Rebecca Smith is a Plymouth City Councillor and MP for South West Devon.
We’re now approaching the time of year where many will be thinking about their plans for Christmas – what to get loved ones and how much food to buy.
It’ll often be a small business that we will go to for our shopping, that’s been at the centre of a local community for generations. Our country is a nation of shopkeepers, and we should be proud of it. Alarmingly, however, these businesses are now fighting for survival as this Labour Government risks ending our nation’s entrepreneurial spirit.
My constituency, South West Devon, is home to one of the highest concentrations of small businesses in the country, with more than 3,000 operating locally. The last year has been punishing for any business owner, making a mockery of any claims Labour had to understanding business. I recently gave local business owners the chance to share their experiences of the past 15 months and a staggering 97 per cent of respondents are worried about what this Budget will bring. This underscores the anxiety and uncertainty that businesses in South West Devon and right across the country are feeling at the moment.
One group of businesses who are feeling it the most at the moment, are our food and drink wholesalers.
They are the lifeblood of our nation, keeping our families fed, shelves at local independent shops filled and supply into schools, hospitals, care homes, prisons and thousands of hospitality venues. Quite simply, our country wouldn’t work without them as they connect farmers and manufacturers to thousands of businesses and public institutions across the UK.
The sector is a huge part of our economy too, generating £33.6 billion in turnover and directly employing around 77,000 people. Food and drink wholesalers support a massive quarter of a million jobs through the supply chain, contributing a staggering £18.6 billion in gross value added (GVA) to the economy.
The Chancellor is planning to reform business rates and introduce a higher tax multiplier for large properties, originally targeting the vast distribution hubs of low-tax online retail giants. However, current proposals, designed to ‘protect the high street’, will see a higher rate for properties with a rateable value of £500,000 and above from next year.
This poses an existential crisis for the wholesale sector, as it will include many of their depots and warehouses. Unlike other industries, wholesalers have no choice but to operate large warehouses. These businesses are not global conglomerates. They are long-established and often family-run and have supported their communities for generations. Each one is fundamental to keeping our nation fed, which beggars’ belief as to why this Government seems so intent to proceed with the act of national self-harm. How can it be fair to punish businesses for owning property and maintaining the scale to feed our nation?
While the rationale behind this change to business rates may be to tax the warehouses of online giants, it is vital to ensure there is a way of differentiating them from business-to-business food and drink wholesalers. As a consequence of the current proposals, wholesalers will be forced into passing additional costs back on to customers – driving food price inflation even higher. Rather than protecting the high street, these proposals mean many small shops and cafés will be worse off.
Don’t just taken my word for it, let’s look at the facts.
Research undertaken by Food and Drink Wholesale UK finds that 80 per cent of wholesalers operate sites above the £500,000 rateable value threshold and will be hit hardest. Business rates have already risen by up to 30 per cent in recent years, with some facing a further 20 per cent hike. One major group has 200 of its 257 depots in the higher band, putting its entire model at risk.
The wider consequences for the country are dire.
Some wholesalers face cost increases of up to £3 million, threatening viability and investment in modernisation. Costs will inevitably be passed on to the customer, directly worsening the cost-of-living crisis. There will be an inevitable spike in food inflation. This tax on our warehouses is a tax on our hospitals and schools. At the very least, the Chancellor needs to introduce a targeted exemption for the food and drink wholesale sector from the higher business rates multiplier.
This mess could all have been avoided.
As Conservatives, we have an unrivalled record of supporting businesses in our local communities, and I am therefore proud to support our fully funded pledge to scrap business rates all together. Labour could have matched our commitment, but they didn’t, and as a result millions of people up and down our country is left fearing the worst this Budget, resigned to the fact that more tax and pain is on the way.
With only a week and a day to go until Budget Day, the survival of our local businesses depends on real measures, not tired soundbites.
Look at our food and drink wholesalers – they cannot wait any longer.
Chancellor, our businesses need genuine relief, and they need it now, before more livelihoods are lost.
