Rather than keeping to their manifesto promises made to the voters, this sorry Labour Government have, once again, chosen to ignore themselves. This time, by hiking business rates which are now soaring for firms of all sizes across England due to the April 2026 business rates revaluation.
Business rates are already firms’ third biggest cost after staff and rent and these ridiculous rate hikes are an unaffordable double whammy, coming on top of Labour’s National Insurance Jobs Tax and another increase to the minimum wage.
It’s worth repeating that the per-employee threshold at which employers start to pay National Insurance has been reduced from £9,100 per year to £5,000 per year. When combined with the minimum wage increases announced at Autumn Budget 2024, the Centre for Policy Studies estimates this added a £2,367 increase in costs for employing someone over 21 years old. The OBR predicted at the time of that Budget the increase in Employer NICs would lead to "higher consumer prices and lower nominal wages". The OBR also said the tax hike would impact around 1.2 million employers with 940,000 losing out in net terms" and that the average employer who loses out will see their liabilities increase by around £26,000".
It is, therefore not terribly surprising, sadly, that since the 2024 Budget, UK businesses have cut jobs at the fastest pace in four years and companies have reduced employment by an annual rate of 1.8 per cent as of November 2025. On top of that, the OBR expects inflation for 2025 will come in at 3.5 per cent (0.2 per cent higher than their previous forecasts in March 2025) and will remain elevated at 2.5 per cent in 2026 (0.4 higher than previously forecast).
It is, however, quite astonishing the Chancellor claims she has cut business rates to a 35-year low when, in reality, the business rates tax take will actually rise to the highest ever level with total business rate receipts rising by 10 per cent in 2026-27alone. As many of you know, business rates are calculated by taking a ‘multiplier’ and applying it to the ‘Rateable Value’ so whilst it is true the rating multipliers are now low, Rateable Values have gone through the roof. As Labour is still insisting the UK now has the lowest business rates since 1991, as the Official Opposition, we have raised a complaint about this claim to the statistics regulator.
The Business Secretary, Rt Hon Peter Kyle MP then continued to test our credulity by claiming Ministers didn't have access to information about the planned revaluation of tax levels. However, the Chief Executive of the Valuation Office Agency, Jonathan Russell, has said his agency was "very clear" about the impact of revaluation with the Government.
The Impact on our Local High Streets
Our local village and town high streets are the focal point of local communities especially in rural constituencies like mine here in East Grinstead, Uckfield and on our Villages. A great many people up and down the nation depend upon a thriving high street for work, subsistence, community and pleasure. We should also recognise and cherish the heritage and cultural value many of our historic high streets offer and so it is vital we keep working to create the conditions which allow high streets to thrive and grow.
First, Labour hammered firms with higher National Insurance costs and an increase in the minimum wage. Then they froze the small business rate threshold despite the increases in Rateable Values. The Labour Government’s failure to shield small and medium sized businesses, including those lining our high streets, betrays the shopkeepers, workers, families and communities depending on them. In particular, the Government’s Business Rates Reform will hit businesses hard.
In their manifesto, this Labour Government promised to replace the business rates system “so we can raise the same revenue but in a fairer way”. At Autumn Budget 2024, the Chancellor said she would “permanently lower” business rates for Retail, Hospitality, and Leisure (RHL) properties from 2026/27 to “level the playing field for the high street”. What was announced was a freeze on the Small Business Multiplier for 2025/26 and relief on RHL properties reduced to 40 percent up to a cash limit of £110,000 per business.
The Chancellor committed to lowering rates on properties under £500,000 rateable value from April 2026, funded by a higher multiplier for properties over £500,000. Labour claimed their new ‘high value surcharge’ would mean ‘online giants’ pay more but this surcharge is also hitting larger shops, supermarkets, hotels and sports facilities. In fact, twice as many retail premises are now being hit by the surcharge than the warehouses this was supposedly meant to target, raising concerns that larger businesses, which act as ‘anchor tenants’ by drawing people to town centres, may be forced to close, further impacting smaller retailers and cutting the number of visitors to high streets.
At Autumn Budget 2025, the Chancellor set out a new system of five separate multipliers. There are three general multipliers: small (43.2p), standard, (48p), and higher (50.8p) as well as two retail, hospitality, and leisure multipliers: small (38.2p) and standard (43p). The Chancellor also announced a £4.3 billion support package over the next three years for sites facing a large increase in their rates bill. The Chancellor claims this will permanently lower tax rates for 750,000 RHL properties.
However, in reality, for most smaller operators in the RHL sector, the changes amount to an increase of 5-15 per cent in business rates next year because rates discounts for small RHL properties have been cut from 40 per cent to an average of 11 per cent. According to the Financial Times, average rateable values have risen by 76 per cent on hotels, 30 per cent on pubs, 14 per cent for restaurants, and that 3,480 retail properties will pay an extra £112 million in rates in April 2026.
