Warehousing has always been the poor cousin of retail and offices in the property industry but the government is beginning to wake up to the vital role it plays in the UK economy.
It even has the grand name of logistics these days that is associated with supply chain management in all its facets, which is a far-cry from the down and dirty back street warehousing image of the past.
So, it is welcome to see Government taking it seriously. Trudy Harrison MP, Minister of State for Transport, in her forward to the Department of Transport’s recently published Future of Freight – A Long Term Plan, said: “The scale of our freight and logistics sector is breath-taking. 1.6 billion tonnes worth of goods are transported in and around Britain each year.” She added: “Freight contributes £127 billion to our economy each year, whilst supporting £400 billion in manufacturing sales.”
Of course, freight isn’t just about warehousing as it encompasses movement of goods across the UK’s roads, railways, seas, skies and canals, but warehousing is a vital component of that movement. And the way the planning system responds to warehouse demand is crucial to the health of the industry. It also plays an important part in the Government’s “levelling-up agenda.”
The Future of Freight Plan’s section on planning explains that there is a disconnect between “an industry that is not equipped to properly engage with the planning process, and local planning authorities that are unable to understand the needs of a changing and innovative freight and logistics sector.”
This means the process for promoters bringing forward schemes in the national interest face increased complexity and costs.
At the root of this is the undersupply of land allocated by local authorities for storage and distribution uses to meet the demand that has been significantly boosted in a post-COVID, post-BREXIT United Kingdom.
This is succinctly put by Gwyn Stubbings the Chair of the British property Federation Committee who says that: “for the sector to reach its full potential is essential to the government’s aspirations to address regional inequalities, but that our planning system remains a barrier and is restricting growth in the sector by not allocating enough land in appropriate locations.
“If the industrial and logistics sector is to play its full part in levelling up, it is vital that we create a more agile planning system which is more responsive to the sector’s needs.”
And the follow-on question is why do local authorities not allocate enough land for B8 Use storage and distribution buildings? There seems to be an outdated view that warehousing creates relatively small numbers of low-level skilled jobs in massive behemoth buildings, taking up a large amount of land, and that they do little to stimulate the local economy.
While there is clearly concern about traffic congestion and road-born freight clogging up roads, the tendency amongst local authorities is to focus on local employments needs and ignore the bigger picture. Ideally a national strategy will look at it in overall terms and perhaps bring neighbouring authorities together to create co-ordinated sub-regional plans, but this may be difficult at a time of staff shortages and lack of resources in the public sector.
A recent report by property consultants Savills and the British Property Federation, entitled: ‘Levelling Up – The Logic of Logistics’, dispels many of these myths. The report describes itself as demonstrating the wider economic, social and environmental benefits of the industrial & logistics sector.
The numbers speak for themselves amongst its statistics. There are 3.8m jobs in England in the industrial and logistics sector and over the last 10 years, jobs within the logistics part of the sector have grown by 26% compared to only 14% across the whole economy. It is not a low-paid, low-skilled employer, in fact, the reality is very different. Firstly, average pay is higher than the UK average. Data from the Office for National Statistics (ONS) show annual wages above average at +£4,600 for Manufacturing and +£4,900 for Logistics. Secondly, while other sectors have contracted during the Covid pandemic the industrial and logistics sector has continued to expand, and productivity is forecast to grow by 29% between 2025 and 2039.
To conclude, the logistics sector is much more broadly-based than in the past utilising a wide range of employment skills and often in buildings that are multi-faceted. However, the provision of adequate sites in suitable locations for storage and distribution uses through the Local Plan process is clearly not working.
I welcome the Department of Transport’s paper on the future of the freight industry and I hope that it encourages local authority planning departments when considering employment allocation to adopt a more level playing field with other land use types.
