Britain’s shopkeepers deserve a fairer deal from government

Shops are the backbone of our town centres. Not only do they define a place but they create a sense of community that online retail – for all its convenience – will never replicate.

The government pledged in its manifesto to level the playing field between online and physical retailers. While warm words have been uttered by ministers about incentivising investment, supporting entrepreneurship and reforming business rates, the government has not yet produced a convincing strategy to support our shops and our communities.

For years, high business rates have stifled investment, forcing shops to close, costing livelihoods of shopkeepers and shopworkers, and leaving communities with hollowed-out high streets. Despite repeated calls for meaningful reform, the government has pushed the Non-Domestic Rating (Multipliers and Private Schools) Bill through Parliament without properly consulting those most affected on its impact.

On the one hand, stakeholders have been asked to join a “dialogue” with government over their Transforming Business Rates paper, while on the other hand the government rams through the most significant legislative reforms to the business rates system in decades. The new legislation contains provisions that I believe the government will come to regret, such as allowing for a new higher business rate to be applied to larger properties. If ever there was a measure that creates uncertainty and fear among the very investors we want to attract in to our urban places, this is it.

The justification for the higher rate on larger commercial property units (including large retailers) is to subsidise a lower rate to smaller retail, leisure and hospitality businesses. This clumsy sleight of hand attempts to mask a stealth tax being imposed on commercial property by a greedy Treasury.  The £1.3bn that has been spent on retail, hospitality and leisure business rates relief this year will have fallen to zero by April 2026. The Treasury is transferring the £1.3b subsidy of making business rates affordable for SMEs in retail, hospitality and leisure to all larger commercial properties.

Any property with a rateable value of £500,000 and above will be in line to pay the higher business rate, which includes all department stores, cinemas, and hospitals. These are not the ‘online giants’ that the government claimed in its manifesto it would target. In the retail space, they are the anchor stores that create the very conditions that allow smaller retailers to thrive. Without them, shopping places are unviable.

The business rates system disproportionately harms physical retailers who pay more in rates because of their higher values and so pay significantly higher operating costs that their online counterparts. This imbalance discourages investment in bricks and mortar and creates barriers to growth at a time when the government should be incentivising private sector investment to sustain local economies.

However, it is not too late to make the best of a bad situation. The Bill gives the Treasury wide scope to act.

First, the government will need to make sure that large properties are protected from paying record high business rates. The ratepayers that make up our major high street stores are not immune from financial constraints resulting in departures, John Lewis Partnership being an example. The bigger anchor and chain stores support the retail ecosystem by drawing shoppers in, from where they then filter into the independents and specialist stores.

Second, if government is serious about supporting local economic resilience, it should apply the lower multiplier to all retail, hospitality and leisure properties to provide certainty and compensate for the loss of the RHL relief.

Third, the government should provide a clear roadmap for lowering the overall burden of business rates over the course of parliament. Nowhere in Europe or beyond is commercial property so heavily taxed than in the UK. If growth is really what the chancellor wants, then a tangible, workable path to lower business rates is what she must provide.

Britain’s shopkeepers deserve a fair deal. The government must act responsibly, engage in proper consultation to understand the impacts of change, and deliver a system that fosters sustainable growth for businesses of all sizes. Failing to do so would be a missed opportunity and a betrayal of the very businesses that sustain our communities. If ministers do not listen now, the damage may be irreversible. It is time for real leadership – leadership that stands up for businesses and delivers the change Britain’s shopkeepers desperately need.