Senedd clash over business rates relief falling from 75% to 40% in Wales

The Senedd rebuffed calls for the Welsh Government to reverse plans to slash business rates relief for the retail, hospitality and leisure sectors.

Peter Fox led a Conservative debate, raising concerns about business rates relief falling from 75% to 40% under Welsh ministers’ draft 2024-25 spending plans,

The Monmouth MS urged the Welsh Government to use money from Westminster to support businesses and protect jobs by keeping the 75% rate.

Mr Fox warned that businesses in Wales will pay almost twice as much in non-domestic rates than if they were based in England.

The former leader of Monmouthshire County Council told the chamber it is vital Welsh businesses are not penalised and disadvantaged.

He said: “For years, businesses in Wales have been disadvantaged by the highest business rates in Great Britain, with both small and large businesses paying the same rate – both of which are higher than the rate that small businesses pay in both England and Scotland.”

Luke Fletcher, for Plaid Cymru, urged ministers to move away from non-domestic rates, saying the system simply does not work and has not moved with the times.

He called for greater flexibility to ensure, for example, that out-of-town shopping centres and supermarkets pay more into the system.

The South Wales West MS also raised concerns about an imbalance between brick-and-mortar businesses and those that operate online.

‘Death sentence’

Janet Finch-Saunders quoted Kate Nicholls, the chief executive of UKHospitality, as saying the trade body is seeing a 10% higher business failure rate in Wales.

The Conservative MS for Aberconwy accused Labour and Plaid Cymru of being “busy brainstorming novel ways to bankrupt our businesses”.

She said: “This represents nothing more than gross negligence, a shambles of a budget that is a death sentence to many businesses.“

Hefin David, a Labour backbencher who represents Caerphilly, highlighted the wider context of 14 years of austerity and soaring inflation.

He criticised UK Government tax cuts at a time when public services are “on their knees”, highlighting the International Monetary Fund’s call for a spending boost.

Dr David said the Welsh Government is prioritising the NHS, social care and schools: “The only way you can have functioning public services – I don’t even mean world-class or good public services, but functioning public services – is if those budgets are protected.”

‘Refocus’

Rebecca Evans, Wales’ finance minister, said business rates raise £1.1bn a year – a non-trivial contribution to the funding required to sustain public services.

She said the Welsh Government has had to make difficult decisions to refocus funding towards core front-line services but still provides £384m in rates support.

Ms Evans pointed to ministers’ decision to cap inflation of the multiplier at 5% next year, adding an additional £18m recurring cost to the Welsh budget.

She told the Senedd: “We’re also investing £78m to provide that fifth successive year of rate relief for retail, leisure and hospitality businesses in 2024-25.

“And let’s remember that that was always a temporary scheme.”

Ms Evans said the Welsh Government continues to explore the idea of land value tax as a possible long-term replacement for non-domestic rates.

The Tory motion was voted down, 14-36, following the debate on January 31. While Plaid Cymru and Welsh Government amendments were agreed, the motion as amended was not.

By Chris Haines, ICNN Senedd reporter