The promise to overhaul business rates in favor of Britain's high streets comes with a substantial price tag, according to new analysis. The flagship proposal to expand small business rates relief would cost the Exchequer approximately £880 million a year, raising fresh questions over who ultimately picks up the bill.
The Greater Manchester mayor has repeatedly argued that there is "room for movement on tax" within Labour's manifesto commitments, pledging a business rates cut for pubs and high street firms while insisting he would stay within the party's fiscal rules. Central to that agenda is a proposal to raise the threshold for 100 per cent small business rates relief in England by 50 per cent, from a rateable value of £12,000 to £18,000, with the upper taper threshold rising from £15,000 to £21,000.
Forecasts suggest that the change would lift more than 140,000 additional small premises out of paying business rates altogether. However, the arithmetic is the problem. The concern is how the policy is funded if things have to be revenue neutral, and whether larger commercial properties will be asked to contribute even more.
The mayor has argued that "online giants" should pay more through higher taxes on large warehouses, and has repeated the case for higher rates on warehouses and major out-of-town developments to fund lower bills for pubs and to lift certain small businesses out of rates altogether. The mechanism to do so already exists, with the Government's reforms introduced in April 2026 including a 2.8p surtax on properties with rateable values above £500,000 in England.
However, the surtax is not a warehouse tax, and any increase would land across a broader base unless the Government designed an entirely new approach. The primary issue remains that property taxes are now too high, and an increase could increase the cost of occupying and investing in many of the sectors that underpin investment, jobs, and economic growth.
The debate may increasingly turn not only on how rates are reformed in England, but on who ultimately controls one of the country's most significant business taxes, as business rates are already devolved to Scotland, Wales, and Northern Ireland.
The constitutional wrinkle highlights the complexities of the issue, and the need for a careful consideration of the funding arrangements and the impact on different sectors of the economy.
