PLAID CYMRU AND BUSINESS RATES - RHETORIC AGAIN OR A REAL COMMITMENT?

As regular readers will know, I have been a constant advocate for lower business rates for smaller businesses in Wales since I started writing my first newspaper column for the Daily Post back in 2003.

And it would seem that this vital issue is now something that has become popular again amongst politicians in Wales.

Last year, we saw the publication of a Welsh Government commissioned review, chaired by Professor Brian Morgan of Cardiff Metropolitan University (above), into whether changing the business rates regime in Wales could aid economic development.

And not to be outdone, Plaid Cymru have now made an announcement on the future of business rates in Wales at their annual conference in Aberystwyth.

This would mean that firms with a rateable value of less than £10,000 would pay no business rates (rather than the £6,000 ceiling at present) and firms would qualify for reduced business rates if their rateable values were below £15,000 (rather than £12,000 under the current regime).

They say that imitation is the sincerest form of flattery, so I am wondering how the Welsh Conservatives would have felt on hearing this announcement given that Plaid’s policy is almost identical to the one they adopted in 2010 i.e. no small business having a rateable value of less than £12,000 would pay business rates in Wales?

To be fair to Plaid Cymru, they had previously made reduction in business rates one of their seven key electoral pledges prior to the 2007 Assembly election, announcing that they had “launched proposals to take 50,000 Welsh businesses out of the business rates net. The announcement is the last of Plaid’s 7 for ‘07 policies to transform Wales. Plaid Leader, Ieuan Wyn Jones outlined proposals, targeted at the West Wales and the valleys region, that would see an immediate increase in the number of businesses entitled to 50 per cent and 25 per cent rate relief and a total of over 50,000 businesses completely leaving the business rates net by 2011.”

Yet, when Plaid Cymru became part of a coalition government between 2007 and 2011, did small firms throughout Wales finally get the business rate reductions they deserved?

Unfortunately, it was a promise they did not keep to Welsh electorate and with Scotland and England then introducing schemes that reduced their business rates, Welsh firms ended up being at an even greater disadvantage in terms of the local taxes they were paying.

And even during the dark days following the economic crash of 2008, the then leader of Plaid Cymru, in his role as the minister for economic development, steadfastly refused to consider reducing the burden on small firms, stating that he was not persuaded that business rate relief was the best use of the limited resources that the Welsh Government had.

To be fair, this antipathy towards reducing the taxation burden for Welsh small firms has not been shared across the whole of Plaid Cymru.

In fact, my fellow Daily Post columnist Lord Wigley is on record as stating that cutting business rates would enable 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”.

With the weekend announcement on reducing business rates, it would seem that his influence on Plaid Cymru’s economic policies are on the increase again assuming, of course, that they actually keep to this promise if they enter the Welsh Government in 2016.

If they do, and with all the major parties in Wales now committed to reforming our business rates regime, that can only be good news for our small firm sector and, more importantly, their potential for creating wealth and employment across Wales.

BUSINESS RATES REVIEW FOR WALES

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.