The following amendments have been selected: amendment 1 in the name of Jane Hutt, and amendment 2 in the name of Rhun ap Iorwerth. If amendment 1 is agreed, amendment 2 will be deselected.

We now move to item 7, which is the Welsh Conservatives debate on business rates. I call on Russell George to move the motion.

Motion NDM6170 Paul Davies

To propose that the National Assembly for Wales:

1. Recognises that the retail industry employs 130,000 people in Wales, and makes a key contribution to the Welsh economy.

2. Notes that the current shop vacancy rate in Wales stands at almost 14 per cent, and the projected rate of store closures is higher in Wales than anywhere else in the UK over the next two years.

3. Regrets that the Welsh Government has not used innovative and supportive measures to help businesses through their transition to the Valuation Office Agency’s revaluations, leaving Welsh businesses to tackle high rates, alongside a system of temporary rebates, and a slow appeals process.

4. Calls on the Welsh Government to:

a) abolish business rates for all businesses with a rateable value of up to £12,000, and provide tapered support for those with a rateable value up to £15,000;

b) take a proactive approach to radically reform the outdated business rates system, and make Wales the flagship nation in addressing the need to provide a more supportive business environment; and

c) place an immediate cap on the multiplier, and a timetabled plan for a gradual reduction in rates.

Motion moved.

Thank you, Deputy Presiding Officer. I would like to formally move this important motion in the name of Paul Davies and, in doing so, declare that I also have a share in a small business myself.

The objective of this debate today is to recognise the massive contribution that small and medium-sized enterprises and the retail industry make to the Welsh economy. Small businesses are the lifeblood of the Welsh economy. A statistic that I often like to quote is that 99 per cent of all businesses in Wales are small businesses. If each of those had the resources to employ one additional member of staff, unemployment in Wales would effectively be wiped out.

Now, one way of alleviating the pressure on small businesses and to free up much-needed cash would be for the Welsh Government to use the economic levers at its disposal to be the low-tax capital for business and take small businesses out of rates altogether. But I would say, please don’t take my word for it. With your permission, and technology allowing, Deputy Presiding Officer, I would now like to show some footage of individuals speaking about how they have been affected by business rates. Apart from the first business owner shown on the film, who approached me directly, the footage of the other individuals was collected by Assembly officials for the purpose of an inquiry into business rates by the Economy, Infrastructure and Skills Committee. So, I should say the showing of this video does not imply that the individuals who were filmed by Assembly officials are supporters of this motion or indeed any other amendment, and that their footage is being shown simply as background information about this issue. I appreciate that other committee members have indicated that they were content for these clips to be shown as well.

A DVD was shown. The transcription in quotation marks below is a transcription of the oral contributions on the DVD. The presentation can be accessed by following this link:

DVD presentation.

Megan Lawley: ‘Hello, my name is Megan. I have a clothes shop in Newtown. I've just had my new draft rates come through for April 2017, and they've gone up substantially. I'm now in the position where I have to make a decision whether I move to Shropshire, where I’d get full relief, or I close my business. I'd really appreciate that the Welsh Government could back small businesses and help people like me throughout the country.’

Alex Martin Jones: ‘There were times when I was borrowing money off family to cover the business rates when I first started, because it kicks in straight away. The VAT bill you have a bit of play with and everything, but the business rates—bang! They kick in.’

Chris Studt: ‘So, if you have just opened a business, then you should be at a stage where you're doing the place up. Should you really be paying rates whilst you're doing somewhere up? And should there be a little bit of bedding-in time, so that you can get the business on its feet?’

Katia Fotiadou: ‘It would have helped if we'd had that little bit of relief, especially in the six months when we weren't trading, as there was no money coming in. There was only money going out. And yet, we had to still pay every month, for six months, half of what we pay for rent here as business rates. Maybe some discount for the first year, or for the six months, or something like that, I think, would probably work and encourage people to set up businesses in the empty units that are all over the place.’

Thank you, Deputy Presiding Officer. We heard from several small-business owners who are telling us, as politicians, to listen to them, and organisations such as the Federation of Small Businesses and the Welsh Retail Consortium have also joined in calling for fundamental reform of what I would say is an outdated business rates system. Megan in Newtown talked about the potential of having to move her business to Shropshire, where she’d be able to get full rate relief, and Alex in Wrexham talked about borrowing money off family in order to pay the business rates. And Chris and Katia questioned the immediate imposition of business rates on start-up businesses, which are, of course, playing their important part in reducing shop vacancies in an attempt to reverse the trend on high-street decline.

