There has been some recent discussion on the question of whether Welsh businesses are getting a fair deal on business rates. To me, an issue as simple as business rates goes to the heart of the argument over the rationale for devolution and the ability for Wales to do things differently to England, Scotland or Northern Ireland.
In fact, despite having the powers to create a far more business friendly rate system that would be relevant to Wales, all that the One-Wales Government has done since 2007 is meekly mimicked the actions of Westminster when it comes to non-domestic rates for businesses
In the case of changes to rates to empty properties, the One-Wales Government replicated exactly the changes that took place in England.
When the Treasury announced that it would bring forward regulations to allow ratepayers in England to opt to pay the increase of five per cent in business rates for 2009-10 over the following two years, what did WAG do?
Exactly the same, of course.
Why didn't Wales adopt a different type of relief for empty properties such as continuing the reliefs for those properties in the poorest areas of Wales?
Why didn't WAG merely absorb part of the five per cent increase in business rates for the smallest businesses?
They didn’t because it has become clear that the One-Wales Government simply does not believe in cutting business rates for small firms in Wales as an economic lever.
Frankly, I find it difficult to understand why a devolved administration, when it comes to something as critically important as business rates, has merely adopted the old colonialist adage of "For Wales, see England".
Even the much lauded decrease in the multiplier and the recent 'increase' in business rate relief by WAG, which deals with the consequences of the 20 per cent increase in the valuation of property is an exact replica of the policy in England with one important exception.
English businesses get a far more generous level of rate relief than Welsh firms.
If we compare the current levels of business rate relief across England and Scotland and Wales, there are considerable differences in levels of business rate relief across the three nations.
For example, to qualify for 50 per cent business rate relief in England, your rateable value should be £6,000 or below. In Scotland, any business with a rateable value of £8000 or less pays no rates at all.
In Wales, you would only qualify for 50 per cent relief if your business had a rateable value of £2,400 (yes, £3,600 below the limit for England) and therefore a business with a rateable value of £6000 would only get 25 per cent relief.
Simply put, a small business in England with a rateable value of £6,000 would, after small business relief was applied, pay roughly £1221 in business rates in 2010-2011.
In Wales, that business would currently pay £1840, a bill that is 50 per cent higher than in England.
The same small business in Scotland would pay nothing.
Therefore, the simple fact of the matter is that small businesses in Wales pay more in business rates than their equivalents in Scotland or England.
That is not why many of us supported devolution for Wales. We backed an Assembly for Wales because we wanted policies that were different to England or Scotland that gave us a competitive advantage over other regions of the UK, not a disadvantage.
With regard to the provision of further rate relief to businesses, no further powers are needed. All that is required is for the Minister for Social Justice and Local Government to sign a new Non-Domestic Rating (Small Business Relief) Order which would improve the direct support to many small businesses across Wales.
Of course, it has been argued that Wales simply cannot afford this during a recession.
Yet, according to a report from the IWA, the spend in the current financial year is estimated at £107 per head in Wales with the RDA for the North East of England, One North East, second at £97. In Scotland, it is put at £76.
Even when we have such funding available, the bureaucratic nightmare than many businesses face trying to access this support means that WAG’s main business support programme had only spent 22 per cent of its budget six months into the current financial year.
As Dafydd Wigley said in an interview with the Western Mail back in 2007, “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 that 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."
Not many would disagree with such remarks.
I certainly don’t and it may be time for one of the National Assembly’s Committees to examine, in detail, whether providing help to Welsh businesses through grant funding and a bloated business support programme is more effective than cutting the amount government takes from the business community through reducing business rates.
So the next time a politician reminds you of the fact that small businesses are the backbone of the Welsh economy, ask them what they think of the fact that the Welsh Assembly Government ensures that small firms in Wales are paying higher rates than their equivalents in England or Scotland?
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