Business rates – after disappointment comes good news!
17th December 2016
On 11th December (see earlier entry under this section) I wrote on behalf of the Chamber an open letter to Assembly Members seeking their support at the meeting on 13th December in the Senedd to oppose the proposed transitional arrangements in their present form, which would take effect In April 2017 when the new rateable values would be imposed by the Welsh Government.
In that letter I criticised the very short period of consultation, the lack of contact with key stake holders and, when the responses were analysed, the lack of a sufficient sample size to have any definite opinion on the results.
As a result of my open letter I was heartened to receive responses from half a dozen AMs agreeing with the stance taken by Monmouth Chamber of Commerce and Monmouthshire County Council. It was therefore with some disappointment to learn on 14th December that the vote had been 25 in favour of adopting the proposals and 27 abstentions. I asked several AMs to comment as to why they had not opposed the proposals rather than abstaining. Their responses indicated that it was a case of except the flawed proposals or businesses would not get any transitional relief at all; so, they had to abstain.
It was a complete surprise to hear from the media on the afternoon of the 16th December that the Welsh Government had acknowledged the hardship that was being caused, especially to shops, cafés and those in the hospitality sectors in certain parts of Wales. Minister Mark Drakeford had therefore decided to provide “temporary relief and a breathing space so that businesses could accept the changes in their rateable value”. This is extra to £10 million for transitional relief. We do not like the tone of the wording used by the Minister as it is permanent solutions that need to be found, not temporary ones.
The Minister went on to say that "Equally there are many high streets across the country where business rates are falling, but retailers are struggling. We want to be in a position where we can offer these businesses the extra support they need"
Business owners will be pleased to hear that this extra support amounts to £10 million and has been provided to “ease the burden” This will be avalable in April 2017 and the fund will be administered by councils. At the present time we do not know how £10 million will be split. Will it just be for the councils who have protested to distribute, or rural counties or be shared by all? So we welcome the £10 million as a gesture, but at this stage we do not know how much it will benefit the retailers, hotels and pubs of Monmouthshire and other hard hit areas.
We see this as a first step in a long campaign to secure a result for businesses that is at least as good as the new tapering relief and Small Business Rate Relief systems to be applied in England from 2017/18 onwards.
It would be remiss of me to conclude this press statement without mentioning those individuals and organisations who have been pivotal in getting the Welsh Government to ease the burden on hard pressed businesses. Firstly Monmouthshire County Council officers and Cllr Bob Greenland. Secondly, our AM Nick Ramsay and MP David Davies. Thirdly, Sally Stephenson of the Cowbridge traders, who has worked tirelessly to raise the profile of the problem with AMs and the media and lastly, independent businesses of Monmouthshire who have been vocal and found sometimes, sympathetic ears.
David Cummings FIAB Chairman
Business rate revaluation – small businesses urgently seek your help
Open letter to all Assembly Members 11th December 2016.
Dear Assembly Member,
There has been a huge amount of press coverage over the last six weeks about the devastating effect the proposed business rate increases will have on small retailers in rural areas, if imposed in April 2017 by the Welsh Government. The small retailers of Monmouthshire are particularly badly hit with proposed rises in rateable value of up to 585%. Outside our county, we have identified rateable value increase hotspots in Cowbridge, Brecon and Ruthin. The hospitality trade generally in Wales has seen hikes of 200% plus with many small businesses being taken out of the Small Business Rate Relief scheme altogether and having to pay rates in full. As an example, we have identified one public house with a current rateable value of £4000 (so no rates to pay) that has a proposed new rateable value of £27,000 meaning rates payable of £13,500 per annum.
We have been working closely with Monmouthshire County Council, have met several times with representatives from the Valuation Office and have made a small amount of progress with less than a handful of revaluations. Now our focus is to try and influence the Welsh government to really support small business with effective measures to curtail, reduce or postpone these business rateable value increases.
Why have we not contacted the Minister Mark Drakeford on this matter? Monmouthshire County Council, Chambers of Commerce, individual business owners and organisations for other areas have made repeated attempts to enter a proper dialogue with him, but as yet to no avail. The Minister has issued standard letters reiterating how the business rateable value system works. The Minister was asked to attend a public meeting in Usk earlier this week by AM Nick Ramsay, but sent his apologies. This is regrettable, some might say unacceptable, as the clock is ticking to make effective changes to the current flawed approach of WG to this issue.
Why did it take so long for the Welsh government to realise there was a huge problem with the result of the business rateable value revaluation, when it was recognised in England and appropriate measures taken to support small businesses with the change in rateable values?