Now, a tax cut for small business was a much-touted pledge by Labour candidates before the Assembly election—a pledge that has been, I would say, broken in the first year. The Labour Member for Mid and West Wales, Eluned Morgan—I appreciate she's not in her place today—went to the Hours cafe and bookshop in Brecon promising that businesses would, and I quote a Labour press release,

‘breathe a sigh of relief if Labour is returned on May 5’ because a Welsh Labour Government would cut the amount of business rates paid by small businesses in Powys. In reality, nothing could be further from the truth. The Welsh Government has broken this promise of a tax cut to SMEs and claimed that continuing with a scheme that's already been in place for a number of years is the tax cut. Now, this is what the FSB has said about this, and I quote them:

‘to describe such a move as a tax cut for small businesses is blatantly misleading and the worst form of spin-doctoring.’

Instead of the tax cut they promised, rate relief for small businesses in 2017-18 would remain exactly the same as in 2016-17, and many small firms now face a dramatic rise, of course, in their bills following rates revaluations. This is in contrast to the situation in England, where the UK Government has announced plans to increase rate relief for small businesses to ensure that no business with a rateable value of under £12,000 would pay rates at all. Now, I’d like to say to the Cabinet Secretary, please follow and take the lead of the UK Government, but, actually, I'd prefer to say, please let's have a better system in Wales to increase and support small businesses in Wales. Let's be ambitious. Let's have the best system of all the nations of the UK to support small business.

I appreciate the Cabinet Secretary and I will have different views on what a tax cut is, but I do appreciate that the Cabinet Secretary is open to reform and I look forward to hearing his comments. I hope that there will be areas of common ground on which we can agree, and I do look forward to contributions from other Members during the debate this afternoon.

I have selected the two amendments to the motion. If amendment 1 is agreed, amendment 2 will be deselected. I call on the Cabinet Secretary for Finance and Local Government to formally move amendment 1 tabled in the name of Jane Hutt. Cabinet Secretary.

Amendment 1—Jane Hutt

Delete points 3 and 4 and replace with:

Reaffirms the independence of the Valuation Office Agency following the financial devolution of non-domestic rates to Wales.

Notes the revaluation by the Valuation Office Agency is not designed to raise additional revenue and that while some rateable values have increased, overall they have fallen.

Notes the Welsh Government’s:

a) decision to extend the Small Business Rates Relief scheme for 2017-18, providing a tax cut for 70,000 small businesses in Wales

b) decision to make the Small Business Rates Relief scheme permanent from 2018 providing small businesses with certainty that this tax cut will continue;

c) commitment to review the Small Business Rate Relief scheme to make it simpler and fairer for businesses in Wales; and

d) decision to introduce a £10m transitional relief scheme in April 2017 to provide additional help for small businesses receiving SBRR who have been affected by revaluation.

Amendment 1 moved.

Formally.

Thank you very much. I now call on Adam Price to move amendment 2, tabled in the name of Rhun ap Iorwerth. Adam.

Amendment 2—Rhun ap Iorwerth

Delete point 4 and replace with:

Calls on the Welsh Government to:

a) expand the transitional relief available to small businesses affected by the 2017 non-domestic rates revaluation;

b) abolish business rates for all businesses with a rateable value of less than £10,000 per year, and provide tapered relief for businesses whose rateable value is between £10,000 and £20,000;

c) make all businesses during their first year of operation exempt from paying any rates in order to encourage new start-ups;

d) introduce a split multiplier for small and large businesses as is the case in Scotland and England; and

e) explore replacing business rates altogether with alternative forms of taxation which do not discourage employment, town centre regeneration and investment in plant and machinery.

Amendment 2 moved.

I’m very pleased to move the amendment on behalf of the Plaid Cymru group.

