Burnham’s £880m small business aid scheme is being described

Andy Burnham’s promise to change business values ​​in favor of Britain’s high streets comes with a price tag, and it’s a big one.

New analysis suggests that his flagship proposal to increase the rate relief for small businesses will cost the Exchequer around £880 million a year, raising fresh questions about who will ultimately foot the bill.

The Mayor of Greater Manchester has repeatedly denied there is “room for maneuver on taxation” within Labour’s manifesto commitments, promising to cut business rates in pubs and high street businesses while insisting he will stay within the party’s budget rules.

Central to that agenda is a proposal, first floated during the Makerfield by-election campaign and repeated in his LBC interview last week, to increase the 100 per cent benefit limit for small businesses in England by 50 per cent, from a flat rate of £12,000 to £18,000, with a higher taper from £1,000 to in £100101001010101001001,010 of £201.

Forecasts from global tax firm Ryan suggest the change will lift more than 140,000 additional small businesses from paying business rates altogether. The move will be welcomed by campaigners: the Federation of Small Businesses has already warned that 104,000 small firms will be dragged into the tax bracket when the freeze coincides with the April review.

But the arithmetic is the problem. Alex Probyn, leader of the property tax practice for Europe and Asia-Pacific at Ryan, said: “Supporting small businesses is a major policy objective. The concern is how that is funded if things are to be neutral. Large commercial properties already contribute a lot to the existing business tax rate to fund low-income retail, tourism and entertainment. The obvious question is whether they will be asked to contribute more.”

Throughout Makerfield’s campaign, Burnham argued that “online giants” should pay more for higher taxes on warehouses. In his LBC interview following this week’s keynote speech, he reiterated the case for higher prices for warehouses and large-scale suburban developments to subsidize low-income pubs and boost some small businesses entirely.

A way to do that already exists. Government changes introduced in April 2026 include a 2.8p property tax on properties with a rateable value of more than £500,000 in England, and legislation allowing ministers to raise that tax by up to 10p without creating a new tax.

The catch, Ryan points out, is that the excise tax is not a storage tax. It works in offices, manufacturing sites, transportation facilities, airports, data centers and large retail buildings alike. Any increase will be to that very broad base unless the Government devises a completely new approach.

“The attraction of increasing the existing surtax is obvious,” Probyn said. “It provides a fixed way to finance other services elsewhere in the system. The danger is that higher property taxes increase the cost of living and investment in many sectors that support investment, jobs and economic growth. The main problem is that property taxes are now too high.”

There is also a constitutional wrinkle. Business rates have already been devolved in Scotland, Wales and Northern Ireland, and with devolution central to Burnham’s wider economic agenda, the debate may turn not only on how rates are changed in England, but on who ultimately controls one of the country’s most important business taxes.