Chancellor George Osborne will impose a 2% cap on business rates in England and Wales next year, it is understood.

Osborne will announce the Autumn Statement tomorrow in which he is expected to reveal that rate rises will be limited to 2% in England and Wales next year instead of being linked to September’s RPI inflation rise, which is set at 3.2%.  

Retail Week has learned he may also impose a business rates freeze across small businesses.

Additionally, the BBC believes he will extend the small business rates relief further, but will not review the whole of the business rates system.

This is despite calls for such a move by some industry groups, as well as business secretary Vince Cable.

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

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

The 2% cap on business rates would mean more than £300m of revenue is lost next year.

It is understood that in Scotland, local councils will be able to adjust their own business rates relief packages for local needs under plans released by the Scottish government earlier this year.

British Retail Consortium director general Helen Dickinson said: “The BRC has been campaigning for a cap on business rates of 2% followed by reform of the system. If the reports this morning are correct and the Autumn Statement does include this cap it will be welcomed enthusiastically by retailers across the country. It could save 7,500 jobs next year, boost local communities and allow more shops to stay open on our high streets.

“In the longer term, reform is still essential. The business rates system is not fit for purpose and has become the highest business property tax in Europe. The BRC is leading a rigorous examination of options for improving it, supported by a broad group of industry stakeholders.”