Posted: Wed 17th Jan 2024

Rate relief cut “final nail in coffin” for Wales’ independent businesses

News and Info from Deeside, Flintshire, North Wales
This article is old - Published: Wednesday, Jan 17th, 2024

The leader of Plaid Cymru has warned that cutting business rate relief could have long-term implications for Wales’ high street. ‌​‌‌​​​‌‍‌​‌​‌‌‌​‍‌​​​‌​‌‌‍‌​​​‌‌​‌‍‌​​‌‌‌‌​‍‌​​‌‌‌​​‍‌​​‌​‌​​‍‌​‌‌‌​‌‌‍‌​​‌‌​‌​‍‌​​‌‌‌​​‍‌‌​​‌‌​‌‍‌‌​​‌‌​​

As part of its 2024-25 draft budget the Welsh Government is proposing a cut from 75 per cent to 40 per cent on the Non Domestic Rates. ‌​‌‌​​​‌‍‌​‌​‌‌‌​‍‌​​​‌​‌‌‍‌​​​‌‌​‌‍‌​​‌‌‌‌​‍‌​​‌‌‌​​‍‌​​‌​‌​​‍‌​‌‌‌​‌‌‍‌​​‌‌​‌​‍‌​​‌‌‌​​‍‌‌​​‌‌​‌‍‌‌​​‌‌​​

The relief will be capped at £110,000 per business across Wales. ‌​‌‌​​​‌‍‌​‌​‌‌‌​‍‌​​​‌​‌‌‍‌​​​‌‌​‌‍‌​​‌‌‌‌​‍‌​​‌‌‌​​‍‌​​‌​‌​​‍‌​‌‌‌​‌‌‍‌​​‌‌​‌​‍‌​​‌‌‌​​‍‌‌​​‌‌​‌‍‌‌​​‌‌​​

However there have been concerns that reducing the rate relief during the cost-of-living crisis and high levels of inflation will have a dire impact on an already struggling retail and hospitality sector. ‌​‌‌​​​‌‍‌​‌​‌‌‌​‍‌​​​‌​‌‌‍‌​​​‌‌​‌‍‌​​‌‌‌‌​‍‌​​‌‌‌​​‍‌​​‌​‌​​‍‌​‌‌‌​‌‌‍‌​​‌‌​‌​‍‌​​‌‌‌​​‍‌‌​​‌‌​‌‍‌‌​​‌‌​​

Speaking in the Senedd on Tuesday Rhun ap Iorwerth MS challenged First Minister Mark Drakeford on whether the planned reduction is in-keeping with the Welsh Government’s strategy for the high street. ‌​‌‌​​​‌‍‌​‌​‌‌‌​‍‌​​​‌​‌‌‍‌​​​‌‌​‌‍‌​​‌‌‌‌​‍‌​​‌‌‌​​‍‌​​‌​‌​​‍‌​‌‌‌​‌‌‍‌​​‌‌​‌​‍‌​​‌‌‌​​‍‌‌​​‌‌​‌‍‌‌​​‌‌​​

He said: “Of course funding is an issue, but there are longer term consequences to cuts like this for the economic and societal well-being of Wales, and I’d be very interested if the First Minister would share with us the calculations that this is a short-term decision that doesn’t have long-term implications. ‌​‌‌​​​‌‍‌​‌​‌‌‌​‍‌​​​‌​‌‌‍‌​​​‌‌​‌‍‌​​‌‌‌‌​‍‌​​‌‌‌​​‍‌​​‌​‌​​‍‌​‌‌‌​‌‌‍‌​​‌‌​‌​‍‌​​‌‌‌​​‍‌‌​​‌‌​‌‍‌‌​​‌‌​​

“I met with Welsh hospitality leaders today, who shared with me their frustrations and fears about the future of the sector. ‌​‌‌​​​‌‍‌​‌​‌‌‌​‍‌​​​‌​‌‌‍‌​​​‌‌​‌‍‌​​‌‌‌‌​‍‌​​‌‌‌​​‍‌​​‌​‌​​‍‌​‌‌‌​‌‌‍‌​​‌‌​‌​‍‌​​‌‌‌​​‍‌‌​​‌‌​‌‍‌‌​​‌‌​​

“Just in the past week, renowned and well established food and drink businesses in the First Minister’s own constituency have announced their intention to close, and the decision to cut business rate relief has been described as the final nail in the coffin for many independent business by the Welsh Independent Restaurant Collective. ‌​‌‌​​​‌‍‌​‌​‌‌‌​‍‌​​​‌​‌‌‍‌​​​‌‌​‌‍‌​​‌‌‌‌​‍‌​​‌‌‌​​‍‌​​‌​‌​​‍‌​‌‌‌​‌‌‍‌​​‌‌​‌​‍‌​​‌‌‌​​‍‌‌​​‌‌​‌‍‌‌​​‌‌​​

