Chancellor Rachel Reeves is considering changes to planned business rate reforms after pressure from leading supermarkets amid warnings that higher costs could drive up food prices.
Following tense meetings with supermarket chiefs, the Treasury is expected to remove large retailers from the top band of business rates. While no final decision has been taken, officials confirmed the sector’s concerns had been “listened to” ahead of the November Budget.
The government had proposed raising rates on properties with a rateable value above £500,000 to fund permanent discounts for smaller shops, pubs and restaurants. The Treasury argued the change would affect only the top 1% of properties, including large warehouses owned by online retailers, and help level the playing field.
However, major supermarkets and department stores warned that the higher levy would make some locations unviable and add to existing pressures from higher national insurance, wages and packaging taxes. The British Retail Consortium (BRC) has warned that up to 400 stores could close if the plans go ahead.
Executives told Reeves the cumulative burden of new taxes risked accelerating food price inflation, which currently stands at 5.1% compared with 3.8% overall Consumer Prices Index. Industry forecasts suggest food inflation could reach 6% by year end, influencing the Bank of England’s interest rate decisions.
Reeves has said she wants to protect small high-street firms but acknowledged the concerns of larger retailers. Talks are ongoing, and changes are scheduled for April 2026.
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