Business rates rise is high street hurricane, say Welsh companies

Image caption, Andria Thomas said the increase in her business rates seemed “unfair” when similar shops in England pay a lower rate
  • Author, Huw Thomas
  • Role, BBC Wales business correspondent

An increase in business rates in Wales has created a “perfect hurricane” for hospitality and retail firms, an industry body has warned.

Since April, the Welsh government’s discount on business rates for the sectors has been cut, with high street traders facing bigger bills.

UK Hospitality Cymru said rising costs had left some businesses “on the edge”.

The Welsh government said it continued to offer business rates relief, with only one in five paying the full bill.

Traders in Bangor, Gwynedd, said the rising costs were beginning to bite.

“We’ve got the longest high street in the whole of the UK, and it’s one of the emptiest high streets in the whole of the UK,” said clothes designer and upholsterer Sophia Ingham.

Image caption, Sophia Ingham expects to close her shop in July because of the increase in business rates

Since last July she has run her Phia shop in the Deiniol shopping centre, but expects to have to close this summer in a move that would be “entirely down to the rate increase”.

It will be the latest business in Bangor to close its doors.

“Most of the shops are closed or boarded up,” Ms Ingham said.

She called on the government to cut rates completely “to help rejuvenate the high streets, rather than terminate them”.

What are business rates and how are they set?

Business rates, sometimes known as non-domestic rates, are a tax based on the rateable value (RV) of the property being used.

So, for example, a business premises with a £15,000 RV will have it multiplied by 0.562, which means a a rates bill of £8,430.

The rates are collected by local authorities and paid into a Welsh government national fund.

The Welsh government determines what discounts, or relief, certain businesses are entitled to.

In April the amount of relief fell from 75% to 40% for retail and hospitality businesses. Similar businesses in England continue to get 75% relief.

The Welsh government said it was still offering retail and hospitality sectors the equivalent of £78m in discounts on their business rates.

Image caption, David Chapman from UK Hospitality Cymru wants rate discounts restored to previous levels

But the body representing hotels, pubs and restaurants said the sector was under huge financial strain.

“It’s not just a perfect storm, it’s a perfect hurricane,” said David Chapman, executive director of UK Hospitality Cymru.

“We’ve had compulsory closure with Covid, we’ve had high levels of energy prices, high levels of inflation on food and drink. We’ve not got any cash reserves, we’re paying back Covid loans.

“The only support that we had was business rate relief, and that’s been cut away from us,” he said.

Mr Chapman urged the Welsh government to restore the relief to its previous level, which would match the discount on offer in England.

Image caption, Llandeilo in Carmarthshire has a thriving high street, but traders say business costs remain high

Andria Thomas runs the Dot clothing shop in Llandeilo, Carmarthenshire, where she sells imported European fashion brands to customers in the rural market town.

She said the increase in her business rates was “a little bit unfair” when similar shops in England pay a lower rate.

“We’re having to pay more than what [businesses] across the bridge in England are having to pay, where our running costs are probably very equal,” she said.

Ms Thomas also sells clothing online, but wants to stay on the high street.

Image caption, Dot clothing owner Andria Thomas says cheaper rates in England seem “unfair”

“Every extra cost impacts on how much profit you can make. And obviously, as much as I want to continue having bricks and mortar and a window shopfront, the running costs for online are cheaper and cheaper.

“So having business rates at a reduced cost is a massive influence to helping us locals to stay local.”

The Welsh government said it was doing “all we can, with the resources and powers available to us” to provide support to businesses.

“We provide a range of permanent non-domestic rates reliefs for businesses, worth £250m a year and fully funded by the Welsh government.

“This includes small business rates relief, which supports ratepayers for around 70,000 properties across Wales, of which more than two-thirds pay nothing at all.

“We are providing additional non-domestic rates support worth £134m in 2024-25. This includes a fifth successive year of support for retail, leisure and hospitality businesses with their rates bills, at a cost of £78m, building on the almost £1bn of support provided in rates relief to these sectors since 2020-21.

“Only one in five properties are liable for their full bill this year.”

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