I think there’s no two ways about it; this is an extremely regressive tax. If you look at the history of it, it goes back to 1601, actually—the introduction of the old Poor Law. Essentially, the problem with it was that, for centuries, of course, it was true that demand for land and property were essentially inelastic, because you didn’t have any options. If you wanted to trade, you needed to do so from a physical property. That no longer is the case, of course. Shops increasingly face their biggest competitors from online sales, and indeed even online sales that aren’t located in the UK. So, there’s a question of geography as well.

The reason the tax has survived, of course, is that it is easy to collect. Small businesses tend to pay their taxes. They can’t afford the kind of innovative tax evasion techniques that are available to larger corporate businesses and that’s why it has remained on the books as a tax, but I think it’s high time now that we moved to actually abolish this tax, and replace it with something that is fit for purpose for the twenty-first century.

In essence, the problem with the tax, as we heard in some of the contributions, is that it falls disproportionately on those businesses that are least able to pay. If you’re a successful and profitable business, as a proportion of your turnover you pay less. It’s the marginal business, actually, where we can see a situation where the tax actually tips them over into a loss, and then they have to close. It’s the start-up business, which, as we heard, needs that extra support in the initial years, that is disproportionately affected. It makes investment in commercial property unattractive compared to investment in residential property, and that has a deleterious effect, of course, on our town centres.

It’s a tax that we need to get rid of. That’s why we suffer from review fatigue. How many reviews have we had, from this Government, from previous Governments, et cetera? There were about three task and finish groups that I could find reports on, even in the last few years here. Unfortunately, because it’s an attractive tax in terms of the Government, because it does provide a stable source of revenue, it’s not a case of death by 1,000 cuts; it’s life by 1,000 cuts. So, what we’ve seen is a whole series of reliefs, and we’ve had a few announced—additional ones, or changes to existing reliefs—by the Chancellor.

So, it’s kept the tax alive by making a bad tax a little bit better. Actually, what we need is to get on with the longer-tem review and replace this tax. There are interesting proposals—the Mirrlees review; Gerry Holtham has suggested moving towards a form of land value taxation; there’s a whole body of literature going back over a 100 years on that. There’s an interesting counter proposal on a sales tax, which could actually equalise competition between online retailers and physical retailers. This has happened in the United States of America, where, to help Main Street, they’ve introduced a local sales tax so that Amazon is at least operating on a level playing field compared with local businesses. It may be that that idea of a local sales tax, freed as we may be, from the perspective of some of our Members opposite, from the shackles of EU law in terms of introducing regional rates and local rates of sales taxation—we have that ability now to look at the prospect of a local sales tax. Wales could innovate. Wales could get rid of this outdated, 400-year old method of business taxation and actually show the rest of the UK what we can do in terms of actually producing a form of business taxation that doesn’t punish innovation and enterprise and investment in our town centres, but rewards it instead.

I don’t think I need to tell anyone here that small businesses are indeed the lifeblood of our economy in Wales, making up 99.4 per cent of all businesses in Wales. In 2015-16, the number of SME start-ups rose by 2.1 per cent—that’s 99,860—all small businesses, all out there on their own. Many are sole traders who start off small and they have many competing and conflicting priorities just to be able to keep the shop door open.

We all know of many wonderful examples in our own constituencies, many promoting our local tourism industry—especially our hospitality businesses, our retailers on our high streets and our fantastic services industry. SMEs make up 61 per cent of private-sector employment, providing the equivalent of 673,600 full-time jobs. That’s a colossal amount of people. Many of them do it completely independent of any support from the public sector or, indeed, this Welsh Labour Government.

But, support for SMEs is lacking, particularly in Wales. I’m glad to see that the United Kingdom Government actually do take small businesses very seriously. Here, we’ve seen an increase of just 20 medium-sized businesses since 2014. Yesterday, Barclays published findings showing that the proportion of high-growth SMEs in Wales fell by 2.2 per cent in the last 12 months, the second worst decline in the UK after Scotland and compared to all regions of England, which have seen and witnessed an increase.

The Welsh Government administered just 10 grants a day through Finance Wales—and that’s across the whole of Wales—last year. Professor Dylan Jones-Evans has stated that the funding gap between the finance that Welsh SMEs need and what they can access is £500 million a year. That’s a lot of money, you know, if you’re a small business. The Wales development bank appears to be simply a re-packaged version of Finance Wales. Various proposals for a development bank have been proposed. In fact, we, the Welsh Conservatives, have actually come up with good ideas far better than Finance Wales. Even now, as part of its deal with Plaid Cymru, the Welsh Labour Government is very reluctant to come forward with any detail about the forthcoming Welsh development bank, despite it due to actually be running next year.

