Disparity in UK business rates – announcement means tangible incentives for Welsh businesses

Leigh Richardson, Head of Business Rates at property adviser GVA in Cardiff, has welcomed the announcement that business rates collected in Wales will stay in Wales.

In a landmark announcement it has been confirmed that for the first time, The Welsh Government is to get control over business rates raised in Wales.

Leigh Richardson says, “We expect that devolved power on business rates will provide a real opportunity for The Welsh Government to boost the Welsh Economy, providing tangible incentives to businesses throughout Wales. We await full details of the reforms but for now this is good news for Wales and hands control of our finances back to the people of Wales.”

This is in stark contrast to ongoing criticism of the business rates system across the UK. GVA says the handling of the UK Government’s revaluation postponement is proving increasingly unhelpful and is urging Westminster, and its property peers, to suggest workable solutions to the problem.

New research by GVA, which is the UK’s largest independent commercial property adviser, reveals the scale of disparity business rates present different regions around the UK. With business rates currently based on rental values that existed at the peak of the market in April 2008, some regions have since experienced significant rental value declines, with Wales seeing the greatest decline of 15%. This compares to a 6.4% decline on prime space in London for example.

At a sector level, the differences are even more extreme. Standard retail property at the regional level saw rental growth vary from +8.6% in London to -23.2% in Wales.

Leigh Richardson continues: “The property market is wielding a very large stick to try and solve this problem, when a carrot could offer a far more helpful resolution. Business Rates won’t be replaced because there isn’t a better alternative we feel. Dramatic changes to the system would just shift the problem onto someone else. Instead the system needs improving.”