Chancellor George Osborne has confirmed he will cap business rates for large businesses at 2% as he unveils a raft of measures to boost high streets.

The business rates cap is expected to ease pressure on businesses which were braced for a 3.2% business rates increase in April next year. Retailers will now face a business rates increase of £151m, rather than the £242m increase expected.

Osborne said: “Business rates impose a heavy burden on businesses of all sizes. Today, we will help ease that burden.”

Speaking in the House of Commons today Osborne also revealed that retail premises with a rateable value of up to £50,000 will get a discount on their business rates worth up to £1,000 each year from 2014 to 2016. He said he recognised how the high street had been struggling in the recession particularly with the groing pressure from online.

Small business rates relief will also be extended for another year. In addition, new tenants taking on a retail property which has been vacant for 18 months will reveive a 50% discount on their business rates, which is set to help bring vacant stores back into use.

Osborne also announced the Government will aim to resolve 95% of outstanding appeals to the Valuation Office Agency regarding business rates by July 2015, which has been a big concern for retailers. In 2014 it will launch a consultation to make the process of calculating rateable values more transparent.

But retailers will have to wait until after 2017 before a reform of the business rates system is discussed.

Business rates are a huge concern for the retail sector, which has urged the Government to tackle the business rates system, which have burdened companies with rising rates bills.

Retailers say the high cost of business rates has restricted investment and new job creation.

Other measures announced included making it cheaper for businesses to employ young people by abolishing employer National Insurance contributions for under-21 year olds on earnings up to £813 per week.

Fuel duty rises have also been cancelled for another year.

British Retail Consortium director general Helen Dickinson said: “The Chancellor has recognised that businesses are suffering and is right to listen to retailers’ concerns on business rates. The BRC has campaigned for a two per cent cap, and reform of the business rates system, and it is extremely welcome to hear it announced.

“With the additional measures also announced today on National Insurance, retailers will be encouraged to do even more to support the aspirations of young people across the country. 40% of all jobs for those under 20 are in retail, and this will help retailers provide secure career opportunities for young people.”

Alliance Boots managing director for heath and beauty in the UK and Ireland Simon Roberts said: “We believe that strong town centres are a key driver for the future success of the retail industry in the UK and we welcome any move by the government to reduce the burden on high street businesses.”