Conservative manifesto puts Ecommerce warehousing on the block 

By Liza Helps Property Editor Logistics Matters

PROPERTY CONSULTANCY Gerald Eve’s Head of Business Rates Simon Green, who like many others had hoped for a commitment on business rates reform, noted that the Tory pledge of £4.3 billion of business rates support over the next five years for small businesses would be paid for by increasing the multiplier on distribution warehouses that support online shopping.

The move seems to have come from the Autumn 2022 Budget when Chancellor Jeremy Hunt first announced changes to business rates in order to target the ‘bricks vs clicks’ tax imbalance between physical and online businesses such as Amazon by substantially raising the business rates bills for big warehouse operators, but limiting rises for many high street retailers, restaurants and pubs.

Green said: “Disappointingly, the Conservative manifesto has very little to say about business rates reform – perhaps not wishing to overpromise, having failed to deliver on its 2019 manifesto commitment to cut the business rates burden. What little has been said, raises some serious red flags: the 2024 manifesto announces plans to “ease the burden of business rates for high street, leisure and hospitality businesses by increasing the multiplier on distribution warehouses that support online shopping”.

“At 54.6%, our multiplier (i.e. the property tax rate) is the amongst the highest of comparable property taxes in the Western world and businesses across all sectors have continually complained that the tax rate is too high, stifling growth.

“Rather than cutting the rate for all, the Conservatives plan to increase the rate for distribution warehouses, which have already seen some of the biggest increases in their liabilities over the last two years with an average rateable value increase of 35% at the 2023 revaluation.

“Business rates must be made simpler rather than further complicated by differential tax rates and complex reliefs. This is the way to help all businesses, including those still suffering on the high street, as well as those impacted by the decline in night-time economies, as identified in the manifesto.”

In March 2023 the UKWA wrote to the Chancellor highlighting the unfairness of the proposed increase in business rates for warehouses and challenged the assumption that businesses with larger buildings require less support. "This is a view that fails to recognise the reality of low-margin SMEs operating within the warehousing sector. Unfortunately, our case was ignored and business rates rose in April [2023], by up to 70% for some of our members."

Whether this manifesto commitment means to extend the multiplier even further than that already instigated on online facilities is not clear. At the time of the Autumn 2022 budget the excuse was that it was simpler and easier to raise  business rates than it was to implement an 'on-line' tax – a tax mooted in 2021 at the height of the pandemic when online sales hit 36% of retail spend and high streets were suffering as a consequence.