Retailers have called on the Chancellor to extend Covid-era aid and then make permanent reforms that would level the playing field.
The High Street faces a £2.5bn business rates increase that threatens to devastate pubs and shops unless Rachel Reeves steps in.
This is the stark warning from both the British Retail Consortium (BRC) and UK Hospitality, who are calling for urgent action in the Budget on Wednesday.
Business rates are a levy based on the value of a commercial property – meaning that shops pay a premium compared with online giants such as Amazon.
The two organisations called on the Chancellor (pictured) to extend Covid-era aid and then make permanent reforms that would level the playing field.
With the relief, all hospitality and retail businesses have 75 per cent shaved off their bill. But from April next year, their bills will rise to £11bn, which will force many to put up prices or shut down.
The High Street will go from paying 34pc of all rates this year to 44pc in 2025, despite accounting for only 9pc of the economy, according to the BRC and UK Hospitality report.
They argue this is unfair, as online firms do not have to fork out as much for their huge warehouses.
Kate Nicholls, UK Hospitality chief executive, said: ‘High street businesses paying one third of all business rates is absurd and one of the primary reasons why we see our businesses facing financial challenges – it makes running a pub, bar, cafe or restaurant, to name a few, incredibly expensive.’
Reducing the burden of rates could ‘unlock millions in investment from new venues to more jobs’ and save local communities from ‘countless closures’, she added.
Echoing this, BRC chief executive Helen Dickinson said: ‘Consumers want diverse and thriving High Streets, but this is held back by the broken business rates system.’
She dubbed rates as ‘the biggest barrier’ to retailers investing into new shops and jobs.
High Street employers want to see a permanent, lower rate used to calculate how much businesses should pay, meaning lower bills.
It is a major fear alongside potential tax increases including raising the rate of employers’ national insurance contributions and Deputy Prime Minister Angela Rayner’s plan for workers’ rights.
The latest plea came just a day after the boss of Marks & Spencer, Stuart Machin, warned against raising business taxes. He said: ‘It might improve the public finances in the short term, but it makes economic recovery harder and hits our customers and colleagues still struggling with the cost of living.’
Labour has pledged reforms and said that the system ‘disincentivises investment, creates uncertainty and places an undue burden on our High Streets’.
In its manifesto, the party promised to ‘replace the business rates system, so we can raise the same revenue but in a fairer way’.
But businesses are worried that reforms will be too little, too late in the face of closures.
Brewers also sounded the alarm. The British Beer and Pub Association warned that it was up against ‘a raft of new punishing rules and costs, which could spell the end of many businesses and jobs’.
Chris Jowsey, boss of Admiral Taverns, argued that tax hikes would ‘simply drive inflation, which means customers will be paying more to socialise’.
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