After chancellor Rishi Sunak delayed the findings of the Treasury’s business rates review until the autumn, we ask experts whether the proposal from Dixons Carphone boss Alex Baldock and Next chief executive Lord Wolfson to increase rates paid by warehouses is the way to revamp the system

John Edgar Fenwick Chief Executive

John Edgar, chief executive, Fenwick

We need the Government to sort rates out once and for all.

I know there’s been discussion around a sales tax for online but that would be difficult to implement and high street retailers would still pay that, whereas including warehouses in business rates would actually see rates for high street retailers improve. It seems like the logical thing to do. 

As a high street retaileR, I can operate between 9am and 8pm, close at 6pm on Sundays and I pay business rates for the high street. As an online-only retailer, I can operate 24/7 all year round in a warehouse employing majority overseas workers paying just about minimum wage and I pay no business rates or sales tax, and if I’m international I pay very little corporation tax as well.

I’m not a communist – but it’s easy to see that something is out of kilter there. Including warehouses in business rates seems like a no brainer.

Segro - David Sleath

David Sleath, chief executive, Segro

The business rates system is outdated and needs to be modernised but a punitive tax on warehouses is not the answer. 

Theoretically, the current system should work as the level of business rates are pegged to a property’s rentable value and should therefore move up and down as demand for that space drives rents. However, the fundamental flaw is that the assessments of rateable values are adjusted too infrequently and the adjustment mechanism to reflect those changes is slow and cumbersome. 

Today’s rates are based on 2015 rental values so do not reflect today’s economy or consumer behaviour and the extraordinary growth of ecommerce in recent years – a trend that has been accelerated by the pandemic. 

This is why, for a number of years, we and others have called for annual revaluations to ensure a fairer system. 

But there is another key issue and that is the total amount of tax revenue generated from business rates is unsustainable – the so-called 50% multiplier and the £30bn of revenue collected through business rates are simply too high, which is why the chancellor needs to come up with a better system.

A blanket increase in business rates for all warehouses, however, would be a terrible solution. For a start, this would penalise thousands of other small, medium and larger non-ecommerce businesses that play a critical role in the production and supply of so many vital goods and services that keep the country going, which employ thousands of people and that will be vital to rebuilding the economy post-Covid. 

Jay Wright Virgin Wines

Jay Wright, chief executive, Virgin Wines

In terms of a tax on warehouses, I’m not sure that punishing areas of the retail sector that are successful is the way to fix areas that aren’t doing so well.

I wouldn’t want to guess what the chancellor will do but I can’t see that working. Although, having said that, taxes are part and parcel of what we’re used to dealing with. 

As a wine business, we’ve done well during lockdown but there are also added costs that we’ve had to deal with as an online retailer. I’d like to see duty come down, though we rarely see taxes come down these days. Also, the wine industry takes a very large burden of alcohol taxation. I’ve seen duty go up from around £10 a case when I first opened my warehouse wines businesses and now it’s something like £26 a case.

We’ve lived through a lot of duty increases over the years and we pay our fair share already. I think a duty freeze would be a good outcome for us.