Days after the pleas of thousands of firms to cut business rates were ignored in the Budget, experts warn that councils could add to the growing burden on the High Street.

Despite intense lobbying by retail groups, business rates will rise by 5.6 per cent next month, dealing a crushing blow to small shops.

Under the Localism Act, which became law last November, councils will be able to retain the business rates they collect. In addition, they may seek to charge supplementary rates on top of the Government-set levy.

The business rate increase alone is expected to cost retailers a further £350million this year.

A spokesman for the Forum of Private Business said: ‘While councils will have to get approval from local firms before raising supplementary business rates, it is important they do not use this as a short-term route to raising finance at the expense of real growth strategies.’ 

Figures published last week by the Local Data Company showed that the vacancy rate of shops in town centres reached 14.6 per cent last month – the highest since the index began in 2008.

Retail sales suffered their biggest fall in nine months in February, down 0.8 per cent on January, according to the Office for National Statistics.

And 10.7 per cent of all sales are now being made online. A spokesman for the Association of Convenience Stores said: ‘Local shops’ hopes for a last-minute reprieve on business rates have been dashed. The increase in rates will be unaffordable for many small shops.’

A spokesman for the British Council of Shopping Centres said: ‘If the Government is really serious about saving town centres, it will review the business rates regime.’