Cannock Chase Council is set to lose £1.2 million as a result of changes to the Rateable Value of the warehouse and premises owned by Amazon at Gazeley Park in Rugeley. Overall the company will receive in the region of £3.2 million as a refund.
The refund back dates to the site opening in August 2011.
An indication of what this means for the Council financially is that in 2020/21 it is set to spend £13.476 million. A £1.2 million income reduction severely depletes the councils resources and occurs at a time when local government is facing a greater level of uncertainty in funding than ever. Ultimately it means less money is available to spend on services to residents and supporting business.
While exact details of the refund are still awaited, provisional figures indicate that the ongoing liability will reduce by 26% from £1.7 million to £1.25 million a year. Currently, this is the largest rateable value site in the District.
The warehouse was built in 2009 with a Rateable Value of £3.18 million and subsequent revaluations in 2010 and 2017 have maintained the Valuation Agency Office assessment at this figure.
However, appeals made by Amazon have succeeded in reducing the valuation to £2.5 million. The actual rates payable is determined by applying a rate in the £ to the RV and this is currently just over 50 pence.
Councillor Gordon Alcott, Deputy Leader of the Council and Portfolio Holder for Town Centre Regeneration has expressed his disappointment in the way fulfilment centres are treated under the Business Rates System.
He said: “Amazon is a highly valued employer in the District but this reduction in business rates is another major blow to this Council, following on from the closure of Rugeley Power Station in 2016 which led to a loss in business rates of £1 million a year to this Council.
“Business Rates are determined by the Government’s Valuation Office Agency and the Council has no say in this process other than it represents a key funding source to the Council.
“The financial impact is of great concern to the Council, however. I feel particularly sorry for our town centres and retail traders where there doesn’t appear to be a level playing field between the business overheads paid by these so-called bricks and mortar businesses against those paid by online traders.
“Although the government is offering business rate relief to some retail providers, it is only a sticking plaster and does not solve the fundamental problem.
“Amazon describes itself as providing fulfilment centres supplying goods direct to the customer and clearly the business rates system does not reflect this treating such sites as basic warehouses, which means that Amazon is paying substantially less than retail warehouses, and a fraction of the cost per square metre of high street shops.
“I have been informed that the rates relate to the floor area occupied and the rent payable per square metre for the relevant facility and part of the reduction is due to mezzanine floors not counting as floor area.
“The system in my view is clearly flawed in relation to the treatment of Amazon and other such providers. We know of other Amazon sites, including one in Swansea, which have also seen significant rates reductions.
“Therefore the Council will be writing to the Government and our local MP to see if this issue can be addressed before we see the further demise of yet more town centres - not only in Cannock Chase but throughout the country”.
Amazon’s Fulfilment Centre in Rugeley