For us to make the debate meaningful today, though, the National Assembly for Wales must be able to scrutinise any development bank’s business case in order to ensure that businesses are fully supported through the proposals and that the failings of Finance Wales, which we’re all too familiar with, over many years, are fully addressed. What we are concerned about is that it will be a continuation of Finance Wales, which has long been deemed unfit for purpose and lacking in engagement. Perhaps the Cabinet Secretary might be able to shed more light on this.

The levels of business rate relief in Wales is putting our SMEs at a distinct disadvantage compared to similar business in England and Scotland. The Welsh Government has not supported businesses through the valuation office’s revaluation process, discretionary hardship relief is too often not awarded where needed and a better rate relief is available to SMEs in England and Scotland. For 2017-18, it is estimated that a business with a rateable value of £12,000 will be liable to pay just under £6,000 in business rates in Wales, whilst in England that figure would be zero. A business valued at £10,000 would owe an amount of £3,323. In Scotland, that figure would be zero.

The Federation of Small Businesses has criticised the Welsh Labour Government, and I do too, over their spin on their manifesto pledge for tax cuts to small businesses. Deputy Llywydd, the FSB are correct, making small business rate relief permanent simply does not imply any tax cut whatsoever.

The Welsh Conservatives have long been supporters of our small businesses and we shall continue to be so. We have several proposals to support them: the creation of a small business hub, ensuring our SMEs are truly represented, providing a clear point of contact, improved access to support and easy to navigate; a regional development bank—businesses to access finance on the high street and on their own doorstep; much-improved business rate relief, with rates abolished for all businesses with a rateable value up to £12,000 and tapered for those up to £15,000. Llywydd, I have hoteliers locally paying business rates of around £120,000, retailers paying £70,000 a year—

Are you winding up, please?

[Continues.]—far higher than their rents. Llywydd, we welcome a review of business rates, however it’s too little, too late. We call for an immediate cap on the multiplier and take a proactive approach to radically reform our really outdated business rates system in Wales.

Could I just say, as a member of the committee, with the other members who are here today, how grateful we were to the stakeholders who came to discuss this issue with us over breakfast about a month ago? We had a very interesting morning, and I’d encourage everyone to read the report for a balanced view of the discussion that we had that morning.

Mae ardrethi busnes yn amlwg yn rhan bwysig o unrhyw wariant busnes ac yn enwedig yn achos busnesau bach, felly mae’n iawn, wrth gwrs, ein bod yn gwneud yn siŵr eu bod yn addas i’r diben, ac rwy’n falch fod Ysgrifennydd y Cabinet wedi nodi bwriad i adolygu sawl agwedd ar y drefn ardrethi annomestig. Un o’r pethau a ddaeth yn amlwg yn y drafodaeth a gawsom yn y brecwast i randdeiliaid oedd bod y rhai sy’n deall sut y mae ardrethi busnes yn gweithio yn dweud eu bod yn eithaf syml, yn gyffredinol, yng Nghymru; mae’n mynd yn fwy cymhleth pan fyddwch yn edrych ar ostyngiadau ac eithriadau ac yn y blaen. Ond wedi dweud hynny, mae yna ddiffyg dealltwriaeth gyffredinol o hyd, mewn gwirionedd, ynglŷn â’r sail y cânt eu cyfrifo arni.

Will you give way?

Certainly, yes.

I do agree; that was an issue that was raised with us. I think part of the issue is that there’s a confusion between—. It’s not a Welsh Government problem here, but it’s the valuation office that sets the valuation, it’s the local authority that collects the funding, and then it’s the Welsh Government that distributes the money centrally. I think businesses just don’t understand that, and that’s part of the issue. It’s not the Welsh Government’s responsibility entirely, but that’s part of the issue that is causing, I think, a lot of the confusion.

Absolutely. That is, in fact, what we heard, and I was going to hope that the Welsh Government could take steps to help clarify that as part of the review, but, obviously, recognising it’s an issue across all parts of the UK in—

Will the Member take an intervention on that point?

Yes, certainly.