The valuation office published their report on new business rateable values on 30th September 2016. The Welsh Government was supposed to engage with stakeholders on a Transition Relief scheme and the results of this consultation will be discussed in the Assembly on 13th December. We consider the five week period of consultation was ridiculously short, but worse, only the CBI and county councils seem to have been directly consulted. Anyone else responding found out by accident. The organisations representing small businesses are the Chamber of Commerce of Wales and the Federation of Small Business. Why weren’t South Wales, Mid Wales, West Wales, Brecon, Chepstow, Monmouth etc Chambers of Commerce not directly consulted. Monmouth Chamber managed to get a response in just in time for 4th November deadline. If the Welsh government has not consulted with key stakeholders, then the results of the consultation should be deemed invalid and the meeting to discuss them on 13th December postponed.
Why did it take Business Wales, as the voice on business matters of the Welsh Government until 15th November to mention the results in an email to those on their database?
What more can the Welsh government do now to help improve the lot of small retailers, so that our high streets do not become ghost towns? A good first step might be to look across the border to see what England is doing. Our Chamber’s view is that we feel that the fact that 96.4% of businesses in Wales are not just small, but micro businesses (9 employees or less) is lost on the Welsh Government. They are the arteries carrying the life blood of our whole economy.
After undertaking a vast amount of research on the matter and gaining expert advice from chartered surveyors with experience of business rateable value issues, we propose very clear and achievable options for the Welsh Government to resolve this crisis, as follows:
That WG should accept their current approach to the revaluation is flawed. They should either postpone implementation of the revaluation until 2018, when a new Small Business Rate Relief (SBRR) system is planned to come in for Wales (details not known) or they should copy and paste the excellent new SBRR proposals for 2017 onwards from England, with the doubling of 100% relief to £12,000 rateable value and more tapering relief up to £15,000 with a lower multiplier up to £51,000 rateable value. And perhaps most importantly, in the English proposals, a proposed maximum 5% increase (favoured option 2) in rateable value for small businesses in year 1, not 25% maximum increase as proposed in the transitional relief proposals for Wales.
WG should postpone the meeting in the Senedd on transitional relief The Non-Domestic Rating (Chargeable Amounts) (Wales) Regulations 2016 proposals due on 13th December, until after they have reconsidered their current flawed approach, which is causing great distress in the small business community.
April 2017, when the new rateable values will be imposed by WG may seem a long way off, but it is not, as effectively a month lost for Christmas. We have taken the time to fully understand the valuation and the devastating effect that the WG current flawed approach will have on small businesses.
In England, they forecast the effect the revaluation would have on small business and produced life rafts for those in peril. Please give the small businesses of rural Wales a voice by raising our concerns repeatedly in the Assembly, especially on 13th December.
David Cummings FIAB Chairman
Council and chambers urge businesses to take prompt action on draft revaluations
Monmouthshire County Council is to urge the Welsh Government to postpone draft proposals for massive hikes in the county’s draft business revaluations. This call, made at a meeting of the county council on Thursday 1st December, aims to allow time for a thorough review of the methodology and results of the revaluation. It comes after Deputy Leader of the Council, Cllr. Bob Greenland, officers and a local chamber of commerce representative met with senior officials of the (Valuation Office Agency) VOA at County Hall on 30th November to discuss the matter. Recently-proposed rateable values are based on the rental value of properties at 1st April 2015, reflecting changes in the property market across the country since the last revaluation came into force in 2010 based on 2008 rental values.
The Valuation Office Agency has published the draft valuations now to give businesses the opportunity to go online and check their proposed assessments. If businesses think the information about their property is factually incorrect and they therefore do not agree with the proposed level of assessment they can contact the VOA by e mailing them at: firstname.lastname@example.org. – the VOA will aim to respond within 40 working days. The valuations are effective from 1st April 2017 and only at that point can a formal appeal be made but ratepayers are encouraged to get in touch about their valuations for an informal review as soon as possible.
To find and review their rateable value and get an estimate of the 2017-2018 bill, businesses should go to https://www.gov.uk/correct-your-business-rates but note that a new transitional relief scheme is planned though this has not been factored into the online assessments.
Businesses failing to ask for a review by 1st April 2017 will be billed on the proposed assessments. If they launch an appeal after that date they must commence the payment of business rates in line with the revised revaluation rates. In addition, they will only be able to claim back any incorrect amount if a formal review is requested and the case proved. If the case is not proved an appeal may be made to the Valuation Tribunal for Wales but as this is a time-consuming process businesses are urged to act quickly.
Deputy Leader Bob Greenland said: “Having sought clarity from the VOA on the business revaluation hikes we urge businesses to take immediate action to address any revaluation errors. This revaluation is of such importance to our businesses in Monmouthshire that it was discussed by all members in Council on Thursday, 1st December when I successfully proposed a motion urging Welsh Government to postpone these draft proposals to allow time for a thorough review of the methodology and results of this revaluation. Alternatively we call upon the Welsh Government to postpone any increases until the results of the appeals are known. And finally, we look for sympathetic transitional arrangements for all businesses. The Welsh Government has announced a transitional scheme for small businesses, but has not done the same for larger businesses which will be harder hit.
