Warehouses being targeted unfairly, says UKWA

IN A submission to the Treasury, the UK Warehousing Association (UKWA) said that reduced business rates for retail, hospitality and leisure (RHL) businesses were not specifically targeted at those facing hardship, and had to be paid for by other companies, whether or not they could afford it.

Under the Government’s plans, premises with a value for business rates purposes of more than £500,000 will pay a higher ‘multiplier’ on this tax, while there will be a cut for RHL properties worth less than £51,000.

The Treasury claims the policy will capture “the majority of large distribution warehouses, including those used by online giants”. However, the UKWA, which represents 1,000 companies, collectively managing over 200 million square feet of logistics space, pointed out that warehouses will bear a “heavy burden” whether they are used for online retail or not. 

Although the trade body said it understood Ministers’ desire to support struggling high streets, it warned that warehouses operated on tight margins. In an economy not growing at the pace hoped “higher business rates could easily translate into lower employment and investment growth”, the UKWA told the Treasury.

UK Warehousing Association CEO Clare Bottle, said: “Helping the high street is a laudable goal, but we are very concerned that this policy mistakes how business supply chains work. Warehouses don’t just serve online retailers – in fact more space is still taken by high street and food retail.

“Hiking the tax on all premises above £500,000 will mean extra costs in the supply chain, and ultimately that will feed through to prices in shops, pubs and leisure venues, even if they are getting a cut in upfront rates.

“We welcome other measures the Government is proposing to make the business rates system work better, but we urge them to keep this particular policy under review, and if doesn’t help high streets, to scrap it.”

In the full response to the Government’s ‘Transforming Business Rates’ review, the UKWA also called for:

• Improvement Relief (which encourages business to invest in their buildings) to be extended to 24 months, up from the current 12 months.
• The exemption period on empty properties to be extend from 6 months to 12, to allow for adequate time for warehouses to be marketed, let and fitted out.
• Maintaining a three-yearly cycle of revaluations to make business rates responsive to market conditions, with adequate resources for the Valuation Office Agency put in place before further changes.
• The Digitalising Business Rates project to be completed by 2028.