Navigating Challenges in the Forecourt Industry: Rising Costs, Policy Changes, and Crime
BY Gordon Balmer Petrol Retailers Association (PRA)
Navigating Challenges in the Forecourt Industry: Rising Costs, Policy Changes, and Crime
The forecourt industry in the UK is currently navigating through a turbulent period marked by escalating operational costs, significant policy changes, and an increase in crime. These challenges have a profound impact on family-run businesses, which form the backbone of this sector.
Rising Costs and Changes in National Insurance and National Living Wage
The recent changes in National Insurance (NI) rates and the National Living Wage (NLW) are putting additional financial pressure on forecourt operators. The increase in NI contributions, alongside the rise in NLW, means businesses must now manage higher payroll expenses. In response to these economic pressures, many forecourt owners are turning to innovative solutions. Investing in car washing machinery, particularly standalone jet washes has become a popular strategy to bolster profits during these tough times in fuel and food retailing. Moreover, the installation of solar panels at many forecourts is proving to be a forward-thinking move to slash energy bills, thereby offering some relief from the rising operational costs .
Business Property Relief and Inheritance Tax
One of the significant fiscal concerns for family-run forecourt businesses is the Business Property Relief on Inheritance Tax. The potential changes could drastically affect investment capabilities: Family forecourt outlets might need to reconsider their investment strategies to accommodate this new financial burden.
There’s a risk that some filling stations might be sold off, while others might lack the funds to continue operations, potentially leading to closures. The reduction in the number of filling stations could have detrimental effects on both the economy and the UK’s energy resilience. Consequently, the Petrol Retailers Association (PRA) has actively encouraged its members to engage directly with political figures, including Prime Minister Keir Starmer, and local MPs, urging a policy review. The PRA has provided a template letter to simplify this communication, highlighting the dire consequences of these changes on family businesses. In addition, the PRA is working with Family Business UK who have garnered together over 30 other trade associations to lobby for a policy reversal .
Combatting Crime in Forecourts
Crime, particularly fuel theft and in-store incidents, has become a significant cost, with an estimated annual impact exceeding £2 billion according to the most recent report from the Confederation of British Industry British Retail Consortium. In response, PRA members are adopting advanced technologies like body cams, facial recognition cameras and headsets to deter and manage crime more effectively. The PRA is also actively participating in a review of the Retail Crime Strategic Plan to provide minimum standards and improvements across the Reporting of Crime, Reporting of Intelligence and Dealing with Vulnerable persons. When managing matters of crime or incidents concerning fuel theft, following discussions with former Secretary of State for Transport, Rt Hon Mark Harper and subsequent advice from the Home Office, companies that provide a service to recover monies associated with drive offs and no means to pay will soon have online access to the DVLA database, provided they meet certain criteria outlined by the Police. This improvement should streamline the process of recovering losses from fuel theft, with implementation expected in Q1.
The 2030 ICE Ban and Charging Infrastructure
While the PRA supports the move towards decarbonization of transport, there’s a strong call for a strategic, cooperative approach between the government and industry. The current inheritance tax changes could limit the available funds for family businesses to invest in essential EV charging infrastructure, which, although viable with a payback period of 8-10 years, requires significant upfront investment.
Advocacy for Car Wash Licensing
The PRAs’ sister not-for-profit trade association, the Car Wash Association ( CWA) is pushing for a national licensing scheme for car washes to ensure quality and fairness in the industry. Collaborations with Nottingham Trent University (NTU) are underway, with NTU preparing to submit proposals for a national licensing scheme. Additionally, the CWA will be participating in webinars with LabourList to discuss these proposals, emphasizing the need for regulation to protect both consumers and legitimate businesses.
Conclusion
The forecourt industry stands at a crossroads, facing a complex array of challenges that require thoughtful policy responses, community engagement and innovative business practices. The survival and growth of family-run forecourt businesses hinges on how well they can adapt to these changes while advocating for a supportive legislative environment. The concerted efforts in lobbying, investment in technology and strategic business planning are pivotal in ensuring that these businesses not only survive but thrive in the evolving economic landscape.
