Chancellor Philip Hammond is set to announce a £1.5bn lifeline to small High Street retailers in the Budget.
The financial package will include £900m in business rates relief for nearly 500,000 small businesses and a pot of £650m to rejuvenate high streets and their transport links.
Planning rules will also be eased to allow home-building on empty sites.
Business groups welcomed the plans but Labour said the rates relief did not go far enough.
The Treasury said its new business rates relief, targeted at small retailers, would knock a third off their bills and that 90% of them would benefit from the proposals.
To qualify as a small retailer, business premises must have a rateable value of £51,000 or less.
Mr Hammond will set out the government’s future spending plans on Monday afternoon.
The British Chambers of Commerce said the pledge to reduce rates bills for small retailers was welcome after an “alarming number” of High Street firms closed this year.
Hannah Essex, the business lobby group’s co-executive director of policy and campaigns, said: “While there are long-term structural changes taking place, including changes to consumer habits, the tipping point for many of these firms has been the unnecessarily large burden that business rates place on them.
“Therefore, this short-term reduction in rates will be very welcome news to those on the High Street who require urgent respite,” Ms Essex added.
The Treasury estimated 496,000 small retailers would benefit from immediate business rates relief.
Rebecca Long-Bailey MP, Labour’s shadow business secretary said of the plan: “Small businesses need support, but the retail sector as a whole is struggling.
“100,000 retail jobs have been lost in the last three years yet not a single M&S, Debenhams or House or Fraser – anchor stores bringing in footfall and benefiting all traders – would have been saved by today’s announcement”.
Ms Long-Bailey said the chancellor’s plan did nothing to address the underlying imbalance between brick-and-mortar retailers and online sellers.
Homes on the High Street
The Labour MP also said Mr Hammond’s move to deregulate town planning could make the rate of closures on the UK High Street worse.
“Instead of deregulating town planning laws, which will hasten the disappearance of high streets and encourage property speculation, the government should give town planners more resources to support local businesses, and repurpose empty shops into community spaces.”
The chancellor’s £650m injection, to be introduced over the next four years and called the Future High Streets Fund, will allow towns and cities to “redevelop under-used retail space into homes and offices, providing help to restore High Street properties and put historic buildings back into use.”
Helen Dickinson, head of the British Retail Consortium said: “Retailers welcome the measures announced by the Treasury to invest new funding to boost high streets and town centres and facilitate re-invention of many to modern and diverse destinations.
Analysis by Joe Miller, BBC business reporter
It’s been a bruising year for Britain’s retailers – and small business owners have been quick to blame the steep rises in business rates that followed the revaluation of the tax in 2017.
Chief executives of large firms such as Tesco have also been critical, saying they are forced to pay more than online competitors such as Amazon, which are often based in rural warehouses, where rates are cheaper.
The chancellor’s response will be an immediate reduction of the levy for small firms, as well as a commitment of £650m to local authorities, which they can use to improve transport facilities and restore dilapidated or historic buildings in city and town centres.
But will it be enough to revive the UK’s ailing High Streets?
Many business groups have cautiously welcomed the announcement, but the British Retail Consortium is not the only organisation to warn that with the majority of Britain’s three million retail workers employed in bigger firms – including troubled chains like House of Fraser – wholesale reform of the tax system is needed.