The Conservative Party’s proposal for business rates reform does little to stimulate future growth, according to John Webber, head of business rates at Colliers.

The professionals services and investment management firm has examined the proposal as detailed in the Conservative manifesto – released last week – and concluded the proposal does not mention tackling the multiplier or relief system.

Ahead of the July election, the Conservatives have pledged to ‘ease the burden’ on the high street by increasing business rates for online retail warehouses. The manifesto also reiterated a business rates support package worth £4.3bn over the next five years.

According to Colliers, the proposal “misses the point that the overall burden of business rates is simply too high for everyone.” Distribution warehouses have already seen a significant increase following the 2023 revaluation, when the average rateable value increased by c35%, the agency says.

Webber commented: “The Conservatives have failed to honour their original manifesto commitment to cut the business rates burden and we are now sitting on a multiplier of 54.6 %, the highest in the UK’s history. Nowhere else in Europe do businesses pay half the rental value of premises in property taxes. Such a tax rate is too high, stifling growth new investment in business.”


‘Frustrating’ lack of clarity from Labour


Colliers further commented on the Labour proposal, which “rightly emphasises” the issue of disincentivising investment and placing an undue burden on high streets. While the party is committed to replacing the system, details remain vague – and a lack of clarity will further disincentivise investment, according to the firm.


Webber said: “Pledging to abolish business rates and replace them with a business property tax is the easy bit. But we need to be able to advise businesses on what kind of taxes they will be paying under a Labour government and Labour’s vagueness is frustrating – they give no detail as to how they will replace the £30bn of income that business rates raise.

“If Labour plans to raise the same amount of money but shield the high street, they will need to collect it from some other sector- such as logistics / industrials or offices. Someone will need to take the pain.”

Labour may decide to postpone the 2026 revaluation to keep retail rateable values at their current low rate, Webber added. Meanwhile, its plan to tackle empty properties would offer a three-month business rate discount as an incentive, paid for by reallocating funding currently used to provide three months of ‘empty property relief’ that goes to landlords. This would come in from month seven to nine to ensure the business is viable and legitimate before it benefits from taxpayers’ cash.

Webber commented: “We think this thinking rather misses the point. Landlords often have a 12-month gap before finding suitable tenants, so to “clobber” them with empty rates is unfair and will do nothing to speed up re-letting. Then to offer new businesses a three-month rates holiday seven to nine months in also suggests the people drawing up these schemes have never set up a business – most new businesses fail due to a lack of cash flow in the early months since that’s when they need the help.”

Collier’s recommendations

Total abolition of business rates would be “naïve”, but a new property tax should retain the best elements of the current system while reforming it to reduce the multiplier to a “sensible level” such as £0.35, according to Colliers.

The firm further recommends reforming the reliefs system to remove inequitable ‘business rates deserts’; looking at alternative means of funding; and extending the empty property rates relief to 12 months for all sectors.

It also suggests to decouple rates from inflation and introduce annual revaluations so that bills accurately reflect values.

Webber added: “None of the three main parties’ manifestos provide me with reassurance. From the “Alice in Wonderland” policies of the Lib Dems to the dangerous tinkering with the Conservatives and vagueness of Labour, no one party has come forward with concrete proposals for reform.

“A new government has a real opportunity to introduce key reforms to the business rates system – a system which, in its current form, is not working. Over the past 30 years, various governments have over-complicated this tax, made it more opaque and increased its level disproportionately, leading to a growing chorus of criticism and contributing to destroying the high street. We need a well-managed and transparent business rates system that supports growth, not hinders it; and we need it now. That is why we have been campaigning to all parties- for meaningful reform – not shallow sound bites.”