Below is a copy of a letter written by David Jones MP to First Minister Mark Drakeford, AM regarding Business Rates for Self Catering Accommodation
Rt Hon Mark Drakeford AM
23 April 2020
Covid-19 Grants for Businesses in Wales linked to Non-Domestic Rates: Self-catering Accommodation
I note that, on 20 April, 2020, the Welsh Government issued guidance to local authorities on the administration of the grant scheme applicable to non-domestic properties in Wales. This follows the announcement by the Chancellor on 17 March, 2020, creating the support package.
The guidance notes that a grant of £10,000 is available to all businesses eligible for small business rates relief (SBRR) in Wales with a rateable value of £12,000 or less.
As you will be aware, there was a degree of concern within Wales that the grant might be available to second home owners. Such concern was entirely understandable and proper. Manifestly, the grant was not designed for such purpose, and it would be wholly wrong if the owners of weekend boltholes were to receive a £10,000 windfall from the public purse.
However, the guidance your administration has published has, no doubt unintentionally, had the consequence of penalising the owners of legitimate small tourism businesses.
The guidance provides that, in relation to self-catering accommodation, properties will not be eligible for a grant unless the following criteria are met:
- The self-catering accommodation can produce two years of trading accounts directly preceding the current financial year of the business;
- The self-catering accommodation must actually have been let for a period of 140 days or more in the financial year 2019-20;
- The self-catering accommodation business must be the primary source of income for the owner (minimum threshold is 50%).
The criteria certainly disqualify weekend cottage owners from receiving the grant. Sadly, however, they also preclude legitimate small businesspeople from receiving it, too.
Let me give a practical example. A constituent who lives in Old Colwyn has contacted me in a state of some distress because she has been informed by her local authority, Conwy, that she is not eligible for the grant. Her position is that she purchased a cottage in Conwy town, some five miles away from her home, in July of last year. The cottage was already being operated as a business and had the benefit of SBRR. It was let for more than 140 days last year.
My constituent is therefore in a position to show let occupation of the property for the necessary period. However, she is unable to produce two years’ trading accounts, because she commenced trading less than a year ago. Furthermore, the business is not her primary source of income. She bought it (as I imagine many holiday cottage owners do) with a view to supplementing her pension on retirement.
She is currently receiving no income from the property and has to make payments on the mortgage she took out in order to purchase it. She is understandably distraught that she will not be receiving the grant because of the application of a policy designed for a completely different purpose.
I have other constituents who are similarly affected, but I will not burden you with a catalogue of their individual cases.
However, it must be remembered that holiday cottages are an important part of the North Wales holiday offering. Every holiday cottage that is owned by small businesspeople such as my constituent provides employment for people such as cleaners, painters, carpenters, plumbers and electricians. The guests for whom they cater spend large sums in the local economy. I have seen figures suggesting that every holiday let generates around £8,000 per annum in local spend.
I am, of course, entirely satisfied that, when devising this policy, the Welsh Government did not intend to penalise people such as my constituent. However, she and others like her are indeed being penalised and are being deprived of financial support that they desperately need in these worrying times.
May I therefore urge you to redesign your guidelines as a matter of priority. I would suggest that you give consideration to the following:
- dispense with the requirement for two years’ accounts to be produced. Some other, less blunt, instrument should be devised to establish that the business is legitimate. Perhaps leaving the issue to the judgment of the local authority would be the most pragmatic way of addressing it;
- by all means require that evidence be produced that the property was available for letting for a minimum of 140 days in the last financial year, but do not require proof that it was actually let. This unfairly discriminates against those who were genuinely trying to let their property but were unable to do so;
- abandon the requirement that the accommodation business be the primary source of income. This is extremely difficult to establish and puts local authorities in an almost impossible position. In any event, there appears to be no good reason for it.
I entreat you to look at this issue as a matter of urgency. A lot of small tourism businesses in North Wales are in danger of suffering enormous hardship as a consequence of what appears to be a poorly thought-out policy.
By all means stop second home owners from receiving the grant. Nobody wants to see that happen. Please, however, do not unfairly penalise the operators of small, legitimate businesses, many of whom are currently sick with worry.