“Now, the current business rate relief of 75 per cent was never intended to continue indefinitely, say Ministers, but putting a safety net in place one minute and then pulling it away when times are particularly tough isn’t a coherent approach. ‌​‌‌​​​‌‍‌​‌​‌‌‌​‍‌​​​‌​‌‌‍‌​​​‌‌​‌‍‌​​‌‌‌‌​‍‌​​‌‌‌​​‍‌​​‌​‌​​‍‌​‌‌‌​‌‌‍‌​​‌‌​‌​‍‌​​‌‌‌​​‍‌‌​​‌‌​‌‍‌‌​​‌‌​​

“Does the First Minister share my concern that businesses in hospitality are closing because of this, and will he listen to the industry’s voices and reconsider that decision? ‌​‌‌​​​‌‍‌​‌​‌‌‌​‍‌​​​‌​‌‌‍‌​​​‌‌​‌‍‌​​‌‌‌‌​‍‌​​‌‌‌​​‍‌​​‌​‌​​‍‌​‌‌‌​‌‌‍‌​​‌‌​‌​‍‌​​‌‌‌​​‍‌‌​​‌‌​‌‍‌‌​​‌‌​​

However Mr Drakeford argued that the reduced business rates relief had “always been a temporary scheme, and there will come a point where it will come to an end.” ‌​‌‌​​​‌‍‌​‌​‌‌‌​‍‌​​​‌​‌‌‍‌​​​‌‌​‌‍‌​​‌‌‌‌​‍‌​​‌‌‌​​‍‌​​‌​‌​​‍‌​‌‌‌​‌‌‍‌​​‌‌​‌​‍‌​​‌‌‌​​‍‌‌​​‌‌​‌‍‌‌​​‌‌​​

He added that the scheme has already given more than £1 billion in additional rate relief to the sector. ‌​‌‌​​​‌‍‌​‌​‌‌‌​‍‌​​​‌​‌‌‍‌​​​‌‌​‌‍‌​​‌‌‌‌​‍‌​​‌‌‌​​‍‌​​‌​‌​​‍‌​‌‌‌​‌‌‍‌​​‌‌​‌​‍‌​​‌‌‌​​‍‌‌​​‌‌​‌‍‌‌​​‌‌​​

Mr Drakeford said: “We will not be reconsidering that decision unless Plaid Cymru can tell me where the money that has been diverted from business rate relief to support many other programmes – including many of the other programmes that, week after week, Plaid Cymru Members will tell me we have to find more money for. ‌​‌‌​​​‌‍‌​‌​‌‌‌​‍‌​​​‌​‌‌‍‌​​​‌‌​‌‍‌​​‌‌‌‌​‍‌​​‌‌‌​​‍‌​​‌​‌​​‍‌​‌‌‌​‌‌‍‌​​‌‌​‌​‍‌​​‌‌‌​​‍‌‌​​‌‌​‌‍‌‌​​‌‌​​

“If he will tell me where that money is to come from, then I’ll consider whether I think that he’s made a sufficiently compelling case. ‌​‌‌​​​‌‍‌​‌​‌‌‌​‍‌​​​‌​‌‌‍‌​​​‌‌​‌‍‌​​‌‌‌‌​‍‌​​‌‌‌​​‍‌​​‌​‌​​‍‌​‌‌‌​‌‌‍‌​​‌‌​‌​‍‌​​‌‌‌​​‍‌‌​​‌‌​‌‍‌‌​​‌‌​​

“I am not plucking anything out of the air about the temporary nature of the scheme. The scheme is funded via the UK Government. ‌​‌‌​​​‌‍‌​‌​‌‌‌​‍‌​​​‌​‌‌‍‌​​​‌‌​‌‍‌​​‌‌‌‌​‍‌​​‌‌‌​​‍‌​​‌​‌​​‍‌​‌‌‌​‌‌‍‌​​‌‌​‌​‍‌​​‌‌‌​​‍‌‌​​‌‌​‌‍‌‌​​‌‌​​

“They said, in the very first year, it was a one-year scheme, and there was no money at all in the budget for this form of rate relief until the UK Government made a decision to continue it for a further year. ‌​‌‌​​​‌‍‌​‌​‌‌‌​‍‌​​​‌​‌‌‍‌​​​‌‌​‌‍‌​​‌‌‌‌​‍‌​​‌‌‌​​‍‌​​‌​‌​​‍‌​‌‌‌​‌‌‍‌​​‌‌​‌​‍‌​​‌‌‌​​‍‌‌​​‌‌​‌‍‌‌​​‌‌​​

