In a move that will surprise absolutely no one who has tried to buy a round of drinks lately, the Welsh government has announced a 30% cut in business rates for pubs, hotels, cinemas and other hospitality, accommodation and leisure venues. First Minister Rhun ap Iorwerth made the announcement on a visit to a pub in Cardiff, presumably after being assured the pint he was holding was just for the photo.
"It is about helping businesses like this to thrive, so our communities can thrive," ap Iorwerth said, delivering a sentence that could charitably be described as a tautology and less charitably as something you'd find on a motivational poster in a dentist's waiting room. The cut is permanent and will take effect from April 2027, which is the earliest point realistically possible, according to the government, presumably after they checked the calendar and realised time travel remains unavailable.
The 30% cut applies to small and medium-sized businesses with a rateable value below £51,000. It replaces the current 15% temporary rate cut for hospitality businesses, which means the sector is effectively getting a permanent double-sized version of what it already had. Funding for the cut will come from "a small increase" in rates paid by the highest-value properties in Wales, including some hotels and large sites such as supermarkets. Finance Minister Elin Jones said the burden would fall on bigger businesses, amounting to around 1p in every £1, which is the kind of sum that sounds trivial until you realise supermarkets deal in billions.
Ministers insisted this would ensure no reduction in funding for local authorities, who receive business rates collected by the Welsh government. UK Hospitality Cymru welcomed the cut but warned that businesses still face "massive amounts of taxation coming from all areas." Director David Chapman compared running a hospitality business to "plate spinning when you're riding an exercise bike," which is a vivid image that we can only assume he developed after several years of actually trying to do both at once.
Chapman added: "You have massive amounts of taxation coming from all areas. We have a VAT problem besides business rates. We also have high inflation in the industry over the last few years. Energy costs have been high. Labour costs have gone up incredibly, really, with the National Insurance changes. And so it's been a very difficult job, a really difficult balancing act to keep going." He did, however, welcome the cut as "the beginnings of a change which I hope will permanently enable our businesses to look at growth and to look at further employment, and to start to plan ahead."
In July, Prime Minister Andy Burnham announced a 20% cut in business rates for pubs, social clubs and live music venues in England, also due from April 2027. So Wales has outdone England by 10 percentage points, which is the kind of competitive devolution we can all get behind. A UK government spokesperson noted that business rates are devolved, meaning the cut also gives extra funding to the Welsh government to allocate as it sees fit, and that the Great British Summer Savings scheme increased footfall for businesses over the summer. Westminster's time is coming to an end, according to Welsh, Scottish and Northern Irish leaders, though that's a separate story.
Phil Newbould, landlord of the Radyr Tap, said the first minister's pint-pulling "could do with some work," but conceded the rates cut would be "helpful" for the industry. Across his two pubs, he said the cut was "not as huge as it sounds" and would amount to a saving of £3,000 a year. He pointed to a UK-wide campaign to cut VAT for hospitality businesses, controlled by Westminster, which he said would cut costs significantly. So the pub industry's message is essentially: thanks for the 30%, now how about the other 20%?
Oliver Banks, owner of Kindred, a cafe and wine bar that has been open for five months in Cardiff city centre, called the cut "fantastic" and said it would give "a little bit more wiggle room with what we do with our costs on food and drink" and make things "a bit lighter on people, especially in the current climate of things." He added that hospitality was not a sector run by people with "oodles of money" and that restaurant owners "aren't exactly running around in sports cars." Previous increases in costs linked to inflation and the minimum wage had seen prices rise for customers, but Banks said "there's only so much you can do as a business owner, and you can't put that cost all on to the guests." A radical notion: not passing every expense to the customer.
The UK government said the Chancellor prioritised support for hospitality by cutting business rates by 20% for pubs, social clubs and live music venues in England during his first week in office. A spokesperson added: "As business rates are devolved, the business rates cut also means extra funding for the Welsh government, which can choose how to allocate it. Our Great British Summer Savings also benefited businesses and families from across the country, including Wales. The scheme increased footfall for businesses in these sectors over the summer, getting more people through the door and boosting local economies." So everyone is taking credit, which is the true sign of a successful policy.