A cabinet minister has called for business rates to be reformed ‘as soon as possible’.
Business Secretary Jonathan Reynolds’s comments came as a growing Budget backlash from corporate Britain piles pressure on the Government to act.
The High Street has been left reeling by a £7billion hit from the National Insurance tax raid and the inflation-busting rise in the minimum wage announced by Rachel Reeves last month.
In a further setback for retailers and hospitality, the Chancellor failed to fulfil her promise to replace business rates with a fairer system – and instead left firms facing higher bills from April.
The scale of the disappointment across the industry was underlined yesterday as a survey by business lobby group, the CBI, showed confidence on the High Street fell at the fastest pace for two years after the Budget.
Labour has faced a barrage of criticism since Reeves announced £40billion of tax hikes last month, which critics say broke a manifesto pledge not to raise National Insurance and was anti-business and will cost jobs.
The High Street was only one area of the economy to be hit. Retailers are demanding fundamental reform of the business rates system to soften the blow.
The British Retail Consortium estimates that 17,300 shops will close over the next decade unless the rates regime is overhauled.
The issue has been highlighted by the Mail’s Save Our High Streets campaign.
Quizzed about the situation by MPs yesterday, Reynolds said: ‘I want business rates reform as soon as possible and as expansive as possible.
‘The kind of conversation we want has to cover not just the future structure of business rates but also some of the wider points and avoidance problems.’
Speaking to members of the House of Commons business committee, he added: ‘I really recognise just how significant this is for all of us, regardless of where you represent the health of High Streets and the future of business rates are a major part of that.’
The CBI’s report found confidence on the High Street fell at the fastest pace for two years in the wake of the Budget as retailers reeled from an onslaught of higher costs.
‘The last time retailers felt this gloomy was back in November 2022, at the peak of the inflation shock,’ CBI lead economist Ben Jones said.
‘The stark rise in employers’ National Insurance next year will hit retailers hard.’
The list of companies warning the tax hikes would hit their prospects also continued to grow.
Bike and motor repair chain Halfords, online giant AO World and building materials store Topps Tiles yesterday became the latest major retailers to warn of the impacts of Reeves’ Budget, saying it will add millions of pounds’ worth of costs.
AO World estimated that its wage bill will go up by around £8million due to the increase to employers’ National Insurance contributions and next April’s wage rise.
Founder and chief executive John Roberts said the chain was likely to have to raise prices and make savings to mitigate the impact.
He added: ‘This whole Budget is extremely inflationary for retailers. Is anyone naive enough to think that will not follow into pricing?’
Meanwhile, Halfords said it faces a £23million hit from Budget measures and may need to raise repair garage prices.
The firm said the cost implications were ‘particularly acute’ given its workforce of more than 12,000.
Just £9million of the extra cost burden was already included and mitigated in its plans for 2025-26.
Boss Graham Stapleton said: ‘The cost implications from the Budget are particularly acute for a specialist retailer that provides expert advice and assistance to customers, face to face.’
Topps Tiles also said it expects £4million of extra costs from next April.
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