Labour’s Budget Bombshell for High Streets across England

Rachel Reeves' Autumn Budget has delivered one of the most punishing sets of tax rises High Streets have faced in years.

Last year, Labour took a hatchet to the Retail, Hospitality and Leisure relief that had kept thousands of local firms afloat. A 75 per cent reduction became a 40 per cent reduction overnight, pulling £1.1 billion a year out of the sector. A fresh revaluation drives business rates receipts up by 10 per cent next year even after transitional relief is applied.

High Streets are being hammered:

• Average Rateable Values up 78 per cent for hotels, 30 per cent for pubs, 13 per cent for restaurants, and 12 per cent for shops.
• A typical pub's bill rising from under £4,000 in 2024-25 to more than £15,000 by 2026-27.
• Hotels facing increases from £2,500 to more than £13,000 over the same period.
• Restaurants face a rise from £5,090 in 2024-25 to over £17,500 in 2026-27.
• And the average shop's business rates bill rises from around £2,200 to over £7,500, from 2024-25 to 2026-27.

These figures exclude transitional relief - but this just phases in the massive tax hikes year by year

Nevertheless, this is compounded by government stopping funding the original relief altogether, culminating in a further £1.4 billion tax rise on top of last year's rise. Alongside this, Labour have created a surcharge that applies to every premises with a Rateable Value above £500,000. The impact falls hardest on high street retail, supermarkets, hotels, and sports venues. Fewer online warehouses are hit than the Government originally claimed. Whilst hotels, including pubs with rooms, also face an overnight “holiday tax” levy on top of soaring business rates.

At last year's Autumn Budget, having promised not to raise taxes, Rachel Reeves launched a £40 billion tax raid on businesses. The National Insurance jobs tax raises the wage bill for every firm in the country. For example, for the average pub with eight employees, the National Insurance Jobs Tax will add an additional £7,200 of tax to the wage bill. Compounding this, Labour's proposed un-Employment Rights Bill layers new compliance requirements onto that wage bill, as its own impact assessment says it will cost the economy £5 billion.

All of this breaks a fundamental pledge in Labour's manifesto. Labour pledged to replace the business rates system with one that would raise the same revenue in a fair way. Labour claimed this would level the field between the high street and online giants. However, what we have seen are receipts rising sharply, high street firms hit harder than online retailers, and the Government moving ahead with a set of decisions that, once again, breach the spirit and the letter of their very own manifesto commitment.

Meanwhile the Conservatives a comprehensive plan to back our high streets.

We have laid out proposals to cut business rates for 250,000 retail, hospitality, and leisure businesses. The support would free local business to invest in staff, upgrade their premises, and deliver better value to customers. It would give high streets the support and breathing space they need to grow.

We will also significantly reduce the cost of energy for businesses through our Cheap Power Plan. This will reduce electricity bills by 20% by cutting burdensome green levies.

The Conservatives will also repeal the most burdensome parts of Labour's Unemployment Bill, scrapping the red tape that holds businesses back from hiring staff.

Andrew Griffith MP, Shadow Secretary of State for Business and Trade, said:

“Buried beneath £26 billion of tax rises and another £16 billion poured into welfare, Labour snuck in an astronomical hike to business rates set to finish off the few businesses Labour hadn't already crippled through their jobs tax. And this is all before the £5 billion of damage coming down the track from their Unemployment Rights Bill. Labour are piling pressure upon pressure, and our high streets are the ones paying for it.

“Only the Conservative Party have a real and credible plan to save British business and revive the backbone of our economy. At Conservative Party Conference, the Conservatives announced plans to cut business rates for the high street for 250,000 retail, hospitality, and leisure businesses, backing our high streets.”

ENDS

Notes to Editors:

• Labour hiked business rates this year. In the Autumn Budget 2024, the Labour Government slashed back Retail, Hospitality and Leisure rate relief, originally introduced by Conservatives, from 75 per cent to 40 per cent. This was a tax rise of £1.1 billion a year from 2024-25 to 2025-26 (Hansard, 21 February 2025, PQ 32156, link).

