Manufacturing Sector Faces Massive Business Rates Hike
The UK’s manufacturing sector is bracing for a nearly £1 billion annual increase in business rates, adding severe pressure to an industry already struggling with high energy costs and rising employment expenses.
New analysis from Make UK, the industry representative body, suggests that manufacturers will face an additional £939 million in rates starting this month. Despite accounting for only 10 percent of the economy, the sector contributes over 20 percent of total business rates revenue, creating an imbalance that leaders say is unsustainable.
Widespread Financial Strain
A recent survey of manufacturers shows the scope of the problem. Nearly 90 percent of companies reported an increase in their April rates, with two-thirds facing hikes of up to 20 percent. Furthermore, nearly one-fifth of businesses have seen increases ranging from 20 to 50 percent, with some smaller entities reporting rateable value spikes of 100 percent.
This financial pressure comes as half of the industry renegotiates energy contracts, compounding the impact of higher national insurance costs introduced earlier this year.
Systemic Issues and Employment Risks
For many firms, business rates now represent a critical overhead—with a quarter of manufacturers identifying them as their second-largest cost, and one in ten citing them as their primary expense. Make UK warns that this burden could threaten approximately 25,000 jobs as companies look to reduce costs.
The core of the issue lies in a rating system based on square footage rather than business performance. Small businesses with large floor space can be unfairly penalised, while the system also disincentivises green investment; installing renewable energy infrastructure increases a facility’s rateable value.
Calls for Reform
Make UK is urging the government to fundamentally overhaul the system, proposing models that link rates to business size, type, or turnover instead of physical property size. They also advocate for better notice periods and greater transparency regarding how local authorities reinvest business rates revenue.
With ongoing supply chain challenges and a hostile domestic cost environment, industry leaders are clear: the current rates regime is stifling growth and investment, and reform is urgently needed to protect jobs and competitiveness.
For this story, generative AI was utilized as a research aid, with editorial verification of all AI-generated content prior to publication.