Europe’s largest logistics developer has warned that new prime minster Andy Burnham’s plans to increase warehouse business rates risks “higher costs for consumers” and would damage growth.
Nick Cripps, Panattoni
Burnham is reportedly set to announce plans to slash hospitality business rates by 20%, an ambition the former Manchester mayor set out when campaigning during the Makerfield by-election campaign last month.
The new Labour prime minister said the policy would be funded by increasing the business rates for large warehouses, targeting ecommerce giants.
But Nick Cripps, Panattoni’s head of international capital markets, warned that an increase in business rates for warehouses would be felt by consumers, and could harm a key cog driving UK growth.
“Large warehouses and logistics facilities already face some of the highest business rates liabilities of any property type,” he said. “They are also the socioeconomic infrastructure powering Britain’s growth – supporting advanced manufacturing, ecommerce and defence.
“Increasing the rates burden further would have consequences far beyond the sector itself, because these buildings form part of the supply chain for almost every category of goods, including groceries, electrical goods and pharmaceuticals, which already trade on razor-thin margins. The additional cost would ultimately be felt by occupiers, retailers and, of course, the consumer.”
Andy Burnham
Burnham’s stated ambition to shift the business rates burden on to the likes of Amazon echo the sentiments of former chancellor Rachel Reeves.
Reeves promoted her business rates reforms as a way to support the high street, paid for by ecommerce giants. But the use of rateable value to determine new rates liabilities saddled a wide range of businesses, not just ecommerce firms, with higher bills.
Announcing his plans to help small businesses when campaigning to become an MP, Burnham said: “Our high streets matter to me because they matter to the people who live here. I want to make sure that these family-owned businesses, as the heart and soul of this country, are protected and given the chance to thrive.”
Cripps conceded that there was a “legitimate case” for supporting hospitality and high street businesses, but added: “Pubs have received substantial business rates support over the next three years, while restaurants facing many of the same pressures have not benefited to the same extent.
“Transferring more of the burden to the very warehouses that supply the hospitality sector does not address the underlying problems with the system.
“Many of the measures introduced in April, as well as those now being proposed, are too broad and insufficiently targeted.
“Before any further changes are made, the government should undertake detailed impact modelling and refine the policy so that it supports struggling businesses without creating wider costs for consumers, discouraging inward investment or weakening the logistics infrastructure on which the wider economy depends.”
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