Rachel Reeves putting 25,000 jobs at risk as £939million business raid triggers dire industry warning

Joe Sledge
Tue, 07 Apr 2026 07:05:15 +0000

Britain’s manufacturing sector faces a £939million increase in business rates this year following changes introduced by Chancellor Rachel Reeves.

The move places an estimated 25,000 jobs now at risk, according to new research from Make UK.

The trade body, which represents thousands of manufacturers across the country, published its analysis on April 7 warning that the tax burden will add further pressure on an industry already grappling with what it describes as existential challenges.

With the Chancellor’s revised rates coming into force at the beginning of April, Make UK said many firms will struggle to absorb the additional costs in a weak economic climate.

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Rather than passing expenses on to customers through higher prices, manufacturers are expected to turn to workforce reductions to manage the near-£1billion increase.

Verity Davidge, policy director at Make UK, said: "This increase couldn't come at a worse possible time and is set to hammer one of the Government’s key strategic sectors, which is already facing existential threats from increased energy and employment costs which are completely out of their control."

She added: "For many companies right now, just to survive the burdens being imposed on them will be an achievement in itself."

The warning comes as economists have already raised concerns about rising unemployment linked to the conflict involving Donald Trump and Iran.

Investment bank ING has estimated that the conflict could eliminate 100,000 British jobs in the coming months as energy costs rise for employers.

Britain’s labour market is already experiencing its highest unemployment rate since the peak of the COVID-19 pandemic.

The manufacturing sector’s exposure to business rates is linked to the scale of factory premises compared with other commercial operations, meaning firms operating from larger sites face higher costs.

Companies employing similar numbers of staff and generating comparable turnover can face significantly different tax bills depending on their sector due to the space required for production.

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Business rates are calculated based on a property’s rateable value, reflecting its estimated annual rental value, which results in manufacturers with large facilities paying more.

Ms Davidge said: "The current system of business rates is outdated and is a blunt instrument that leaves manufacturers paying disproportionately more than other sectors relative to their size."

Under the revised framework, higher rates are applied to properties with an annual rental value exceeding £500,000, a threshold that disproportionately affects factories.

Make UK also warned that firms investing in renewable energy solutions such as solar panels could face higher rateable values, increasing their overall tax burden.

The organisation is calling on ministers to reform the system by linking business rates more closely to turnover and sales rather than property size.

It said such changes would ensure that taxation better reflects business performance rather than penalising companies for operating from larger premises.

Make UK is also urging Labour to provide businesses with a minimum of 12 months’ notice before implementing new rates to allow firms time to adjust their cost structures.

The national minimum wage rose to £12.71 at the start of April, representing an increase of 50p, adding further cost pressures for employers.