Some good news in Spring Budget, but Government must do more says UKWA CEO

March 16, 2023

The Spring Budget provided some support for warehousing and logistics businesses, but it should have gone further, according to Clare Bottle, CEO of the UK Warehousing Association (UKWA).

“We welcome the Chancellor’s announcement of a replacement to the super deduction tax allowance – something we had lobbied for, on behalf of our members.  But the fact that nothing has been done to correct the unfairness of business rates is very disappointing,” she said.

The former super deduction tax allowance, against the cost of certain plant and machinery, comes to an end on 31 March 2023, but under a new ‘full expensing’ scheme included in the Spring Budget, investments made by businesses on qualifying plant and machinery over the next three years will attract a 100% first-year allowance.  This will incentivise business growth and should boost the adoption of robotics and the installation of solar panels on warehouse rooftops.

Simultaneously to the Spring Budget, the Government published a Summary of Responses document and Information and Impact Note in respect of each of its two consultations looking at business rates reform, alongside launching a further consultation relating to the Valuation Office Agency (VOA) disclosing more information on business rates valuations.

Commenting on ‘full expensing’ Clare said, “This new measure will help support warehouses looking to invest in updating and improving their operations, including the upfront investment of installing rooftop solar panels as part of their drive to save costs, improve energy resilience and decarbonise on their journey to net zero.”

On the forthcoming rise in business rates, she added, “Prior to this latest set of fiscal measures, UKWA wrote to the Chancellor, highlighting the intrinsic unfairness of his planned hike in business rates for warehousing businesses from April 2023. The Government’s chosen antecedent valuation date of April 2021 was during national lockdown, when demand for warehousing space soared, pushing up property values disproportionately compared to other commercial property sectors. Basing business rates on the extraordinary property values in April 2021 puts warehouses at a significant disadvantage. It is regrettable that our call for Government to review this anomaly has been ignored.

“Moreover, businesses have previously seen transitional relief caps of 10% plus inflation, so the 30% cap for large buildings is punitive. The assumption that businesses with larger buildings require less support fails to recognise the reality of low-margin SMEs operating within the warehousing sector.

“Unfortunately, this important opportunity to enable the warehousing sector to facilitate growth and support the levelling up agenda has been largely missed.”