Agenda item

This Council notes: 

  

1.         That neighbourhood shopping areas across Cambridge are facing dramatic business rates increases from April 2026, with Valuation Office Agency (VOA) data showing particularly severe impacts in areas outside the city centre including Milton Road (25% increases), Chesterton Road (43-46%), Cherry Hinton High Street (19-25%), Queen Edith's, and Arbury (approximately 20%). 

2.         That business rates are a nationally controlled tax, the proceeds of which are controlled by central government, with local councils only collecting them on Government's behalf and receiving a small incentive for increases in the total raised in their areas. 

3.         That these increases coincide with the removal of 40% Retail, Hospitality and Leisure (RHL) relief affecting 230,000 small firms across England, meaning actual bills for neighbourhood shops will increase by several hundred percent over the next three years despite so-called 'transitional protections'. 

4.         That the Federation of Small Businesses (FSB) has warned of 'three years of business rates misery' with an average 52% hike in bills for small businesses such as cafés, shops and hairdressers, describing this as a 'tax timebomb' that threatens high streets and the jobs and services they provide. 

5.         That the Government has raised new funds from a high-value multiplier which it has the power to use to support retail, hospitality and leisure sectors but has chosen not to, leaving most of the high street without adequate support. 

6.         That the VOA operates geographical 'valuation schemes' grouping streets together, with neighbourhood shopping areas serving less affluent communities systematically facing higher increases than city centre areas. 

7.         That businesses in these neighbourhood areas provide essential local services, affordable goods, and employment to Cambridge's less affluent communities. 

  

  

This Council believes: 

  

8.         That forcing neighbourhood shops to raise prices or close makes the cost of living crisis worse for families across Cambridge who can least afford it. 

9.         That viable local shopping areas are essential for community cohesion and supporting residents who cannot easily travel to city centre retail. 

10.     That there is no rational justification for neighbourhood shopping areas serving deprived communities to face massive increases of 20-46%. 

11.     That the Government has raised new revenue from high-value properties which could be used to support small businesses but has chosen to provide only limited relief to pubs and music venues while leaving most of the high street without adequate support. 

12.     That the removal of meaningful RHL relief, combined with aggressive revaluation, threatens the survival of neighbourhood shops across Cambridge. 

13.     That the Government's transitional protections are wholly inadequate - allowing bills to increase by £800 per year or 15-25% over three years amounts to managed decline of our local high streets. 

14.     That businesses facing these increases will be forced to raise prices (increasing the cost of living for residents across Cambridge who can least afford it), reduce services, or close entirely. 

15.     That Labour's handling of business rates reform has been chaotic and poorly communicated, with the Government's own calculator withdrawn after providing incorrect figures, leaving businesses unable to plan with certainty. 

  

  

This Council resolves: 

  

16.     To write to the Chancellor of the Exchequer and Cambridge's Members of Parliament calling on the Labour Government to provide meaningful relief for retail, hospitality and leisure businesses equivalent to the previous 40% support levels, using the new revenue raised from high-value properties, and urging Government to enact meaningful long-term reform by replacing business rates with a Commercial Landowner Levy (CLL) paid by property owners instead of tenants. 

17.     To write to the VOA demanding an explanation for the geographical disparities in rateable value increases across Cambridge, particularly why neighbourhood shopping areas are facing massive increases of 20-46%, and requesting an urgent review of the methodology used. 

Councillor Dalzell proposed and Councillor Hauk seconded the following motion: 

 

This Council notes: 

  

1.    That neighbourhood shopping areas across Cambridge are facing dramatic business rates increases from April 2026, with Valuation Office Agency (VOA) data showing particularly severe impacts in areas outside the city centre including Milton Road (25% increases), Chesterton Road (43-46%), Cherry Hinton High Street (19-25%), Queen Edith's, and Arbury (approximately 20%). 

2.    That business rates are a nationally controlled tax, the proceeds of which are controlled by central government, with local councils only collecting them on Government's behalf and receiving a small incentive for increases in the total raised in their areas. 

3.    That these increases coincide with the removal of 40% Retail, Hospitality and Leisure (RHL) relief affecting 230,000 small firms across England, meaning actual bills for neighbourhood shops will increase by several hundred percent over the next three years despite so-called 'transitional protections'. 

4.    That the Federation of Small Businesses (FSB) has warned of 'three years of business rates misery' with an average 52% hike in bills for small businesses such as cafés, shops and hairdressers, describing this as a 'tax timebomb' that threatens high streets and the jobs and services they provide. 

