The retail industry has welcomed a planned cut to business rates in the chancellor’s latest Budget.

Rachel Reeves announced on Wednesday that the High Street would benefit from permanently lower rates worth nearly £900 million a year for retail, hospitality, and leisure (RHL). The cuts will be funded by higher rates for the most expensive properties such as warehouses used by large online retailers.

The move, which is set to benefit 750,000 RHL properties, will see a higher rate for properties worth £500,000 and above.

The government has also said that from March 2029 at the latest it will remove the UK’s customs duty relief for low-value imports worth £135 or less because some e-commerce retailers are being placed at an “unfair advantage”, adding that the move will support the UK’s businesses and High Streets.

Shirine Khoury-Haq, Co-op group chief executive said that the Budget provided the “clarity and certainty” that small shops and local communities have been waiting for.

“The government’s decision on business rates is a welcome and important step that will help protect jobs, strengthen local economies and support high streets across the country,” she continued. “Co-op is stepping up alongside this commitment, facilitating over £1 billion of spend into the UK economy over the next year.”

A mixed bag for retailers

Responding to the chancellor’s Budget, Helen Dickinson, chief executive at the British Retail Consortium (BRC) said that it was a “mixed bag” that offered relief for many shops but brought in new costs for others.

“The announced permanent reduction in retail business rates is an important step to reduce the industry’s burden from this broken tax,” she said. “Yet the decision to include larger retail premises in the new surtax does little to support retail investment and job creation.”

She added that plans to scrap customs duty relief have been "weakened" by the 2029 deadline.

The chief executive said that while an increase to the National Living Wage for those over 21, which will be hiked by 50p to £12.71 from April next year, was in line with expectations, a rise for 16 to 20 year-olds "could limit employment opportunities."

Under the plans, 18 to 20-year-olds will receive a minimum wage of £10.85, representing an increase of 85p, while 16-17 year-olds and apprentices will receive £8, an increase of 45p.

Tackling child poverty

Retail trade union Usdaw welcomed the Budget's measures to tackle “appalling" levels of child poverty, with 4.5 million growing up in poverty and 70 per cent of them in working families.

It added that ending the two-child benefits cap and a substantial increase in minimum wage rates will "make a real difference".

"As one of the top seven wealthiest nations, it is unacceptable that millions of kids are growing up in poverty in the UK, with seven in 10 of them in working households," said Joanne Thomas, Usdaw general secretary. "That is a legacy of 14 years of Tory failure, which Labour is working to turn around.

"Ending the Tories’ unfair two-child cap will help hundreds of thousands of children out of poverty."

She added that further action is already under consideration, with Usdaw participating in the government’s reviews of the Universal Credit system along with parental leave and pay.

"All these initiatives should make a real difference to working families, as will another significant increase in minimum wage rates, the continuing rollout of new free breakfast clubs, new nurseries in primary schools and doubling free childcare to 30 hours a week," continued Thomas. "This government is helping to give children the best start in life.”

A political budget?

Michael Shapiro, commercial property partner at law firm Spencer West LLP described the Budget as "political", adding that it did not produce anything to stimulate growth.

"Despite lowering business rates for many retail and hospitality businesses through higher rates on warehouses used by online retail companies, the fact remains that the local High Street has many empty retail and hospitality premises," he said. "Speaking with many commercial landlords and tenants which make up my client base, the main driver is the level of business rates, and the way that the business rating system works.

"While an overhaul is scheduled for April 2026, this is something that needs to be addressed with urgency. Hospitality and retail businesses continue to struggle through the current system, which is further compounded by the rise in National Insurance in the last Budget and the incoming rise to the minimum wage in January."

---