Key facts
- Andy Burnham's plan to reform business rates could cost approximately £880 million per year.
- The proposal aims to expand Small Business Rates Relief, potentially removing over 140,000 small businesses from paying business rates.
- Funding for the relief would come from increasing business rates on large warehouse developments.
- The threshold for 100% Small Business Rates Relief would rise from £12,000 to £18,000 rateable value.
- Tax specialists question how the policy would be funded without shifting the burden to larger businesses.
- The Confederation of British Industry stated that business rates suppress investment and penalize ambition.
Andy Burnham's proposal to reform business rates in favor of high street businesses could carry an annual cost of approximately £880 million, according to new analysis from global tax firm Ryan. The plan aims to expand Small Business Rates Relief, potentially removing over 140,000 additional small business premises from paying business rates altogether.
Burnham intends to fund this reform by increasing business rates on large warehouse developments, particularly those utilized by online retailers such as Amazon. He stated that there is "room for movement on tax" within Labour's fiscal rules and that the government should "prioritise and reward the businesses that bring social benefit."
Under the modelled proposals, the threshold for 100% Small Business Rates Relief would rise from a rateable value of £12,000 to £18,000, with the upper threshold for tapered relief increasing from £15,000 to £21,000. Tax specialists, however, have raised concerns about the funding mechanism, questioning if larger businesses will be asked to bear an even greater burden, as they already contribute more through existing surtaxes.
The Confederation of British Industry has criticized the current business rates system as a "growth killer," warning that it suppresses investment and makes long-term planning difficult. They advocate for reforms that deliver real relief without simply shifting costs between sectors. This debate occurs as Britain's high streets show a fragile recovery, with retail sales seeing a modest uptick in May, though consumers remain price-sensitive amid rising operational costs for retailers.