Business rates to make ‘ghost towns’ of UK high streets

Some of the country’s biggest retailers have written to the chancellor, Rachel Reeves, warning that the government’s plans to overhaul business rates risk turning UK high streets into “ghost towns”.

The Retail Jobs Alliance, which represents Tesco, Sainsbury’s, Kingfisher, Morrisons, Asda, Primark and M&S, says thousands of jobs could be lost as a result. The changes could “accelerate the decline of high streets, reducing footfall and creating a cycle of economic downturn,” says the letter, which is also signed by Usdaw, the Labour-affiliated shop workers’ union, and the business partnership High Streets UK.

The Treasury plans to raise business rates on bigger stores from 2026 to pay for a tax cut for small stores. The fear is that this will make certain stores less profitable so they will have to consider closing down. The letter urges the chancellor to remove shops from the proposed higher level of rates and create a “fairer approach that supports, rather than penalises, physical retailers”. The proposed changes could also “negatively impact the jobs market”, it warns. Analysis by the Retail Jobs Alliance suggested that 300,000 people could leave the sector by 2028.

Without a strong retail presence “high streets risk becoming ghost towns, leading to declining property values, reduced public safety and a loss of community cohesion,” the letter adds. “[High] streets in lower-income areas would be hardest hit.”

In Redcar, a community for example, where nearly one in four people are economically inactive and, retail accounts for 13 per cent% of employment. This leaves it more exposed than other areas to a potential loss of retail jobs. “The retail sector is the lifeblood of many local communities, providing not only employment opportunities but also a sense of identity, security and economic stability in villages, towns and cities nationwide,” the letter says.

There are over 3m jobs directly linked to the retail industry, and stores act as an “anchor” for other high street businesses including cafes, hair salons and nail bars.

The letter has been copied to Labour MPs in seats where retail makes up a significant proportion of local employment. These are predominantly marginal seats where Reform UK came second in the 2024 general election, such as Blaydon and Consett, where 18%?? per cent of people are employed in retail.

A Treasury spokesman said: “We are a pro-business government that is creating a fairer business rates system to protect the high street, support investment, and level the playing field. Our reform to the ... system will introduce new, permanently lower business rates in 2026.”

Photograph by Mike Kemp/In Pictures via Getty Images