UKWA has pushed back hard on government proposals for Business Rates Revaluation 2023, pointing out in response to a recent consultation that for warehouse operators the principle of ‘transitional relief’ for small buildings is deeply unhelpful. The thinking behind this is to offer assistance to smaller businesses where rates go up sharply, but this is to misunderstand the nature of warehousing, where many operators are SMEs but necessarily have large and often expensive premises. It is misguided and unfair to assume that ratepayers of large buildings can afford to subsidise companies that operate from smaller buildings.

Moreover, general rates relief is being offered to retail, hospitality and leisure businesses, yet (as usual) no equivalent relief is available for warehouses. Again, this is muddled thinking. The idea is to provide extra support to those businesses hit hard during the pandemic, yet it was warehousing that rallied to support the country in very difficult circumstances, with many operators struggling to cope with the costs of maintaining COVID-safe environments while continuing to meet increased customer demand.

For similar reasons, we have objected strongly to the proposal to re-value all property based on 1st April 2021, which will really penalise warehousing. To use this antecedent valuation date seems crazy, being mid-pandemic and during extraordinary market conditions. What’s more, it seems we will only find out in January 2023 what business rates apply from April 2023. This is ridiculously short notice and will make it virtually impossible for warehouse operators to budget properly or to plan for passing on costs to customers.

Essentially, HMRC wants to keep revenue stable by funding the various relief programmes from adjustments to the overall scheme. So potentially, sectors like warehousing will be expected to pay more, to subsidise those businesses that are eligible for help. But government have missed the greater opportunity here.

Our 2021 report from Savills, The Size & Makeup of the UK Warehousing Sector showed a 32 percent growth in warehousing from 2015 to 2021. More recent insights from the real estate industry show that warehousing continues to be in short supply and high demand, so government already receives more income via business rates from our sector than ever before. Going forward, the development of more warehousing ought to allow HM Treasury to secure still more revenue from business rates as new buildings come into scope.

Finally, as indicated by Levelling Up –The Logic of Logistics our joint report with the British Property Federation published earlier this year, demand for industrial and logistics space across England has been underestimated in planning policy for a decade, and future demand is likely to be at least 29 percent higher than past levels. So, if government fix the Planning system, we know there’s suppressed demand which could lead to even more income!

We’re calling for a more joined-up government that better understands our sector, that could meet its revenue requirements while supporting warehousing as an engine of economic growth for the UK.

Clare Bottle

UKWA, CEO

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