I think, with that recognition, I think perhaps Russell George would recognise the Conservatives have grossly underestimated the complexities involved in reviewing business rates to make a more progressive system, but that’s what the Government has committed to do, so that’s indeed what we’re likely to see.

Thank you for that clarification. The other major issue that came up in that discussion, I think, was the question of revaluation and the period between revaluations. Gaps, obviously—lengthy gaps—can mean unfair conditions for some businesses, where the valuation doesn’t track the general economic performance, and I think it’s clear from the latest revaluations in Wales that the effects of the financial crisis are still very much being felt here. While overall values in England have gone up, largely as a result of the strong economic performance in the south-east of England, in Wales, of course, most businesses will face lower bills as a result. Either way, more frequent revaluations will help to iron that out, and I would ask the Welsh Government to look at that as part of the review.

The motion calls for us to look to become a flagship nation, when it comes to business rates, and, in fact, Russell George expressly asked us to look to the UK Government for inspiration on some of these things. On transitional relief, where Janet Finch-Saunders was very keen for us to take our lead from England, I commend the Welsh Government for not following the example of the Conservative Government in Westminster, who’ve made ratepayers themselves, who’ve seen a reduction in their rateable value, bear the burden of funding those who’ve seen theirs go up. So, the Welsh Government’s chosen to fund that itself, which is a clear signal of its support for the sector, and one of several ways in which I’d say that the system here is already fairer and more robust than the English system.

The most striking difference, I think, is the Conservative Government in Westminster’s plans for a redistribution, effectively, of business rates income from poorer councils to richer councils, allowing them to keep 100 per cent of their business rates. That obviously compounds the inequalities that already exist, and if that were to be replicated in Wales, it would be hugely detrimental to large swathes of the country.

We also heard warnings, not reflected in the video clips, about the dangers of following the appeals process that has been introduced in England, which has been seriously adverse to business in terms of the length of time taken and the costs incurred. I’m sure the Cabinet Secretary will have regard to those warnings when he brings forward his consultation on appeals specifically. I gently point out to those on the Conservative benches, in particular, who’ve asked us to be inspired by the English example, that if the test is what proportion of your small businesses is exempt from 100 per cent business rates, our system here, which covers 50 per cent of our small businesses, is doing pretty well against an English system where that figure is only a third.

But the motion is broader than simply business rates and looks at support for the retail sector more generally, which taps into a wider discussion about how we can revitalise our town centres in the face of real economic forces pulling in the opposite direction. I’d add that many towns, including Neath in my own constituency, have taken advantage of Welsh Government support to develop business improvement districts, which obviously aren’t universally popular, but they are an opportunity for close collaboration between local government, business and other stakeholders.

I draw attention to comments in the latest deep place study that Steffan Lewis mentioned earlier in today’s proceedings, which I think bear some reflection about devolving further economic development powers to a local level, and looking imaginatively at pop-up business premises and pop-up shops and so forth.

I think one of the fundamental reasons why our town centres are in the situation they’re in is because of the squeeze on the household budgets and disposable incomes of those who use them most, which I’m afraid to say today’s autumn statement hasn’t done anything to address.

For generations, our town centres have been the trading heart of our communities. They are at the core of healthy and prosperous local economies, a source of civic pride and the focal point of community life. But today too many of our high-street shops are in decline, with fewer customers and empty shop units.

Changes to people’s lifestyles have meant changes to the way they shop. The development of out-of-town retailing in some cases has had a detrimental effect on town centres across Wales. Shoppers like the convenience and choice offered by out-of-town retailers who provide free parking. Footfall in retail parks in Wales has seen an increase of over 4.6 per cent. This has caused a subsequent decline in footfall in our high streets. E-commerce is one of the fastest-growing markets in Europe. Retail figures for Great Britain in September this year show a 22 per cent increase in online sales compared with the same month last year.

So, our high streets are under pressure. This is reflected in shop vacancy rates. In 2014, 159 high-street shops closed in Newport. At present, one in eight retail premises in Wales stands empty. The latest Local Data Company report ranks Newport as one of the worst-performing town centres for retail and leisure vacancies, with a rate of over 25 per cent.

