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Welsh Government lacks power to cut business rate relief to charities

2013 Medi 18 11:27 AM

The Welsh Economy Minister would face an uphill battle over possible changes to business rate relief for charity shops according to Welsh Liberal Democrat Shadow Business Minister, Eluned Parrott AM, following legal advice that Welsh Ministers do not have the power to impose such changes without new primary legislation.

The Minister is consulting over proposals following an independent review of business rates for charities, chaired by Prof Brian Morgan of Cardiff Metropolitan University, which published recommendations in April. These included:

  • Cutting rate relief for all charity shops from 80% to 50%
  • Cutting rate relief for larger charity shops even further; 0% in some cases
  • Zoning or limiting the number of charity shops in a given area

The formula for the mandatory funding of charity business rate relief is fixed in Section 43(5) of the Local Government Finance Act 1988. According to independent legal advice given to the Welsh Liberal Democrats, as neither the Welsh Ministers nor the Secretary of State has the power to change that formula, implementing the rate relief recommendations would require primary legislation either by way of an Act of the Assembly or an Act of Parliament.

Commenting, Eluned Parrott stated: "This is welcome news as it means that any change to the rate relief given to charity shops would be subject to a high level of scrutiny and could not be slipped through under the radar.

"The proposals in the report would be a clear attack on charity shops, which play such a valuable role in creating a vibrant and diverse high street. They fundraise for vital services, support volunteer opportunities which help people back on the route to employment, and divert thousands of tonnes of textiles from landfill.

"The report states that the business rate relief to charity shops can crowd out other retailers, but this is absurd given that the charity sector accounts for only 0.3% of retail sales by turnover, while nearly one in five shop premises on the Welsh high street lie vacant.

"According to the Charity Retail Association, nearly a fifth of Wales' charity shops could close if the Minister pushes ahead with these proposals. I think the Minister would face an uphill battle in justifying legislation on this issue, which would threaten the future of so many charities on our high street.

"This has been a worrying time for many charities across Wales and I hope that the Minister will clarify her intentions as soon as possible."