Rebecca Smith is a Plymouth City Councillor and MP for South West Devon.
We’re now approaching the time of year where many will be thinking about their plans for Christmas – what to get loved ones and how much food to buy.
It’ll often be a small business that we will go to for our shopping, that’s been at the centre of a local community for generations. Our country is a nation of shopkeepers, and we should be proud of it. Alarmingly, however, these businesses are now fighting for survival as this Labour Government risks ending our nation’s entrepreneurial spirit.
My constituency, South West Devon, is home to one of the highest concentrations of small businesses in the country, with more than 3,000 operating locally. The last year has been punishing for any business owner, making a mockery of any claims Labour had to understanding business. I recently gave local business owners the chance to share their experiences of the past 15 months and a staggering 97 per cent of respondents are worried about what this Budget will bring. This underscores the anxiety and uncertainty that businesses in South West Devon and right across the country are feeling at the moment.
One group of businesses who are feeling it the most at the moment, are our food and drink wholesalers.
They are the lifeblood of our nation, keeping our families fed, shelves at local independent shops filled and supply into schools, hospitals, care homes, prisons and thousands of hospitality venues. Quite simply, our country wouldn’t work without them as they connect farmers and manufacturers to thousands of businesses and public institutions across the UK.
The sector is a huge part of our economy too, generating £33.6 billion in turnover and directly employing around 77,000 people. Food and drink wholesalers support a massive quarter of a million jobs through the supply chain, contributing a staggering £18.6 billion in gross value added (GVA) to the economy.
The Chancellor is planning to reform business rates and introduce a higher tax multiplier for large properties, originally targeting the vast distribution hubs of low-tax online retail giants. However, current proposals, designed to ‘protect the high street’, will see a higher rate for properties with a rateable value of £500,000 and above from next year.
This poses an existential crisis for the wholesale sector, as it will include many of their depots and warehouses. Unlike other industries, wholesalers have no choice but to operate large warehouses. These businesses are not global conglomerates. They are long-established and often family-run and have supported their communities for generations. Each one is fundamental to keeping our nation fed, which beggars’ belief as to why this Government seems so intent to proceed with the act of national self-harm. How can it be fair to punish businesses for owning property and maintaining the scale to feed our nation?
While the rationale behind this change to business rates may be to tax the warehouses of online giants, it is vital to ensure there is a way of differentiating them from business-to-business food and drink wholesalers. As a consequence of the current proposals, wholesalers will be forced into passing additional costs back on to customers – driving food price inflation even higher. Rather than protecting the high street, these proposals mean many small shops and cafés will be worse off.
Don’t just taken my word for it, let’s look at the facts.
Research undertaken by Food and Drink Wholesale UK finds that 80 per cent of wholesalers operate sites above the £500,000 rateable value threshold and will be hit hardest. Business rates have already risen by up to 30 per cent in recent years, with some facing a further 20 per cent hike. One major group has 200 of its 257 depots in the higher band, putting its entire model at risk.
The wider consequences for the country are dire.
Some wholesalers face cost increases of up to £3 million, threatening viability and investment in modernisation. Costs will inevitably be passed on to the customer, directly worsening the cost-of-living crisis. There will be an inevitable spike in food inflation. This tax on our warehouses is a tax on our hospitals and schools. At the very least, the Chancellor needs to introduce a targeted exemption for the food and drink wholesale sector from the higher business rates multiplier.
This mess could all have been avoided.
As Conservatives, we have an unrivalled record of supporting businesses in our local communities, and I am therefore proud to support our fully funded pledge to scrap business rates all together. Labour could have matched our commitment, but they didn’t, and as a result millions of people up and down our country is left fearing the worst this Budget, resigned to the fact that more tax and pain is on the way.
With only a week and a day to go until Budget Day, the survival of our local businesses depends on real measures, not tired soundbites.
Look at our food and drink wholesalers – they cannot wait any longer.
Chancellor, our businesses need genuine relief, and they need it now, before more livelihoods are lost.