“It has always been a temporary scheme, and there will come a point where it will come to an end. ‌​‌‌​​​‌‍‌​‌​‌‌‌​‍‌​​​‌​‌‌‍‌​​​‌‌​‌‍‌​​‌‌‌‌​‍‌​​‌‌‌​​‍‌​​‌​‌​​‍‌​‌‌‌​‌‌‍‌​​‌‌​‌​‍‌​​‌‌‌​​‍‌‌​​‌‌​‌‍‌‌​​‌‌​​

“We are providing a pathway out of the subsidy for the sector, and I think we have made the right decision.34 ‌​‌‌​​​‌‍‌​‌​‌‌‌​‍‌​​​‌​‌‌‍‌​​​‌‌​‌‍‌​​‌‌‌‌​‍‌​​‌‌‌​​‍‌​​‌​‌​​‍‌​‌‌‌​‌‌‍‌​​‌‌​‌​‍‌​​‌‌‌​​‍‌‌​​‌‌​‌‍‌‌​​‌‌​​

“It’s right for me to point out, Llywydd, as well that, at the same time, we are providing an additional £20 million in a new capital scheme that will allow those businesses to carry out improvements to premises that will permanently reduce their reliance on very expensive energy, for example. ‌​‌‌​​​‌‍‌​‌​‌‌‌​‍‌​​​‌​‌‌‍‌​​​‌‌​‌‍‌​​‌‌‌‌​‍‌​​‌‌‌​​‍‌​​‌​‌​​‍‌​‌‌‌​‌‌‍‌​​‌‌​‌​‍‌​​‌‌‌​​‍‌‌​​‌‌​‌‍‌‌​​‌‌​​

“So, that’s not a one-off scheme or a temporary scheme; that is a scheme that will mean that, from then onwards, those businesses will be able to save money and to go on trading. ‌​‌‌​​​‌‍‌​‌​‌‌‌​‍‌​​​‌​‌‌‍‌​​​‌‌​‌‍‌​​‌‌‌‌​‍‌​​‌‌‌​​‍‌​​‌​‌​​‍‌​‌‌‌​‌‌‍‌​​‌‌​‌​‍‌​​‌‌‌​​‍‌‌​​‌‌​‌‍‌‌​​‌‌​​

Rhun ap Iorwerth MS also questioned the first minister on whether he would support a business rates reform. ‌​‌‌​​​‌‍‌​‌​‌‌‌​‍‌​​​‌​‌‌‍‌​​​‌‌​‌‍‌​​‌‌‌‌​‍‌​​‌‌‌​​‍‌​​‌​‌​​‍‌​‌‌‌​‌‌‍‌​​‌‌​‌​‍‌​​‌‌‌​​‍‌‌​​‌‌​‌‍‌‌​​‌‌​​

He said: “But the truth is, of course, that business rates is a pretty badly designed levy in the first place; a pretty blunt instrument holding back too many of our entrepreneurs. ‌​‌‌​​​‌‍‌​‌​‌‌‌​‍‌​​​‌​‌‌‍‌​​​‌‌​‌‍‌​​‌‌‌‌​‍‌​​‌‌‌​​‍‌​​‌​‌​​‍‌​‌‌‌​‌‌‍‌​​‌‌​‌​‍‌​​‌‌‌​​‍‌‌​​‌‌​‌‍‌‌​​‌‌​​

“Now, I’m up for the challenge of reforming it, because I believe that Wales’s greatest assets are its people, and I want to support them in any way that we can. ‌​‌‌​​​‌‍‌​‌​‌‌‌​‍‌​​​‌​‌‌‍‌​​​‌‌​‌‍‌​​‌‌‌‌​‍‌​​‌‌‌​​‍‌​​‌​‌​​‍‌​‌‌‌​‌‌‍‌​​‌‌​‌​‍‌​​‌‌‌​​‍‌‌​​‌‌​‌‍‌‌​​‌‌​​

“Is the First Minister ready to trigger work on genuine reform of business rates, in his last few weeks as First Minister, or perhaps call on his successors to do so.” ‌​‌‌​​​‌‍‌​‌​‌‌‌​‍‌​​​‌​‌‌‍‌​​​‌‌​‌‍‌​​‌‌‌‌​‍‌​​‌‌‌​​‍‌​​‌​‌​​‍‌​‌‌‌​‌‌‍‌​​‌‌​‌​‍‌​​‌‌‌​​‍‌‌​​‌‌​‌‍‌‌​​‌‌​​

Mr Drakeford agreed that the current system is “ripe for reform” and added that work had been ongoing for a “considerable period of time.” ‌​‌‌​​​‌‍‌​‌​‌‌‌​‍‌​​​‌​‌‌‍‌​​​‌‌​‌‍‌​​‌‌‌‌​‍‌​​‌‌‌​​‍‌​​‌​‌​​‍‌​‌‌‌​‌‌‍‌​​‌‌​‌​‍‌​​‌‌‌​​‍‌‌​​‌‌​‌‍‌‌​​‌‌​​

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