A coalition of UK industrial and logistics (I&L) investors and developers have warned the government’s proposed changes to the business rates system risk damaging the very sectors it is aiming to support.
In their joint response to the Transforming Business Rates consultation, I&L businesses including SEGRO, Prologis, Tritax Big Box, Logicor and Indurent, argue the government’s proposal to apply a higher business rates multiplier to all properties with a rateable value above £500,000 would have “unintended consequences, disproportionately affecting high-street retailers, manufacturers and SMEs that rely on efficient logistics infrastructure who would absorb the financial burden”.
Analysis of more than 570 large buildings that sit within in their portfolios reveals that only 11% of space is occupied by ecommerce businesses, while 66% is used by transport, logistics, manufacturing and retail occupiers.
In a statement, the group said: “This blanket approach risks driving up costs across supply chains, fuelling inflation and deterring investment into precisely the sectors the government wants to grow.”
The coalition also warned the proposed reforms could stall progress on the upgrading of older I&L stock to meet higher environmental standards as the enhancements could increase a property’s rateable value above the £500,000 threshold.
The coalition has urged the government to: replace the proposed flat threshold with a banded or progressive system to avoid ‘cliff-edge’ disincentives; extend empty property relief from the current period to 12 months to support refurbishments aligned with net zero goals; introduce reliefs or incentives for sustainable upgrades, such as lower multipliers for highly energy-efficient buildings; and provide longer-term certainty on rate setting to support regional investment and job creation.
“Without a more balanced approach, these reforms could ultimately weaken the very industries they seek to support, placing pressure on SMEs, delaying sustainability upgrades, and harming the high street,” the group added.
