime.

Bills will go up sharply in April next year after Rachel Reeves slashed much-needed reliefs and declined to live up to her pledge to ‘replace’ the levy with a fairer system.

The rise in business rates comes on top of other costs including a £25billion national insurance raid, an inflation-busting 6.7 per cent increase in the minimum wage and a workers’ rights package costing firms £5billion a year.

Balancing act: Chancellor Rachel Reeves (pictured) was warned she is walking a ‘tightrope’ as she seeks to fulfil her spending pledges while avoiding another rout on the bond markets

Kate Nicholls, chief executive of UK Hospitality, said the Budget represented just ‘the latest blow’ to the industry and warned ‘2025 will be painful’.

She added: ‘In the short-term, the tsunami of employment costs coming in April will ultimately do more to hamper growth than incentivise it.’

Luke Johnson, chairman of Gail’s Bakery and former Pizza Express boss, said the business rates system needs ‘wholesale reform to protect our towns and cities’.

Labour was elected on a manifesto pledge to ‘replace the business rates system so we can raise the same revenue but in a fairer way’.

And ahead of the Budget, firms called for a Covid-era discount of 75 per cent to be extended to give them some breathing space to swallow other costs.

But to the disappointment of the industry, Reeves launched a ‘conversation about how the Government can best deliver’ on its promise to create a fairer system.

In a major blow to thousands of firms, she also cut Covid-era business rates relief from 75 per cent to 40 per cent, and capped it at £110,000 per organisation.

This means rates bills will more than double overnight, representing a huge £668million increase to shops, restaurants, pubs, cafes, hotels and other High Street firms, according to property group Altus.

Exasperated: Luke Johnson (pictured), chairman of Gail’s Bakery, said the business rates system needs ‘wholesale reform

It said the average shop will see its bill jump from £3,589 to £8,613 while a typical restaurant levy will increase from £5,051 to £12,122.

Simon Green, head of business rates at property consultancy Gerald Eve, called this ‘absolute madness’.

Although Reeves raised the prospect of lower bills for some in the future, she said these would not come in until April 2026. 

More valuable properties – such as large warehouses used by the likes of Amazon as well as big city centre stores including Harrods – will face higher bills.

John Webber, head of business rates at property agent Colliers, described the package as ‘desperately disappointing’.

Simon Dodd, the boss of pub chain Young’s, said: ‘This needed urgent reform.’