“I have also made representations to Welsh Government, sending a letter to the First Minister and drawing his attention to the serious consequences for many of our businesses in the County. Whilst most council areas in Wales, including Cardiff, have seen net reductions in rateable values through these proposals, in Monmouthshire we have seen over 65% of business rates increased, some hiked by as much as 300% with a few even above that. We will continue to work with our Assembly Member and Member of Parliament to get a fair and just settlement for our businesses"
David Cummings, Chairman of Monmouth and District Chamber of Trade and Commerce was authorised by business organisations in the county to represent all 3,167 businesses with rateable premises at the meeting. He said: “Following our very constructive meeting with the VOA, the council and I have agreed a joint strategy to work together in the best interests of businesses badly affected by the rate revaluation. This strategy relates to our approach to the VOA as well as our dealings with the Welsh Government on transitional relief and on possible changes to existing Small Business Rates Relief.“
Monmouth Chamber suggests radical solutions to the business rate crisis
“David Cummings, Chairman of Monmouth and District Chamber of Trade and Commerce commented:
There has been a great deal of discussion around the crisis for small businesses created by the business rate revaluation, which will affect business rates payable from next April. We believe the time has come to dismiss ideas that are not achievable and to make sure that small businesses in Wales are treated the same or better than those in England. After all, and a thought that the Welsh Government seems to have missed, 96.4% of all businesses in Wales are micro , i.e 9 employees or less. They are the heart that provides the lifeblood of the economy of Wales. Our proposals are based on thorough research of this complex subject, with input from experts on the rateable value issue.
Firstly let’s dismiss a proposal that is completely unachievable. The Valuation Office are not going to set aside the rateable value revaluation published on 30th September. There is no money to re-do the revaluation of tens of millions of British business premises.
So what can be achieved? We have proposed that Monmouthshire County Council create a fund to finance a firm of chartered surveyors who are experts in business rate appeals to represent small businesses in dealings with the Valuation Office. This would take the form of groups of businesses from rateable value revaluation hot spots having a combined appeal.
The next proposal we make is to have the same support as small businesses in England. It is not acceptable that the Welsh Government are expecting businesses to wait until April 2018 for a new Small Business Rate Relief (SBRR) system. By then many businesses, which have been unfairly assessed on rates, will have closed.
The first step of support that Welsh Government should take is to double the rate of 100% SBRR from £6000 to £12000 and raise the tapering relief from the current start level of £6001 to £12,001 with tapering relief going on to £15,000. Better still make it £20,000. If English businesses can receive this level of support for 2017 onwards, why not small Welsh businesses?
No doubt the Welsh government will counter this proposal saying that they have proposed transitional relief with increases in business rates being phased in over four years from April 2017. However, the Chamber believes that this is like giving a tornado warning for four years hence. Their business will still be destroyed in 2021, unless, of course, they move to England In England the self funding Transitional Arrangements likely to be approved would limit the amount of increase in 2017/18 to just 5% for a small business.
Our next proposal is that Welsh businesses should benefit from the same favourable multiplier that will be enjoyed by businesses in England from April 2017. What is the multiplier? The multiplier works on taking your business rateable value and multiplying it by an amount in pence to give you the amount of rates you will actually pay. In England the multiplier is lower for companies up to £51,000 rateable value. Why can’t this favourable multiplier be available in Wales?
In conclusion, we believe the proposals we have made above are simple and achievable, if decision makers will listen. They could all be in place ready for April 2017. The ball is now most definitely in the court of Monmouthshire County Council and the Welsh Government for a response. We await with interest their comments on our proposals.
There is hope for hard pressed businesses on the rateable value issue
15th November 2016
David Cummings, Chairman of Monmouth and District Chamber of Trade and Commerce commented:
"Yesterday evening I met with a representative of the Valuation Office and questioned them at length about the way in which the rateable value increases had been calculated. It is evident that most of the information on rents at April 2015 came from letters sent during the consultation process to landlords and tenants. In broad terms, the proposed new rateable value of a business should equal the yearly rent at that date.
The representative said that if businesses had a revaluation that was likely to cause financial distress then the Valuation Office would discuss matters with them now. If your businesses is likely to be in financial distress as a result of the proposed rateable value increases then go to https://www.gov.uk/business-rate-appeals/how-to-appeal to find out more and do contact them. I can find no wording on the .gov.uk website that explains the right to appeal now, so it is not surprising that so few businesses have been in touch with the VOA!
If you do contact them, then please give me a report on your experience emailed to email@example.com. Please note that I can only help businesses on an NP25 postcode. I am hoping to attend a meeting at the end of the month with the Valuation Officer at MCC and will raise your experiences, good or bad, with them then.
It is most important for businesses to act now and not wait until April".