The food and drink wholesalers are calling on the government to rethink its approach to business rates reform and exempt the sector to ensure they can continue their vital role.
According to Federation of Wholesalers and Distributors (FWD) CEO James Bielby, the current government proposals will see a higher rate for properties with a rateable value of £500,000 and above from next year, will have adverse impact on wholesalers, particularly those with large distribution warehouses.
Bills could increase by as much as 20 per cent, pointed out Bielby.
While the rationale behind this change may be to tax the warehouses of online giants, it is essential 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.
It emerged in a recent FWD survey that wholesalers cannot absorb this tax.
Some 80 per cent of wholesalers surveyed have sites exceeding the £500,000 rateable value threshold. Business rates have already risen by 25-30 per cent in the past three years, and another 20 per cent increase is a hit that wholesalers simply cannot afford.
Facing these cost increases, 80 per cent of wholesalers say they will be forced to cut jobs and pause recruitment, compounding pressures on employment. Some businesses estimate cost increases of up to £2 million.
Bielby stated, "We aren’t just another business sector looking for relief. Wholesalers are Critical National Infrastructure, who are central to keeping schools, hospitals and care homes stocked with food and drink.
"Unlike other industries, wholesalers have no choice but to operate large warehouses, yet they are being taxed as if they are high-profit online retailers such as Amazon.
"Wholesalers run on wafer-thin margins of around one per cent, leaving them with no buffer to absorb yet another cost increase.
"While other businesses can pass on rising costs, wholesalers, who supply thousands of independent businesses and the public sector, cannot pass on costs without devastating consequences for schools, hospitals, care homes and local economies."'
Many wholesalers are already cancelling expansion projects, meaning fewer jobs and less economic growth.
Bielby further added that if wholesalers are forced to absorb these costs, the consequences will be severe like rise in food prices, , hurting independent businesses and, ultimately, consumers.
"Wholesalers are not asking for special treatment; they are asking for fairness. This policy was designed to target online giants, not the essential businesses feeding the nation.
"The government must rethink its approach to business rates reform and exempt food and drink wholesalers, ensuring they can continue their vital role in supporting public services, local businesses and communities," he concluded.
