Business Rates Will Prime the Inflation Pump

Proposals to reform business rates will affect the logistics and warehouse sector disproportionally, adding millions to operators' costs and driving inflation, warns business group Logistics UK ahead of the Autumn Budget. The reforms, as outlined in the government's "Transforming Business Rates" document, will increase business rates for properties with a rateable value above GBP500,000 and, according to Logistics UK, apply irrespective of the properties' use, purpose or the owners' ability to pay. The government proposes the increase to subsidise a reduction in business rates for smaller retail and hospitality businesses, but Logistics UK Acting Chief Executive Kevin Green says a tax regime designed to hit the warehouse sector, and other large business premises, is misguided:

"If the government is serious about protecting the high street, it needs to consider the retail and hospitality sectors alongside the businesses that supply the goods they rely on to operate. Penalising the organisations that keep our high streets stocked with the goods they need to sell through a punitive tax regime will be counterproductive, as prices will rise for businesses and consequently the end consumer as a result. "The impression that warehousing is operated solely by the online giants is wrong - there are around 5,000 PAYE/VAT-registered warehousing companies in the UK and the majority of these are SMEs.

The sector is also a significant regional employer, particularly in the Midlands, the North West and Yorkshire and the Humber. As is typical across logistics, warehouse businesses operate on slender margins and regrettably will have no alternative but to pass on any increases in business rates to their customers - the businesses that supply the high street. "Applying a blanket increase in the tax rate on property solely based on its rateable value makes no effort to reflect a warehouse operator's profitability or ability to pay: it is a disproportionate burden to impose on businesses who are essential to the UK economy and intrinsic to the profitability of the sector the business rate reforms are supposedly protecting.

Ahead of this year's Budget, we urge the Treasury to ensure reforms to the business rates system protect investment in logistics infrastructure and do not create additional inflationary pressures." Logistics UK is one of the UK's biggest business groups, representing logistics businesses which are vital to keeping the UK trading, and more than seven million people directly employed in the making, selling and moving of goods. With decarbonisation, new technology and other disruptive forces driving change in the way goods move across borders and through the supply chain, logistics has never been more important to UK plc.

Logistics UK supports, shapes and stands up for safe and efficient logistics, and is the only business group which represents the whole industry, with members from the road, rail, water and air industries, as well as the buyers of freight services such as retailers and manufacturers whose businesses depend on the efficient movement of goods.

For more information about the organisation and its work, please visit logistics.org.uk

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