5.    That the Government has raised new funds from a high-value multiplier which it has the power to use to support retail, hospitality and leisure sectors but has chosen not to, leaving most of the high street without adequate support. 

6.    That the VOA operates geographical 'valuation schemes' grouping streets together, with neighbourhood shopping areas serving less affluent communities systematically facing higher increases than city centre areas. 

7.    That businesses in these neighbourhood areas provide essential local services, affordable goods, and employment to Cambridge's less affluent communities. 

    

This Council believes: 

  

8.    That forcing neighbourhood shops to raise prices or close makes the cost of living crisis worse for families across Cambridge who can least afford it. 

9.    That viable local shopping areas are essential for community cohesion and supporting residents who cannot easily travel to city centre retail. 

10.                   That there is no rational justification for neighbourhood shopping areas serving deprived communities to face massive increases of 20-46%. 

11.                   That the Government has raised new revenue from high-value properties which could be used to support small businesses but has chosen to provide only limited relief to pubs and music venues while leaving most of the high street without adequate support. 

12.                   That the removal of meaningful RHL relief, combined with aggressive revaluation, threatens the survival of neighbourhood shops across Cambridge. 

13.                   That the Government's transitional protections are wholly inadequate - allowing bills to increase by £800 per year or 15-25% over three years amounts to managed decline of our local high streets. 

14.                   That businesses facing these increases will be forced to raise prices (increasing the cost of living for residents across Cambridge who can least afford it), reduce services, or close entirely. 

15.                   That Labour's handling of business rates reform has been chaotic and poorly communicated, with the Government's own calculator withdrawn after providing incorrect figures, leaving businesses unable to plan with certainty. 

    

This Council resolves: 

  

16.                   To write to the Chancellor of the Exchequer and Cambridge's Members of Parliament calling on the Labour Government to provide meaningful relief for retail, hospitality and leisure businesses equivalent to the previous 40% support levels, using the new revenue raised from high-value properties, and urging Government to enact meaningful long-term reform by replacing business rates with a Commercial Landowner Levy (CLL) paid by property owners instead of tenants. 

17.                   To write to the VOA demanding an explanation for the geographical disparities in rateable value increases across Cambridge, particularly why neighbourhood shopping areas are facing massive increases of 20-46%, and requesting an urgent review of the methodology used. 

 

Councillor S. Smith proposed and Councillor Nestor seconded the following amendment to motion (deleted text struck through and additional text underlined):

 

Labour Amendment to Agenda Item 9b

Proposed by Councillor Simon Smith, seconded by Councillor Antoinette Nestor

Existing text struck through, additional text underlined

 

UNFAIR BUSINESS RATES INCREASES THREATENING RELIEFS FOR NEIGHBOURHOOD SHOPS, HOSPITALITY AND LEISURE SECTORS

This Council notes: 

  

1.    That neighbourhood shopping areas across Cambridge are facing dramatic business rates increases from April 2026, with Valuation Office Agency (VOA) data showing particularly severe impacts in areas outside the city centre including Milton Road (25% increases), Chesterton Road (43-46%), Cherry Hinton High Street (19-25%), Queen Edith's, and Arbury (approximately 20%). 

2.    That business rates are a nationally controlled tax, the proceeds of which are controlled by central government, with local councils only collecting them on Government's behalf and receiving a small incentive for increases in the total raised in their areas. 

3.    That these increases coincide with the removal of 40% Retail, Hospitality and Leisure (RHL) relief affecting 230,000 small firms across England, meaning actual bills for neighbourhood shops will increase by several hundred percent over the next three years despite so-called 'transitional protections'. 

4.    That the Federation of Small Businesses (FSB) has warned of 'three years of business rates misery' with an average 52% hike in bills for small businesses such as cafés, shops and hairdressers, describing this as a 'tax timebomb' that threatens high streets and the jobs and services they provide. 

5.    That the Government has raised new funds from a high-value multiplier which it has the power to use to support retail, hospitality and leisure sectors but has chosen not to, leaving most of the high street without adequate support. 

6.    That the VOA operates geographical 'valuation schemes' grouping streets together, with neighbourhood shopping areas serving less affluent communities systematically facing higher increases than city centre areas. 

7.    That businesses in these neighbourhood areas provide essential local services, affordable goods, and employment to Cambridge's less affluent communities. 

    

This Council believes: 

  

8.    That forcing neighbourhood shops to raise prices or close makes the cost of living crisis worse for families across Cambridge who can least afford it. 

9.    That viable local shopping areas are essential for community cohesion and supporting residents who cannot easily travel to city centre retail. 

10.                   That there is no rational justification for neighbourhood shopping areas serving deprived communities to face massive increases of 20-46%. 

