Editorial: A nasty shock on rates in Wales

The proposal to reduce business rate relief for charity shops could do a lot of damage to the sector, writes deputy editor Andy Ricketts

Andy Ricketts
Andy Ricketts
The proposal from the Welsh government to cut business rate relief for charity shops from 80 per cent to 50 per cent came as a nasty surprise last week.

The Charity Retail Association estimates that about 500 of the 10,000-plus charity shops in the UK are in Wales, contributing profits of between £12m and £14m a year to their respective causes. Last year, when a change to business rates for charity shops was first mooted, the CRA warned that cutting the rate relief could cause up to a third of charity shops in Wales to close, so the potential damage is plain.

The Welsh government’s consultation is based on a list of proposals made by a review group led by Professor Brian Morgan of Cardiff Metropolitan University, who said the reduction in business rates from which charity shops benefit was creating a market distortion.

But it’s hard to see how his proposed solution will benefit town centres. Take a walk down your average high street and empty retail units are usually not very hard to find – and charities are not to blame for the decline of the high street as a shopping location.

Increasing the costs for charity shops does not seem to be an effective way of addressing this, even if the additional revenue created by the reduction in rate relief, likely to be only a few million pounds, is ploughed back into tackling empty units somehow.

Far more sensible was the suggestion from the retail expert Mary Portas, who was asked by the Prime Minister in 2011 to carry out a review of Britain’s town centres. Like Morgan, she identified the business rate relief for charity shops as a difficulty but, rather than cut the rate relief, her solution was that new local businesses should be offered similar discounts to encourage a growth in the number of local traders.

Charities will no doubt be giving the Welsh government a similar message over the coming weeks, but as government purse strings tighten this kind of thinking seems less likely to curry favour with those in positions of power.

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