By the time you read this, we will be close to nominations closing for the next leader of the Labour Party. At the time of writing, it seemed likely that Andy Burnham will be the only candidate nominated.
The UK Warehousing Association is not a party-political organisation, so this column is not about leadership challenges or nomination processes. However, given that political change does affect our members, we need to consider what could happen to policy affecting our sector.
If you attended our conference in Nottingham in March, you will know that Business Rates are already an incredibly sore subject for warehouse operators. When we asked members to pick the single change the Government could make to help the sector, they chose reversing this year’s rates revaluation, which introduced a new surcharge for properties with a value above £500,000.
This tax increase, which came into effect in April, was explicitly sold by ministers as an additional levy on the warehouses of ‘online giants’ (although it actually catches any large logistics site), in order to pay for a rates cut for small shops and pubs.
The average warehouse rates bill has gone up by 9% this year, according to Savills, the property agent. There is a lot of variation, with some warehouses facing much larger increases. To ease the pain, the Government has applied some transitional relief, which the UKWA pressed hard for.
However, given that large premises are an unavoidable necessity for our members, and that other costs, including National Insurance, are going up, you can see why rates are causing consternation among our members.
So it was with incredulity that I read during the Makerfield campaign that Burnham was proposing a 20% rates cut for pubs and music venues, paid for by warehouses of ‘online giants’ (which seems to be the required phrase to describe online retail).
Things said in a campaign can clearly change in office, and we don’t have the full details, but the news had me putting my head in my hands. Pubs occupy a special place in British history, and have become totemic for politicians. But that’s no excuse to forget that they are also businesses at the end of long supply chains.
Every cask or beer, every bottle of spirits, every packet of crisps sold in a pub has to be brought there somehow, and there’s a pretty good chance it has been through a warehouse. If the pub serves food, ingredients will have come from a wide variety of sources, often from overseas, in order to reach the kitchen. Logistics operates on tight margins (we haven’t even mentioned the price of fuel here) and if you significantly increase costs in one part of the supply chain, it will ultimately flow back to the customer.
To be fair to Burnham, he has also said that he would look again at the National Insurance increases that have done so much to add to the cost of employment. Whoever is in No 10, we will keep arguing that to grow the economy, you need to appreciate that it is all interdependent. There’s no better way to understand that, than to look at logistics.
Clare Bottle
UKWA, CEO
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