11.                   That the Government has raised new revenue from high-value properties which could be used to support small businesses but has chosen to provide only limited relief to pubs and music venues while leaving most of the high street without adequate support. 

12.                   That the removal of meaningful RHL relief, combined with aggressive revaluation, threatens the survival of neighbourhood shops across Cambridge. 

13.                   That the Government's transitional protections are wholly inadequate - allowing bills to increase by £800 per year or 15-25% over three years amounts to managed decline of our local high streets. 

14.                   That businesses facing these increases will be forced to raise prices (increasing the cost of living for residents across Cambridge who can least afford it), reduce services, or close entirely. 

15.                   That Labour's handling of business rates reform has been chaotic and poorly communicated, with the Government's own calculator withdrawn after providing incorrect figures, leaving businesses unable to plan with certainty. 

  

This Council resolves: 

  

16.                   To write to the Chancellor of the Exchequer and Cambridge's Members of Parliament calling on the Labour Government to provide meaningful relief for retail, hospitality and leisure businesses equivalent to the previous 40% support levels, using the new revenue raised from high-value properties, and urging Government to enact meaningful long-term reform by replacing business rates with a Commercial Landowner Levy (CLL) paid by property owners instead of tenants. 

17.                   To write to the VOA demanding an explanation for the geographical disparities in rateable value increases across Cambridge, particularly why neighbourhood shopping areas are facing massive increases of 20-46%, and requesting an urgent review of the methodology used. 

 

1. In April 2026, the Government introduced three changes to business rates. A revaluation based on market rents as of April 2024, five new multipliers and targeted reliefs. Taking each change in turn:

2. Rateable Value: This is the annual rent a property could fetch on the open market as estimated every three years by the Valuation Office Agency. The revaluations can therefore lead to increases and decreases according to market trends by location and sector. Businesses can challenge a new rateable value if they believe it is not justified.

3. Multipliers: Business rates are determined by a property’s rateable value x national multiplier (poundage) set by the Government.

4. From 2026, the Government moved from a two-tier multiplier system (of 49.9p and 55.5p for properties with rateable values of less and more than £55k) to a five-tier system shown below.

5. This includes two permanently lower multipliers for the retail, hospitality and leisure sectors which are part of a £4.3bn support package to manage changes in rateable values and loss of the Retail, Hospitality, Leisure relief. However, the revaluation changes and new lower multipliers may not necessarily result in higher business rates for businesses in this sector.   

 

Category	Property Type Rateable Value	2026/27 Multiplier
Small RHL	Retail, Hospitality, Leisure <£51k	38.2p
Standard RHL	Retail, Hospitality, Leisure £51-£499k	43p
Small Non-RTL	Other Sectors < £51k	43.2p
Standard Non-RTL	Other Sectors £51-£499k	48p
High-Value	All Properties > £500k	50.8p

 

6. Targeted support: In addition to the lower multipliers, there are three main relief schemes: 

7. Supporting Small Business Scheme 2026-29. This applies when a business has, due to the 2026 revaluation lost some or part of either their Small Business Rates relief, or Retail, Hospitality and Leisure relief, or 2023 Supporting Small Business relief.

 

8. If eligible, an increase in business rates would go up by the greater of either £800 or the following transitional relief percentage caps: 5% for properties with rateable values of up to £20,000, 15% for rateable values £20k to £100k and 30% for rateable values of more than £100k.

9. It is important to translate revaluation increases of 25% into the payable business rates bills and review what has happened since 2019.

For example, in 2019 a shop in the City was the subject of a rateable value of £19,500 and a business rates bill of £6,383 In 2026, the same property has a ratable value of £28,750 and a business rate bill of £7,919, after applying the new multiplier and Supporting Small Business Cap worth £287.50. This amounts to an increase of 24% over seven years against an increase in the Consumer Prices Index of 27.5%.

 

Year	Rateable Value £	Multiplier	Retail Hospitality Leisure Relief	Business Rates £
2019	19,500	0.49	33%	6,383
2020	19,500	0.499	100%	0.00
2021	19,500	0.499	100% Q1   66% Q2,3,4	2,483.54
2022	19,500	0.499	50%	4,865.25
2023	23,000	0.499	75%	2,797.52
2024	23,000	0.499	75%	2,869.25
2025	23,000	0.499	50%	6,886.20
2026	28,750	0.38	0%	7,919.13

 

In the intervening years, the shop has benefited from a rates free year, and temporary Retail, Hospitality and Leisure Relief rates from 100% to 50%, and from 2026/27 a new lower and permanent multiplier of 38p in every £ in rateable value.

ii) Transitional relief: This caps business rate increases for properties over the three years 2026/27 – 2028/29 as follows:

 

Ratable value	2026/27	2027/28	2028/29
Less than £20k	5%	10% + inflation	25% + inflation
£20k to £100k	15%	25% + inflation	40% + inflation
More than £100k	30%	25% + inflation	25% + inflation

 

11. iii) Pubs and Live Music Venues Relief. For 2026/27 eligible pubs and live music venues will receive after deducting other eligible reliefs a 15% business rates relief. Business rates will be frozen in real terms for two years from April 2027. This additional relief will benefit 89 pubs in the City.

