Burnham’s high street tax plan carries £880m price tag
Andy Burnham’s plans to overhaul business rates in favour of Britain’s high streets could cost around £880m a year, according to new analysis, as questions mount over how the Labour leadership frontrunner would pay for one of his first major tax reforms.
Forecasts by global tax firm Ryan suggest Burnham’s proposal to expand Small Business Rates Relief would remove more than 140,000 additional small business premises from paying business rates altogether.
The analysis comes after Burnham said he would fund the move by increasing business rates on large warehouse developments, particularly those used by online retailers such as Amazon.
Speaking to LBC this week, Burnham insisted there was still “room for movement on tax” within Labour’s 2024 manifesto while keeping to the party’s fiscal rules.
“I believe there is a case for higher business rates on warehouses and the major developments we see on the outskirts of our cities, so that we can cut business rates for pubs… and lift some high street businesses out of business rates altogether,” he said.
He added that government should “prioritise and reward the businesses that bring social benefit” such as pubs, cafés, restaurants and hairdressers.
Under the proposals modelled by Ryan, the threshold for 100 per cent Small Business Rates Relief would rise from a rateable value of £12,000 to £18,000, while the upper threshold for tapered relief would increase from £15,000 to £21,000.
Using government business rates data, the consultancy estimates the reforms would cut annual business rates liabilities by approximately £880m.
But tax specialists warned the policy would inevitably raise questions about whether larger businesses would simply be asked to shoulder an even greater burden.
Alex Probyn, practice leader for property tax at Ryan, said: “Supporting small businesses is a great policy objective. The concern is how that is funded if things have to be revenue neutral.”
“Larger commercial properties are already contributing more through the existing business rates surtax to fund lower liabilities for retail, hospitality and leisure. The obvious question is whether they are now going to be asked to contribute even more.”
High street relief vs warehouse tax
Burnham first floated the idea during the Makerfield by-election, arguing that “online giants” should contribute more towards supporting traditional town centres.
His words also come just months after the government introduced a new 2.8p business rates surtax on properties with rateable values above £500,000 to help fund permanent relief for retail and hospitality businesses.
The Confederation of British Industry has labelled the current system a “growth killer”, warning that 32 per cent of firms have cancelled, reduced or delayed investment because of business rates.
The CBI also says the UK has the highest property tax burden in the OECD relative to GDP – more than four times Germany’s level – while 76 per cent of businesses believe business rates suppress investment and 53 per cent say uncertainty over future bills makes long-term planning more difficult.
CBI chief economist Louise Hellem has argued reform must “deliver real relief, not simply shuffle costs from one sector to another.”
“Business rates are no longer just a cost of doing business – they’re a major tax on ambition and one that effectively penalises investment,” she said.
The debate comes as Britain’s high streets continue a fragile recovery, with retail sales having seen a 1.2 per cent uptick in May, according to the Office for National Statistics, helped by warmer weather and stronger spending on non-food goods.
But analysts cautioned that consumers remain highly price-sensitive, with many retailers still facing rising wage, energy and operating costs.