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In January the Welsh Assembly Government appointed a review commission to examine business rates policy in Wales. The review body, chaired by Professor Brian Morgan of Cardiff Metropolitan University and including Chris Sutton of JLL’s Cardiff office, has published its report: “Business Rates Wales Review: Incentivising Growth”.

 

The report contains 19 recommendations in all, but its key findings relate to: devolving business rates to Wales; the small business rates relief scheme; empty property rates; and other rates reliefs. The review body recommends that the Silk Commission, currently reviewing devolution to Wales, should also consider devolving business rates to Wales. This proposal, if implemented, would give the Welsh Assembly control over approximately £1 billion of business rates generated in Wales. The report also recommends business rates retention in Wales, as is being enacted in England, but on a different model.

 

The small business rates relief scheme is seen by the review body as of major importance to the Welsh economy and it recommends continuation of the current reliefs, due to expire in March 2013, at least until 2015.

 

The report makes the point that the current empty property rate regime, introduced in 2008, has harmed the Welsh economy, and recommends various modifications including longer rates-free periods and further EPR exemptions for refurbished second-hand stock.

 

Finally the report recommends other changes to rates reliefs, including a Welsh renewable energy relief scheme.

 

Commenting on the report, Blake Penfold, head of rating at GL Hearn, says: “This is a well written and sensible review that appears to have grasped correctly many aspects of the complex business rates system that seem to have eluded governments in England, Scotland and Northern Ireland. The report makes the important point that the abolition of Empty Property Relief in 2008 has had a significant negative impact on the economy. It also makes clear that there is a limit to what business rates policy can achieve, saying: “there are limits to what changes to rates can achieve. They were created as a means of taxation on property values and not as an economic development tool. They cannot be a cure-all for economic problems.” Penfold also commented that the report came out against the type of rates levies introduced in Scotland and Northern Ireland pointing out the adverse effect of these on the wider economy. He said: “for the first time for a long time we have a balanced and common sense view about business rates from a government sponsored body, not just another naked tax grab”.