A political dispute has erupted over whether the government was fully aware of the significant impact of business rates revaluations before announcing its autumn budget, following revelations from the head of the Valuation Office Agency.
The Core of the Controversy
The row centres on claims made during Prime Minister's Questions on 14 January 2026. Conservative leader Kemi Badenoch asserted that Business Secretary Peter Kyle had said the Chancellor, Rachel Reeves, "did not even realise the impact of her business rates policy" on 12 January. Badenoch further stated that on 13 January, the "tax office said that it did tell the Government what the impact would be".
In response, Mr Kyle clarified that ministers "did not have access" to the specific information from the independent VOA revaluations before finalising budget decisions. However, this position was directly challenged by testimony from tax officials.
What the Tax Office Told MPs
Under questioning by the Treasury Select Committee on 13 January, the chief executives of the Valuation Office Agency and HM Revenue and Customs revealed they had provided the government with detailed data. VOA chief executive Jonathan Russell and HMRC chief executive John-Paul Marks told MPs they had supplied datasets showing the impact of rateable value revaluations at a "sectoral level".
Mr Russell described a formal process of "data drops" to the government over a 12-month period. When pressed by Conservative MP Dame Harriett Baldwin on whether the dramatic increases for certain sectors, like pubs, were explicitly flagged, the officials were less clear. Russell stated, "we make it very clear that there are changes in rateable value because of the work we’re doing", but did not confirm if the scale was highlighted as a potential political issue.
Understanding the Business Rates Changes
Business rates are a tax on commercial properties in England, revalued every three years. The VOA assesses the 'rateable value'—an estimate of a property's annual rent—while the government sets the multiplier used to calculate the final bill.
In the autumn budget, Chancellor Rachel Reeves announced a lower multiplier for retail, hospitality, and leisure properties. However, this coincided with the end of a Covid-era discount and a nationwide revaluation by the VOA, effective from April 2026.
The revaluation led to stark increases: pubs in England face an average 30% rise in rateable value, with pubs offering lodging seeing an average 70% hike. The average increase for all properties in England is about 19%.
Mr Marks pointed to the government's response, noting "Ministers announced a multibillion-pound – £4.3 billion – package of reliefs", implying this decision was informed by the data provided.
The revelation that ministers received sector-level impact data before the budget decisions raises questions about the internal government communication and the framing of the policy's rollout. The dispute highlights the complex and often politically sensitive interplay between independent valuation processes and ministerial decision-making in tax policy.
