Will Wales Slash Business Rates for Pubs and Music Venues?

Welsh pubs, restaurants, cafes, and live music venues will benefit from a 15% discount on their business rates for one year, as announced by the Welsh government. This move aims to assist around 4,400 businesses in coping with rising costs and shifting consumer habits, paralleling a similar initiative in England that offers a longer three-year relief period.

Last updated: 17 October 2023 (BST)

What’s happening now

The Welsh government has recently unveiled a financial relief package aimed at reducing the business rates burden on the hospitality sector. This decision, made by Finance Secretary Mark Drakeford, is particularly focused on supporting pubs, restaurants, cafes, and live music venues that have been significantly impacted by rising operational costs and changes in consumer behaviour. The discount will take effect from April 2024, providing immediate financial relief for affected businesses.

Key takeaways

• Welsh hospitality venues will receive a 15% business rates discount for one year.
• The initiative is designed to support around 4,400 businesses in Wales.
• This move aligns with a similar scheme in England, which offers a three-year relief.

Timeline: how we got here

The announcement of the business rates discount follows a series of developments in both Wales and England, driven by the ongoing challenges faced by the hospitality sector. Key dates include:

• November 2022: UK government faces backlash over budget leading to significant property valuation increases.
• February 2023: Welsh businesses express concerns over rising business rates due to increased property valuations.
• 17 October 2023: Welsh government announces a 15% discount on business rates for the hospitality sector effective from April 2024.

What’s new vs what’s known

New today/this week

The Welsh government's announcement provides clarity on the immediate relief measures for hospitality businesses, setting a one-year framework for the discount. This decision comes in response to specific pressures faced by the sector, including rising costs and changing consumer preferences.

What was already established

It has been previously established that the hospitality sector in Wales has been under considerable strain, with many venues reporting sharp increases in business rates due to rising property valuations. The UK government's parallel scheme in England, which offers a longer discount duration, has also been noted as a point of comparison.

Impact for the UK

Consumers and households

The discount on business rates is expected to lead to more stable pricing for consumers in local hospitality venues. This may help maintain the affordability of dining out and attending live music events, despite the rising cost of living affecting many households in Wales.

Businesses and jobs

For businesses, this support is vital in helping them navigate the economic pressures of the current climate. The financial relief may prevent some establishments from closing and could help maintain jobs within the hospitality sector, which is crucial for local economies.

Policy and regulation

The decision to introduce this scheme is managed by the Welsh government, which has the authority to set business rates independently from Westminster. The forthcoming Senedd election in May 2024 may also influence future policies regarding business rates and sector support.

Numbers that matter

• 15%: The discount percentage on business rates for Welsh hospitality venues.
• Approximately 4,400: The number of businesses that will benefit from this initiative.
• 3 years: The duration of the similar relief scheme in England, compared to Wales' one-year initiative.

Definitions and jargon buster

• Business rates: A tax on non-domestic properties, which businesses must pay to local councils based on the estimated value of their property.
• Senedd: The Welsh Parliament, responsible for making laws and decisions for Wales.

How to think about the next steps

Near term (0–4 weeks)

Businesses should prepare for the upcoming changes by evaluating their financial situations and understanding how the discount will affect their rates from April 2024. It may be beneficial to engage with local councils to clarify any questions regarding the application of the discount.

Medium term (1–6 months)

As the April start date approaches, businesses should monitor consumer trends and adapt their offerings accordingly to align with changing habits. This may involve adjusting menus, pricing strategies, or marketing approaches to attract customers.

Signals to watch

• Local council announcements on the implementation of the business rates discount.
• Consumer spending trends in the hospitality sector as the economic situation evolves.
• Political developments leading up to the Senedd election in May 2024 that could influence future policies.

Practical guidance

Do

• Engage with local councils to understand how the discount will be applied.
• Review your business budget in light of the upcoming changes.
• Consider adjusting pricing strategies to accommodate any shifts in consumer behaviour.

Don’t

• Ignore the changes in business rates that may affect your financial planning.
• Delay in communicating with customers about any changes in service or pricing.
• Overlook the importance of adapting to changing consumer habits.

Checklist

• Confirm eligibility for the business rates discount with your local council.
• Evaluate current expenses and financial forecasts for the next year.
• Monitor competitor pricing and offerings in the local market.
• Stay informed about any political developments that may impact your business.

Risks, caveats, and uncertainties

While the 15% discount provides immediate relief, businesses should remain cautious of the broader economic context. Changes in consumer behaviour and ongoing economic pressures could still impact profitability. Additionally, the one-year duration of the discount raises questions about future support beyond April 2025, particularly with the upcoming Senedd election potentially influencing policy direction.

Bottom line

The Welsh government's decision to implement a 15% discount on business rates for hospitality venues is a timely measure to support a sector under pressure. It offers immediate relief but raises questions about long-term sustainability and future support in the evolving economic landscape. Businesses are encouraged to strategically adapt to these changes while preparing for the upcoming electoral decisions that may shape further policies.

FAQs

What is the business rates discount for Welsh hospitality venues?

The business rates discount for Welsh hospitality venues is set at 15% for one year, aimed at helping pubs, restaurants, cafes, and live music venues manage rising costs.

When will the discount take effect?

The discount will take effect from April 2024, coinciding with the start of the new financial year.

How many businesses will benefit from this scheme?

Approximately 4,400 businesses across Wales will benefit from the 15% discount on their business rates.