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London’s economic recovery since the pandemic has been built by the determination of small businesses, start-ups, and the flexible workspaces that give them room to grow. The Chancellor threatens to unravel that progress with a series of overlapping changes to the business rates system which would At the heart of the issue are two intertwined reforms - the removal of Small Business Rates Relief (SBRR), and the potential removal of vacant office relief. Together, these changes could be catastrophic for London. Under the proposed changes, flexible and serviced offices could be treated as one large property rather than as multiple smaller units. That means the small businesses - the graphic designers, fintech start-ups and consultants that fill these spaces - would lose their eligibility for Small Business Rates Relief (SBRR). The result would be a sharp and sudden hike in occupancy costs at the very moment when they can least afford it. At the same time, the Chancellor is threating to remove vacant office relief. This would punish the operators who provide these flexible spaces. Currently, when a tenant moves out, providers can claim temporary relief to manage the transition before a new tenant moves in. It’s a system that works - enabling operators to adapt quickly to the changing needs of the economy and keeping high-quality workspace available for London’s entrepreneurs. Scrapping this relief would break that balance. Faced with higher costs, operators would have no choice but to pass these increases onto tenants - the very businesses the Chancellor says she wants to support. Many would be priced out of central London altogether, forced into lower-quality spaces or out of business completely. The consequences would extend far beyond office walls. Thousands of people are employed directly in the flexible workspace sector - from community managers to maintenance and tech staff. And when offices empty out, so too do the cafes, shops and gyms that depend on daily footfall. We saw this during the pandemic - London cannot afford to repeat that experience. The Chancellor’s role should be to drive growth, not deter it. Hiking costs in a low-growth, high-inflation environment would be an act of self-sabotage - a policy that weakens the very sectors driving recovery. Our ask is simple. Retain SBRR for individual flexible office tenants and preserve vacant office relief for workspace providers. Doing so would show the government understands the symbiotic relationship between London’s workplaces and its prosperity. Fail to act, and the risk is clear. We will see small businesses shutting, job losses across the sector, and city centres slipping back into stagnation. The Chancellor has an opportunity to send a clear message - that she supports small business growth and London’s entrepreneurial hubs. Let’s keep London’s lights on - not just in its offices, but in the communities and livelihoods that depend on them.
