What will the Budget Bring for Warehousing?

When the Chancellor, John Healey, stands up in the House of Commons on 28th October to deliver his first Budget speech, there is one subject over all others that we will be looking out for: business rates.

They say that the only thing worse than being talked about, is not being talked about. Warehouses have definitely broken through onto the political agenda this summer, unfortunately most of this has related to how much tax can be squeezed out of them.

At the UKWA’s conference earlier this year, members voted rates as their biggest government-related challenge, with major concerns about this year’s revaluation, and the ‘higher value multiplier’ in particular.

Despite the Government’s claims that the new multiplier would wring more rates from large distribution centres of online retailers, warehouses serving all sales channels (and plenty in the mid-box category) are being caught in the dragnet.

The way politicians talk, you would think they didn’t know that a large warehouse already pays a multiplier above 50p, compared to a rate for 38p for a small high street shop. You’d also be forgiven for thinking that some elected officials have never considered how goods that supply retail and hospitality venues get there in the first place.

Despite the frustrations, the increased interest in warehousing has given the UKWA an opportunity to explain how any tax on business supply chains will inevitably lead to higher costs for consumers. We’ve been speaking to the Treasury, No 10, and every Government Department and MP we can.

Due to these efforts, including collaborating with other trade bodies, warehouses won a reprieve in July. The new Prime Minister’s announcement of a business rates cut for pubs specifically did not commit to raise rates on warehouses in return.

As we said at the time, however, this must not be only a temporary reprieve.

The risk of a rise in the high value multiplier is very real. As David Parker, Head of Rating at Savills, told the audience at our Member Connect event at GXO in Corby in early September, this multiplier is probably the most straightforward lever the Chancellor can pull.

Straightforward, but wrong.

Our submission to the Treasury ahead of the Budget spelled out that warehousing was vital to the Government’s aims on controlling the cost of living and boosting growth in every post code. Other means of raising revenue, including clamping down on VAT evasion by foreign sellers on online marketplaces, would be much better than another tax hikes on warehouses. We’ll keep pushing on this until the very last moment, and encourage all members to write to their local MP, to make clear the value they add to the local community and economy.