Monday, June 18, 2012


In various newspaper columns and blog entries, I have returned regularly to the theme of business rates and the failure, to date, of successive Welsh Governments to use them as a means of reducing the financial burden on hard-pressed businesses across Wales.

 In particular, I argued, on numerous occasions, for part of the Welsh Government's economic development budget to be used to reduce rates for thousands of businesses rather than focus mainly on grants for large companies to come into Wales.

And I am not the only one to have done so.

Back in 2007, my fellow Daily Post columnist Lord Wigley stated that “a significant reduction in the business rate might cost between £100m and £200m, depending on how it was applied, but it certainly can be afforded within (the economic development) budget, and it would be better for that money to be re-circulating within the business sector, enabling it to take on more people, to set up new projects, and to have a new confidence and incentive for its work, than being gobbled up in the bottomless pit of bureaucracy, where so much of it ends up at present."

I am sure that businesses across Wales would find little to disagree with in that statement, which it why it was so disappointing that Plaid Cymru, when sharing power during the last Welsh Government, did nothing to change the business rates regime in Wales.

Fortunately, the new Minister Mrs Edwina Hart is taking the issue more seriously. She recently tasked Professor Brian Morgan of Cardiff Metropolitan University to chair a group which would examine what Lord Wigley and myself have called for on numerous occasions, namely how the business rate regime in Wales can be used to encourage economic development and growth. Last week, they released their interim findings.

Whilst some of the recommendations made were a case of tidying up technical anomalies, such as giving certain exemption from empty property rates to premises which are part of a property which comprises both residential and commercial elements, others were more controversial.

Indeed, the main conclusion from the group is a proposal to break the links with the jointly calculated England-Wales business rates regime and devolving this to Wales alone. This would make business rates a fully devolved tax and, according to Professor Morgan, make the Welsh Government responsible for properly managing a business tax that it raises itself.

Given that Council Tax in Wales is already devolved, the present arrangements on business rates look increasingly like an anomaly that needs to be addressed. And the argument from Professor Morgan’s group is that we don’t have to ask permission from Westminster to do this as the National Assembly for Wales already has the power to determine all aspects of business rates including the rate, exemptions and reliefs. More importantly, it has responsibility for the administrative arrangements for its calculation, including the current pooling arrangement with HM Treasury.

Therefore, if it so wishes, the Assembly can end the arrangement tomorrow if the political will is there to do so and thus create a new business rate system in Wales. Some have suggested that this report may end up gathering dust on the Minister's desk as the impression given by some Labour politicians is that they have little appetite for devolving further fiscal powers to Wales.

I doubt that will happen but as dialogue is continuing with Professor Morgan's group, I would urge every business in Wales to make their views known and ensure that we finally have the business rates regime that we need in Wales taht will give us the ability to create a more competitive environment for the Welsh economy.