12. The Council serves as the business rates collections authority on behalf of the Government. In the context of the various changes, the Council Collections team has been:

i) Providing reassurance to businesses concerned about how much their business rates bills will be by signposting them to online calculators and providing estimates and information on the support measures and how to appeal, and

ii) Working to ensure all applicable reliefs and adjustments are applied to the 2026/27 business rates bills which will be issued in March 2026. This will enable all businesses to see how their charge has been calculated and make informed decisions about whether to appeal. However, there may be cases where the exact nature of the business is unknown. Charge payers are encouraged to contact the Council if they believe a relief has not been applied.

13. The Treasury has stated restructuring of business rates for 2026/27 is designed to be revenue neutral overall but shifts the burden from smaller, in-person retail, hospitality and leisure properties to properties with rateable values over £500k, for example distribution warehouses. The British Property Federation claims the overall tax burden will increase by £1.7bn and complained about the burden on big businesses.

This Council believes:

14. Neighbourhood shops and local shopping areas provide residents with convenient access to goods and services, are vital for those with mobility issues and without access to a car and contribute to community cohesion and sense of place and belonging.

15. It has a significant responsibility to maintain the viability of its portfolio of local shops and shopping parades, redevelop them as required and secure provision in new developments through planning policies and development management practices.

16. Businesses whose premises are the subject of hard-to-justify increases in rateable values be encouraged to appeal,

17. Businesses with concerns about their eligibility for the various reliefs be encouraged to seek advice from the Council’s collections team.

18. It would be misleading to make claims about ‘massive increases’ in business rates and consequential increases in retail prices, reductions in services and closures in advance of comprehensive evidence of the impacts in monetary terms.

19. It would be prudent to request and review such evidence before any resolution could be justified to make representations to the Chancellor of the Exchequer, Cambridge’s MP’s and Valuation Office Agency.

This Council resolves:

20. The Council will use its discretionary relief powers under Section 47 of the Local Government Finance Act (as amended) to grant the Pubs and Live Music Venues Relief and claim full reimbursement from the Government in accordance with its expanded guidance (Business Rates Information Letters 1/2026 and 3/2026).

21. Request officers to provide further information – in monetary terms – on the financial impacts of the new rateable valuations, multipliers and relief schemes on neighbourhood shops, hospitality and leisure sectors.

 

The amendment was carried by 22 votes to 10 with 5 abstentions.

 

Resolved (by 35 votes to 0 with 1 abstention) that:

 

This Council notes: 

 

1. In April 2026, the Government introduced three changes to business rates. A revaluation based on market rents as of April 2024, five new multipliers and targeted reliefs. Taking each change in turn:

2. Rateable Value: This is the annual rent a property could fetch on the open market as estimated every three years by the Valuation Office Agency. The revaluations can therefore lead to increases and decreases according to market trends by location and sector. Businesses can challenge a new rateable value if they believe it is not justified.

3. Multipliers: Business rates are determined by a property’s rateable value x national multiplier (poundage) set by the Government.

4. From 2026, the Government moved from a two-tier multiplier system (of 49.9p and 55.5p for properties with rateable values of less and more than £55k) to a five-tier system shown below.

5. This includes two permanently lower multipliers for the retail, hospitality and leisure sectors which are part of a £4.3bn support package to manage changes in rateable values and loss of the Retail, Hospitality, Leisure relief. However, the revaluation changes and new lower multipliers may not necessarily result in higher business rates for businesses in this sector.   

 

Category	Property Type Rateable Value	2026/27 Multiplier
Small RHL	Retail, Hospitality, Leisure <£51k	38.2p
Standard RHL	Retail, Hospitality, Leisure £51-£499k	43p
Small Non-RTL	Other Sectors < £51k	43.2p
Standard Non-RTL	Other Sectors £51-£499k	48p
High-Value	All Properties > £500k	50.8p

 

6. Targeted support: In addition to the lower multipliers, there are three main relief schemes: 

7. Supporting Small Business Scheme 2026-29. This applies when a business has, due to the 2026 revaluation lost some or part of either their Small Business Rates relief, or Retail, Hospitality and Leisure relief, or 2023 Supporting Small Business relief.

