Business rates reforms will derail growth, say wholesalers

Rebecca Smith MP visited Bidfood alongside Food & Drink Wholesale UK (FWD) to hear how the government’s proposed rates changes could threaten UK wholesale sector viability and drive up food prices

The visit to Bidfood’s distribution depot in Ivybridge forms part of FWD’s ongoing campaign to raise awareness of the critical role that the wholesale sector plays in supporting public services, local businesses and the wider economy. With the Autumn Budget approaching, wholesalers are urging the government to reconsider reforms that would impose a higher business rates multiplier on properties with a rateable value above £500,000, many of which are essential distribution hubs operated by wholesalers.

James Bielby, Chief Executive, FWD said: “Wholesalers are not online giants. They are the backbone of the UK’s food supply chain, operating on tight margins and serving schools, hospitals, care homes, and high street retailers.

“If these reforms go ahead without exemptions for our sector, the result will be higher food prices, job losses and stalled investment in vital upgrades. We’re calling on the government to level the playing field and protect the businesses that feed the nation.”

In FWD’s most recent member survey, the results revealed the following:

• 80% 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% in recent years, with some facing a further 20% hike.
• One major group has 200 of its 257 depots in the higher band, putting its entire model at risk.
• 80% of wholesalers say they will cut jobs or pause recruitment if these changes go ahead.
• Some wholesalers face cost increases of up to £3 million, threatening viability and investment in modernisation and net zero upgrades.

The proposed reforms, while aimed at taxing the warehouses of online retailers, risk capturing business-to-business food and drink wholesalers who were never the intended targets. Unlike online giants, wholesalers do not sell directly to consumers and operate on significantly lower margins. They supply other businesses, including many on the high street, and are vital to public sector food supply chains.

If relief is extended to large retail stores but not wholesalers, the result will be a distortion of competition across the food and drink sector. Retailers would benefit from lower costs while wholesalers, who supply many of the same institutions, would be penalised, undermining fair competition and driving up food prices in public sector contracts.

“Wholesalers are vital to the UK’s food supply chain and public service provision, and should be treated on par with large retail premises, and must be included in any exemption. Supermarkets already get the retail, hospitality and leisure relief for smaller stores, while wholesalers get nothing,” added Bielby.

Andrew Selley, CEO, Bidfood said: “Wholesalers like Bidfood are essential to keeping the UK’s foodservice sector running, from schools and hospitals to restaurants and care homes. The proposed business rates reforms risk penalising the very infrastructure that enables food supply across the country. We urge the government to recognise the unique role wholesalers play and ensure they are treated fairly in any exemption framework.”

During her visit to Bidfood, Rebecca Smith MP, sang the praises of the sector: “Wholesalers are the unsung heroes of our food system. They supply our schools, hospitals and high streets, and they deserve a fair deal. I’ll be taking this message back to Westminster: business rates reform must support growth, not punish the very businesses that keep our communities running.”

FWD is calling for wholesalers to receive equivalent relief to large retail premises, recognising their unique role in the economy and the communities they serve. Without urgent action, the reforms risk undermining growth and fuelling inflation at a time when affordability and food security are already under pressure.

Andrew Selley Bidfood Food & Drink Wholesale UK Government James Bielby Rebecca Smith MP