Businesses in the dark on rate relief fund

Andrew West, Director of Business Rates, calls for detail in wake of £10m relief announcement

11 January 2017

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The Welsh Government appeared to provide some last-minute Christmas cheer in December with its announcement that an additional £10million will be made available to help high street business rate payers across Wales facing substantial increases in their business rates as a result of the 2017 revaluation.

This no doubt provided some welcome relief for those high street businesses facing rate increases from 1 April as a result of the 2017 revaluation. In Wales, the urban, industrial areas have seen the sharpest declines in their rateable value, while some of Wales’s more rural authorities in mid and north Wales will be subject to marked increases. Unsurprisingly, this has resulted in an outcry from many businesses operating in the worst affected parts of Wales.

To put this into context, across Wales, the revaluation resulted in significant variations between the 22 Welsh local authorities, from an overall fall of 10.7% in Neath Port Talbot to an increase of 9.2% in Conwy. The revaluation saw a fall of 3.5% in Cardiff, 7.7% in Newport and 1.8% in Swansea, while Monmouthshire, Powys, Ceredigion and Denbighshire saw increases of 7%, 5%, 4.9% and 4% respectively. Gwynedd saw an increase of 8.9%.

Monmouth in particular hit the headlines when the rateable value movements for Monnow Street were published. Here, the average increase for retail properties was 30%, varying between increases of 6% for the supermarkets and 66% for standard retail units.

The revaluation will provide challenges to many, including rating practitioners and billing authorities. Part of the problem is that the valuation date on which the 2017 list was based was 1st April 2015 - a time when the economy was slowly emerging from the deepest recession seen since the Second World War. Clearly, in 2015, rental transactions were still scarce so there was inevitably a lack of good quality rental evidence on which to base assessments.

Taking all of this into account, the announcement by the Welsh Government was a welcome early Christmas present for many. What was announced was a targeted special grant scheme, aimed at high street retailers including shops, pubs and restaurants, including those businesses which have seen their rates increase significantly as a result of the 2017 revaluation eligibility and application process. 

Details on how the scheme will operate are due to be published on the Welsh Government website. But until then, businesses are in the dark about their eligibility and potential to benefit before the implementation of the relief from April.

With local authorities preparing 2017/18 rate bills now with no detail yet available on the mechanics of the scheme; it is probable that bills will be issued without the application of this new relief.

There’s also the question of the criteria on which the relief be based. Will it be based on rateable value limits or financial criteria? And how will it operate in the context of the current small business rates and transitional relief schemes already in operation in Wales - will those who currently qualify for tapered rate relief be eligible?

Each of these are legitimate questions being asked by businesses, and ones to which we simply don’t know the answers.

Our hope is that the money is spent on a considered, simple scheme that’s universally applied across Wales without an application process, meaning any business suffering rates increases would be automatically eligible. Simplicity really is going to be key here. Complexity confuses, and if the process is too arduous or discretionary then businesses simply won’t take the time to apply.

Ultimately, what’s really needed in Wales is a long-term, permanent solution. We are lagging behind England in elements of our policy approach. While the English system is by no means perfect, businesses do at least have certainty that the small business rates relief scheme is permanent, and the UK Government has also doubled the rateable value threshold in England from April.

Businesses in Wales have not been afforded the same degree of certainty. The Welsh Government is considering its long-term position on business rates and announcements like the recent relief fund to be welcomed, but to affect genuine and sustainable change, it must be clear and ambitious with  its direction of travel, to provide the certainty demanded by the business community in Wales.

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Matthew Leach, Arriva Capital Waterside