Tuesday 21st Nov 2017 - Logistics Manager

Business rates will define the future of retail supply chains

Freight organisations have focused their campaigning efforts on fuel taxes over the past few years – understandably so, given the large part they play in the costs of logistics operations.

Only last week, the Freight Transport Association made it clear that it is opposed to any increase in fuel duty.

Malory Davies FCILT, Editor.

Malory Davies FCILT, Editor.

But with the oil price down to about $30 a barrel, it means that the pump price of diesel is now averaging £1 a litre. That compares to £1.50 a litre four years ago.

Now the focus is increasingly moving to business rates. This is a particularly significant tax for bricks and mortar retailers – and consequently the supply chains that support them.

Last week Justin King, former chief of Sainsbury’s, took the lead in arguing that, for retailers in particular, business rates are a massive problem – certainly bigger than the Corporation Tax row that has been going on.

In particular, he highlighted the fact that high street chains are paying many times as much in business rates as online-only retailers.

He told “The Guardian”: “A big part of the advantage non bricks and mortar retailers enjoy is their ability to use services that their competitors paid for. They use the roads, they still use waste collection services but they are paid for by the local retailer, through business rates, who has just had that sale competed away from him.” (The Guardian, 11th February).

The British Retail Consortium has called for a fundamental reform of business rates. Responding to government proposals to extend Sunday trading, Helen Dickinson, chief executive of the BRC, said: “The government should be concentrating its efforts on finally delivering fundamental reform of the business rates system which would provide much greater support to the reinvention of high streets across the country and particularly in areas which are struggling.”

The Confederation of British Industry is also calling for an “update” of the business rates system, though it is less radical in its thinking. It wants to see a shift in the uprating system from the Retail Prices Index to the Consumer Prices Index, arguing that this will save businesses money.

As you might expect, the timing of all this is significant: Chancellor George Osborne delivers his budget on Wednesday 16th March. It is clear that whatever he decides on business rates will have a significant impact on the high street – and could play a part in defining the future shape of retail supply chains.