Business Rates Are Broken—But Will Anyone Fix Them?

Business rates in Britain are outdated, unfair, and long overdue for reform. Let’s stop pretending otherwise. Every time reform is “on the table,” what happens is a bit of tinkering around the edges—temporary reliefs, a new multiplier here, a promise of a review there.

But if Labour’s recent chatter is to be believed, we could—finally—be at the beginning of something more substantial. Or are we?

The Business Secretary, John Reynolds, says he wants to make Britain “fun” again, slash red tape, and introduce permanently lower business rates for retail, hospitality and leisure. It all sounds positive. It always does. And yet, many of us in the industry are holding our breath—not in excitement, but in cautious scepticism.

What Counts as Hospitality?

Because here’s the thing: real reform means asking hard questions. Like, what even is the hospitality industry—was it ever a clearly defined category in the first place? Where does it begin and end? If the government goes ahead with lower business rates for hospitality, who exactly qualifies?

Would a global fast-food chain like McDonald’s or Burger King—because they technically serve food—end up receiving the same discounted rates as your local chip shop or village pub? What about large hotel chains versus family-run B&Bs? And then there’s Greggs—often considered retail rather than hospitality, even though they serve hot food and have seating. These blurry lines matter.

And on the flip side, others may ask—should a highly profitable small takeaway not pay any business rates at all, while a full-service restaurant with ten staff, higher rent, and tighter margins continues to carry the load?

This is the crux of the issue: we need a system that’s fair, proportionate, and targeted. Not just “lower” for the sake of it, but smarter—so support flows where it’s genuinely needed.

The Real Cost of Offsetting Relief

But if the goal is to reduce business rates for hospitality, how will that be funded? The government’s most recent proposal suggests offsetting the relief by increasing rates for the top 1% of rateable value commercial properties. On the surface, that might sound politically neat. But as John Webber, Head of Business Rates at Colliers, explained when he spoke to me on Episode 188 of the Ceres Podcast, it risks causing major collateral damage to the sectors that underpin jobs, logistics, and supply chains.

“This policy risks impacting not only key sectors like manufacturing, industrial, and utilities but also the larger retailers and hospitality businesses—the very ones creating jobs in these sectors,” he said. As he clarified, the so-called “top 1%” includes the highest-value commercial properties—distribution centres, logistics hubs, supermarkets, retail warehouses, and some large hospitality sites. These aren’t luxury outliers; they’re the physical backbone of how goods move and get sold in Britain.

He flagged that supermarkets alone could face a £228 million rise in rates, with larger shops and retail warehouses not far behind.

That’s not levelling the playing field—that’s shifting the burden. And if you penalise the very businesses investing in training, refurbishment, and expansion—especially after hitting all employers with higher National Insurance contributions—what message does that send?

It’s Time to Get Serious About Fairness

Reforming business rates isn’t just about lowering headline numbers. We need a system that reflects the real pressures businesses face—where the tax burden considers not only property value, but also profitability and sustainability.

Some argue the whole foundation is flawed: why tax bricks and mortar at all? Why not move to a profit-based model? It’s a fair question—and one I put to John Webber, Head of Business Rates at Colliers, during our chat. His answer was clear: profit is slippery, subjective, open to manipulation, and far more challenging for HMRC to verify. Property, by contrast, is visible, fixed, and far easier to tax. John made some compelling points. On paper, taxing profit sounds fairer. But in practice, it could incentivise certain businesses to fiddle the books, underreport earnings, or use creative accounting. A reformed system must reflect commercial reality, but it also needs to be enforceable.

Still, there’s no denying the growing disconnect between how businesses are taxed and how they trade. As Nick Mackenzie, CEO of Greene King, rightly pointed out in a recent report, just because a pub is pulling in good turnover doesn’t mean it’s making a healthy profit. Wages, energy costs, and ingredient prices are all rising. Taxing based on property value alone increasingly feels like a blunt instrument—it punishes survival, not success.

And while we’re at it, let’s not ignore the elephant in the room: many businesses don’t pay any business rates at all. Small businesses, charity shops, online-only operations, and home-based companies often qualify for complete relief or fall under exemptions. And that’s before you even get into edge cases and loopholes.

If we’re talking about fairness, we have to talk about burden sharing. What percentage of high-street shops and community pubs pay in full, while others contribute nothing? Real reform means addressing that imbalance, not just tinkering with thresholds.

Reform Shouldn’t Be Cosmetic

Creating “hospitality zones” and rolling out pavement dining might sound progressive, but they’re just paint on the cracks unless the deeper structure is rebuilt. If local pubs and high-street restaurants are expected to compete with retail parks, online giants, and multinationals with deep pockets, they deserve a level playing field.

Let’s not kid ourselves—many of the boarded-up shops we pass every day are the result of neglect, outdated tax models, and a government that’s historically prioritised treasury receipts over long-term economic sustainability. We’ve had promises before. We’ve had revaluations, consultations, and endless warm words. But pubs and shops can’t survive on warm words.

A Chance to Do Something Meaningful

If Labour is serious—and I mean serious—about making business rates fair, they need to be brave. That means reform that targets support where it’s needed most: to community-focused businesses that reinvest in people and places. Not multinationals with global reach. It means listening not just to Treasury wonks, but to publicans, café owners, and shopkeepers who live the reality of business rates every single day.

Let’s not forget the bigger picture: hospitality isn’t just about restaurants and pubs. It’s about community. It’s about jobs, apprenticeships, and pride in our neighbourhoods. If we can get the tax system right, we unlock all of that. But if we get it wrong, we risk another wave of closures and a further hollowing out of our high streets.

So here’s my message to policymakers: don’t bottle it. Don’t tweak around the edges. Because if we do this properly, we could rebuild the high street. But if we don’t, we’ll just be holding its hand as it fades further into memory.