8. If eligible, an increase in business rates would go up by the greater of either £800 or the following transitional relief percentage caps: 5% for properties with rateable values of up to £20,000, 15% for rateable values £20k to £100k and 30% for rateable values of more than £100k.

9. It is important to translate revaluation increases of 25% into the payable business rates bills and review what has happened since 2019.

For example, in 2019 a shop in the City was the subject of a rateable value of £19,500 and a business rates bill of £6,383 In 2026, the same property has a ratable value of £28,750 and a business rate bill of £7,919, after applying the new multiplier and Supporting Small Business Cap worth £287.50. This amounts to an increase of 24% over seven years against an increase in the Consumer Prices Index of 27.5%.

 

Year	Rateable Value £	Multiplier	Retail Hospitality Leisure Relief	Business Rates £
2019	19,500	0.49	33%	6,383
2020	19,500	0.499	100%	0.00
2021	19,500	0.499	100% Q1   66% Q2,3,4	2,483.54
2022	19,500	0.499	50%	4,865.25
2023	23,000	0.499	75%	2,797.52
2024	23,000	0.499	75%	2,869.25
2025	23,000	0.499	50%	6,886.20
2026	28,750	0.38	0%	7,919.13

 

In the intervening years, the shop has benefited from a rates free year, and temporary Retail, Hospitality and Leisure Relief rates from 100% to 50%, and from 2026/27 a new lower and permanent multiplier of 38p in every £ in rateable value.

 

ii) Transitional relief: This caps business rate increases for properties over the three years 2026/27 – 2028/29 as follows:

 

Ratable value	2026/27	2027/28	2028/29
Less than £20k	5%	10% + inflation	25% + inflation
£20k to £100k	15%	25% + inflation	40% + inflation
More than £100k	30%	25% + inflation	25% + inflation

 

11. iii) Pubs and Live Music Venues Relief. For 2026/27 eligible pubs and live music venues will receive after deducting other eligible reliefs a 15% business rates relief. Business rates will be frozen in real terms for two years from April 2027. This additional relief will benefit 89 pubs in the City.

12. The Council serves as the business rates collections authority on behalf of the Government. In the context of the various changes, the Council Collections team has been:

i) Providing reassurance to businesses concerned about how much their business rates bills will be by signposting them to online calculators and providing estimates and information on the support measures and how to appeal, and

ii) Working to ensure all applicable reliefs and adjustments are applied to the 2026/27 business rates bills which will be issued in March 2026. This will enable all businesses to see how their charge has been calculated and make informed decisions about whether to appeal. However, there may be cases where the exact nature of the business is unknown. Charge payers are encouraged to contact the Council if they believe a relief has not been applied.

13. The Treasury has stated restructuring of business rates for 2026/27 is designed to be revenue neutral overall but shifts the burden from smaller, in-person retail, hospitality and leisure properties to properties with rateable values over £500k, for example distribution warehouses. The British Property Federation claims the overall tax burden will increase by £1.7bn and complained about the burden on big businesses.

 

This Council believes:

14. Neighbourhood shops and local shopping areas provide residents with convenient access to goods and services, are vital for those with mobility issues and without access to a car and contribute to community cohesion and sense of place and belonging.

15. It has a significant responsibility to maintain the viability of its portfolio of local shops and shopping parades, redevelop them as required and secure provision in new developments through planning policies and development management practices.

16. Businesses whose premises are the subject of hard-to-justify increases in rateable values be encouraged to appeal,

17. Businesses with concerns about their eligibility for the various reliefs be encouraged to seek advice from the Council’s collections team.

18. It would be misleading to make claims about ‘massive increases’ in business rates and consequential increases in retail prices, reductions in services and closures in advance of comprehensive evidence of the impacts in monetary terms.

19. It would be prudent to request and review such evidence before any resolution could be justified to make representations to the Chancellor of the Exchequer, Cambridge’s MP’s and Valuation Office Agency.

This Council resolves:

20. The Council will use its discretionary relief powers under Section 47 of the Local Government Finance Act (as amended) to grant the Pubs and Live Music Venues Relief and claim full reimbursement from the Government in accordance with its expanded guidance (Business Rates Information Letters 1/2026 and 3/2026).

21. Request officers to provide further information – in monetary terms – on the financial impacts of the new rateable valuations, multipliers and relief schemes on neighbourhood shops, hospitality and leisure sectors.