The Welsh Government agree with the Group’s findings that the Silk Commission will need to consider issues relating to the devolution of business rates and the local retention of business rates as part of the whole funding system for Wales. In addition, the Business Rates Review group is being asked to further examine the effectiveness of schemes introduced in Northern Ireland and Scotland to bring empty properties back into use.
The Business Rates Review, published in June, was a result of the task and finish group established by the Minister and headed by Professor Brian Morgan, to examine whether the Business Rates regime can be used as a lever for economic growth in Wales.
In an official response to the Report at plenary today, the BETS Minister announced a £20million business rate scheme in the seven Enterprise Zones, targeting support for start-ups and SMEs that are creating jobs; a £1.5million annual scheme to support renewable energy producers and a £200,000 fund to encourage the development of Business Improvement Districts (BIDs) in Wales.
One of the main recommendations of the Review concerns the devolution of business rates.
Mrs Hart said:
"Devolving business rates would provide the policy flexibility to enable business rates to support economic development and growth.
“But the Silk Commission needs to consider business rates as part of the whole funding settlement. Our aim is to secure a comprehensive set of financial reforms for Wales that would include fairer funding and effective borrowing arrangements.”
However, the Minister emphasised that business rates are not a cure all for the current economic difficulties and the Business Rates Review Group found limited evidence to suggest that changing business rates would have a significant and lasting impact.
She said: “Business rates are just one lever and that is why I will seek to link this with cross-cutting government work on several areas for maximum effect.”
She added: “I want to do what is right for Wales. This response offers a sound basis on which to develop business rates policy to make some immediate improvements within existing constraints – and looks longer term to creating a business rates system in Wales that gives real policy flexibility.”
In response to the Business Rates Review, the Minister announced:
- £20million funding - from January 2013 - for Business Rate incentives in all seven Enterprise Zones focussed on new start-ups or SMEs that are expanding and increasing their permanent workforce. The Welsh Government is matching the UK Government consequential with £10 million.
- £1.5 million annual funding - from January 2013 - for Renewable Energy Producers to support expansion of the sector and Wales’ renewable energy capacity;
- Jointly with the Minister for Housing, Regeneration and Heritage, a £200,000 fund to encourage the development of Business Improvement Districts (BIDs) in Wales over the next three years;
- The Welsh Government is to press the UK Government to continue the Small Business Rate Relief Scheme and propose innovative changes to the Empty Property Rates regime, based on the recommendations of the report;
- The Minister for Environment and Sustainable Development has written to the UK Government to propose improving relief available for businesses that invest in renewable energy;
- The Welsh Government will work with local authorities in Wales and encourage them to use their powers of discretionary rate relief;
- Revamped Welsh Government websites will improve the accessibility of information on key business rates issues;
- The Valuation Office Agency will look at reviewing its guidance on material changes in circumstances.
- “If the UK Government fails to examine ways to improve the current Empty Property Rates regime – then we will examine what we can do;
- "If business rates are devolved, we will consider the model of local retention of rates;
- “We will monitor the effectiveness of Tax Increment Financing across the UK;
- “I have asked the Minister for Environment and Sustainable Development to look at how the playing field between out-of-town and town centre parking could be levelled;
- “The First Minister and I are concerned about the rising costs for energy intensive industries and we will look to see if there are ways of supporting these and the costs they face;
- “I have asked Professor Brian Morgan and Juliet Luporini to bring business and charities together to examine charity relief and to consider whether reliefs could support social enterprises and credit unions. “
The Business Rates Review group has also been asked to examine the effectiveness of schemes introduced in Northern Ireland and Scotland to bring empty properties back into use. In addition, it will consider the implications of the UK Government’s decision to postpone the revaluation exercise that was due to come into force in England 2015 until 2017.
The group has also been tasked with coming up with innovative proposals to encourage development through rate relief following a response from the Construction Sector Panel.
Mrs Hart thanked the Group for the report and their efforts to ensure the meaningful engagement and genuine involvement was at the heart of this work.