• Labour are hiking business rates again next year by stealth. The Budget 2025 announced further changes to the way business rate work and have undertaken a business rate revaluation. As a result, in 2026-27, the OBR have said that business rate receipts are rising by 10 per cent this year, even with transitional relief. Pubs and hotels are being hammered in particular. The average Rateable Value of the hotels sector is up 78 per cent from the last revaluation; pubs are up 30 per cent. Whilst the average Rateable Value rose by 13 per cent for restaurants, and 12 per cent for shops (OBR, Economic and Fiscal Outlook, 26 November 2025, p. 90, link; Data from VOA, Non-domestic rating: change in rateable value of rating lists, England and Wales, 2026 Revaluation (draft list),26 November 2025, link. Figures for Special Categories 226 and the ‘Hotels, Guest & Boarding, Self Catering etc Sub-sector').

The table below shows the average rise in business rates in England (based on Conservative analysis of Valuation Office Agency rating list data):

(Figures exclude transitional relief and Supporting Small Business relief – which just phases in the tax rises)

Business rates are soaring by stealth:

The business rates revaluation has seen the Rateable Values, on which rates bills are based, of many sectors go through the roof.

• The previous Retail, Hospitality and Leisure (RHL) Rate Relief has been scrapped, and replaced with RHL multipliers that are less generous. New analysis from global tax firm Ryan shows that pubs in England face sharp rises in business rates from next April, as the current 40 per cent RHL discount comes to an end. While the new multipliers offer a real-terms reduction of around 10 to 12 per cent compared with the standard rate, this is far below the relief previously available. Ryan warns that the scheme is being replaced with a ‘far less generous' multiplier cut (Morning Advertiser, 27 November 2025, link).
• Central government is no longer funding the RHL relief itself.This is a tax hike of £1.4 billion a year, on top of last year's additional £1.1 billion hike (MHCLG, 4/2024: Autumn Budget 2024 - business rates measures, 19 November 2024, link. £1.4 billion is the 2025-26 cost of the RHL relief, which is no longer centrally funded. MHCLG, National non-domestic rates collected by councils in England: forecast for 2025 to 2026, March 2025, link).
• A new surcharge is being applied to higher value premises with Rateable Values above £500,000.A new surcharge to higher value premises with Rateable Values above £500,000 is hitting larger shops, supermarkets, hotels and sports clubs. Twice as many retail premises are being hit than the online warehouses this was supposedly meant for (The category ‘Industry - Storage & Distribution Sub-sector' accounts for just 10 per cent of the number of properties affected by the new high-value surcharge; the retail sector is 20 per cent, data from Hansard, 19 March 2025, PQ37568, link).

Labour are killing business:

• Labour have broken their manifesto pledge: The 2024 Labour Party manifestopledged: ‘In England, Labour will replace the business rates system, so we can raise the same revenue but in a fairer way. This new system will level the playing field between the high street and online giants'. But this is not what is happening. Business rates are going up. The high street is being hit more than internet retailers (The Labour Party, Manifesto 2024, June 2024, p.31, link).
• Labour's National Insurance Jobs Tax is hiking up the cost of hiring staff, meaning a chain pub with eight employees faces an additional £7,200 bill.For the average pub with eight employees, the National Insurance Jobs Tax is going to add an additional £7,200 of tax to the wage bill. The so-called Employment Rights Bill will further hike costs for firms (ONS,Economies of ale, 26 November 2018, link; IFS, Autumn Budget, 30 October 2024, link).
• Businesses have criticised the budget's negative impacts on their operating costs. Global tax firm Ryan has showed that business rates for many will increase significantly once the transitional relief is phased out. Barons managing director Clive Price said that there is ‘no meaningful improvement in the unfair business rates burden that pubs pay' (Morning Advertiser, 28 November 2025, link).
• Under Labour, hotels are facing a dual tax hike: business rates increases and a new holiday tax. On top of business rates, hotels are also facing then a ‘overnight visitor levy' that Labour are allowing mayors to impose. UK Hospitality have warned could cost the public could cost the public up to £518 million (BBC News, 25 November 2025, link).

Only the Conservative Party plan for the high street and a stronger economy:

• At Conservative Party Conference, the Conservatives announced plans to cut business rates for the high street to build stronger local economies.250,000 retail, hospitality and leisure businesses would benefit from 100 per cent business relief. This would deliver substantial savings that can then be reinvested in better premises, more staff, and lower prices. The relief would be capped at £110,000 per business (Sky News, 6 October 2025, link).