The British Retail Consortium's Chief Executive, Helen Dickenson, said that "currently retailers account for 5 per cent of the economy but pay over 20 per cent of the business rates bill.”
The Impact on our Pubs
Our local pubs are great British institutions and this Labour Government’s treatment of them continues to show how out of touch they are with ordinary English people. When pubs fail; consumers, high streets, working people and communities all pay the price.
As noted by the British Beer and Pub Association (BBPA), pubs contributed more than £34.4 billion to the UK economy in 2024 and paid more than £17.4 billion in tax despite the tight margins they operate on. As well as the economic contribution, pubs are invaluable to society at large, a huge part of our national life and history, as well as being great places to come together, talk and just enjoy ourselves!
Just as many households have struggled with relentlessly high energy bills and inflation so too have pubs. I know pubs and the hospitality industry more widely face issues with both staff vacancies and costs and are still feeling the residual effects of lockdowns with many still not seeing a return to pre-pandemic demand.
Pubs are also facing yet more red tape which will reduce their custom as Labour plan to increase burdens on pubs further through measures such as reducing drink drive limits, banning 16- and 17-year-olds from drinking alcohol-free drinks, and their job-destroying Employment Rights Act, which also includes the incredibly unpopular ‘banter ban’.
Mims Davies MP Statement on 'Banter Bouncers' | Mims Davies
To be hitting pubs with additional taxes given this backdrop is unconscionable. For example, Labour’s National Insurance Jobs Tax is hiking up the cost of hiring staff: 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.
Sadly, I have been having lots of conversations with local publicans who are struggling while others have written in sharing their worries for the future. Reflecting the general dismay, one local pub recently wrote,
‘We have been struggling with the ongoing inflation of just about everything that we need, be it food pricing, drink pricing, energy pricing, national insurance increases, never ending minimum wage increases, all of which we have had to absorb. Now we have a water outage that means we are required to close up shop completely. What next. Oh, drink driving levels being reduced. There's a sense out there that country pubs are going to be a quaint thing of the past that we will all one day reminisce about.’
Mims Davies MP Encourages Residents to Support their Local Pub this January | Mims Davies
Analysis from the British Beer and Pub Association has found that pubs are facing steeper business taxes that could cost the sector an additional £150 million. Despite business rates being lowered, the industry has warned that pubs could still end up paying more because they are facing a cut to the existing tax relief next year coupled with the fresh revaluations of their properties. The BBPA has calculated that bills will rise by £3,867 for the average small pub from next year and by £11,085 for the average medium-sized pub.
The Chief Executive of the BBPA has said that pubs across Britain "are anxiously doing the sums and many will now see their bills will dramatically go up, not down, despite the impression the Budget gave. The new lower multipliers combined with the loss of the existing relief will not counter the huge increase in rateable values."
Andrew Griffith MP, the shadow business secretary, said,
“This is yet another attack on our pubs at a time when they are already struggling under this Government’s anti-business red tape and punitive hikes in business rates.”
As I mentioned earlier, following immense pushback from industry and the Opposition, on the 27th of January, the Labour Government finally announced a somewhat limited additional rate relief scheme to mitigate the impact of the business rates raid on pubs and live music venues. I note the planned relief will only apply to pubs and not to other hospitality businesses despite desperate calls from industry and even from Labour backbench MPs to extend relief across high street businesses.
However, let’s be very clear; the new relief only applies to pubs and live music venues. Hospitality venues like restaurants, cafes, nightclubs, hotels, theatres, cinemas and members’ clubs are exempt, as well as the whole retail sector. So even after the new relief, the average independent pub will still be paying £5,700 more by 2028/29 than they were in 2024/25 and more broadly only 5 per cent of RHL businesses will benefit from the Government's sticking plaster relief for pubs and live music venues.
So, yes, the pub partial U-turn is reducing the size of the pending tax hike, but it’s not actually cutting business rates. Labour’s transitional relief just phases in the hikes over three years. Business rates are still going up each and every year.
Whilst the last Conservative Government took a third of properties out of business rates completely through Small Business Rates Relief, this Labour Government seems determined to undermine our high streets and pubs and stall local growth while loudly proclaiming their support. But actions speak louder than words and I know my constituents are watching this Labour Government closely.
While I remain very concerned about the impact Labour’s economic policies will have on our local and national businesses, I am pleased the Shadow Chancellor, Mel Stride, announced the Opposition would scrap business rates for most high street businesses and pubs altogether.
He has said,
"a future Conservative government will completely abolish business rates for shops and pubs on our high street. End of. Finished. Gone".
