Rishi Sunak — the chancellor and a Yorkshire MP — making the tea as his team prepares for the budget

The Conservatives will consider radical plans to scrap business rates and replace them with a land value tax in a bid to save struggling high streets.

In his first budget Rishi Sunak, the chancellor, will announce a “fundamental” review of the business rates system amid concerns that it is penalising high street retailers.

The current system of business rates is based on shop rental values and is calculated every five years. The levy is paid by tenants, rather than landowners.

It is viewed as outdated because companies that need a presence in town centres pay higher rates than online and out-of-town rivals.

The review will examine proposals for a tax on the land rather than buildings based on its “permitted planning” use, meaning that