𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

Rachel Reeves has been warned that her £1.7 billion raid on business rates could push Britain’s largest supermarket suppliers to the brink. Food and Drink Wholesale UK, the trade body representing wholesalers selling produce to UK supermarkets, wrote a letter to the Chancellor advising her against the overhaul.

It said: “We agree that reforming business rates is critical to stimulating growth in the economy. However, the Government’s proposals, designed to ‘protect the high street’, are “placing disproportionate pressure on wholesalers.” The letter was sent on behalf of 13 of Britain’s biggest wholesalers, and warned of incoming costs they “cannot afford” that would push some suppliers “to the brink of viability”. Despite the business rates shake-up being aimed at giant corporations such as Amazon, the wholesalers said they too would feel the effects, despite having “significantly lower margins”.

The letter added: “If wholesalers are caught by these changes, they will be forced to pass the costs on to local businesses, undermining the very goal of redressing the imbalance between high street retailers and online giants who often minimise their UK tax liabilities by being based abroad.”

Business rates are based on a property’s “rateable value”. This is an estimate by the Valuation Office Agency of how much it would cost to rent a property for a year on April 1.

In the Autumn Budget 2024, the Chancellor announced two lower multipliers for Retail, Hospitality and Leisure (RHL) properties with rateable values (RVs) below £500,000 and a higher multiplier for all properties with RVs of £500,000 and above.

The latter represents less than 1% of all properties, but captures the majority of large distribution warehouses, including those used by online giants, the Treasury said.

Ms Reeves’ department said the move would create a “fairer business rates system to protect the high street”.

A Treasury spokesperson said: “We are a pro-business government that is creating a fairer business rates system to protect the high street, support investment, and level the playing field.

“To deliver our manifesto pledge, we intend to introduce permanently lower tax rates for retail, hospitality, and leisure properties from next year that will be sustainably funded by a new, higher rate on less than 1% of the most valuable business properties.

“Unlike the current relief for these properties, there will be no cash cap on the new lower tax rates, supporting some of Britain’s most loved high street chains to continue to create jobs and grow the economy.”