Welsh Conservatives have been calling for many years for a strategy to revive our high streets. And yet, in spite of warm words from successive Welsh Governments, it is clear that little has been achieved. We need urgent action to revitalise our high streets as centres of economic growth. We need a clear management strategy for our town centres. Poor parking facilities, high parking charges, traffic congestion and the lack of public transport all serve to deter customers from shopping in town centres, and in certain other areas. More importantly, there are not many public toilets, not many children’s playfields, and, finally, they’re not very friendly for disabled people to go across and walk through the high street. We need to promote free parking schemes, convenient public transport and park-and-ride schemes, with the aim of making town centres pedestrian and cycle-friendly. Plans should encourage a genuine mix of shops and offices in town centres, as well as housing, to bring people into those areas, particularly at night-time. And we need to look again at business rates, which remain a significant barrier to the growth and success of businesses in Wales.

Deputy Presiding Officer, we saw the film, you heard, ladies and gentlemen, my colleagues here, but one typical example happened in my constituency office. A constituent came to my office—he has been running a shop for the last 14 years on the main road, and he’d just expanded a shop within his shop, where his office was, to remove the office premises and expand a couple of gondolas and make bigger his shopping area. Guess what? The valuation office turn up and they increase his rates. The shop was unexpanded, the area was unexpanded, only the gondolas, the shopping commodities, were increased. Fivefold, from £3,000 to £15,000, the rates were increased for this business. So, what he did was he sold his business. That is one typical example, very recently.

On the High Street in Newport, the rents are normally within the range of £14,000 and rates are, virtually, around about the same figure. How can a new business run a business with that sort of attitude? There are some innovative ideas I think the Minister should consider. Firstly, trading should be totally free for any trade. Secondly, tapered relief based on the first year profit; in the third year, exactly the same—the second-year profit margin. Very innovative ideas that can give a new incentive to new entrepreneurs and new businesses to grow and thrive on our high streets. That is one of the reasons I think our businesses on the high street are so much in decline that, sometimes, it’s a no-go area, especially in the night-time.

As I said, business rate relief provides an opportunity to support enterprise and stimulate economic growth. Abolishing rates for businesses with a rateable value below £12,000 and tapering relief up to £15,000—Deputy Presiding Officer, we’ve been saying this on this side of the Chamber for many years. I think it’s about time the Government listened to us. Our proposal would see 73 per cent of business premises taken out of rates altogether. Presiding Officer, we all want to see a bustling high street, thriving local business and a positive community engagement. Vibrant high streets are the key, lasting—

Are you winding up, please?

I call on Welsh Government to put high-street regeneration at the top of their agenda. Thank you.

I also want to concentrate on the high-street businesses. It is an incontrovertible fact that there is a dramatic decline in high-street shopping across the whole of Wales. This, of course, is a problem shared throughout the rest of the UK, but it seems Wales has been hit harder than many other parts of the country. We have to ask the question: can this decline be halted, or at least alleviated?

One very salient fact, heard time and time again from those engaged in the high-street retail industry, is that of parking fees. Parking fees are a direct tax on the retail trade. Yes, there are many other problems, pointed out today, particularly with regard to rates et cetera, most of which have been addressed by previous speakers, but I believe this is one aspect that cannot be ignored and is instantly redeemable. The problem is, of course, councils find this revenue flow, sometimes substantial, a very welcome addition to their budgets, so much so that many councils have chosen to increase this cash flow year on year. For instance, Newport was up 113 per cent between 2014 and 2015. Bridgend had an increase of 108 per cent for the same years, as did Merthyr at 83 per cent, and Carmarthen was up 76 per cent—

Will you take an intervention?

Yes, of course.

Can I just ask the Member if he can confirm that, although the daily rates for parking in Merthyr are £3.50, there is actually a monthly parking rate of only £29, which is a considerable reduction for anybody having to use those car parks on a regular basis?

Yes, thank you, Dawn. I fully appreciate that, but we are talking about people who are casual shoppers most of the time, and they would not be wanting to get one of these monthly tickets.

The increases in Newport beggars belief, given that the town has lost out to Cwmbran town centre, which has offered free parking for many years, and resulting in Newport, as Asghar has already pointed out, having the highest shop vacancy figure of any town in Wales. And returning to Carmarthen, when the parking meters were vandalised, resulting in a two-week absence of parking fees, retailers in the town reported an increase of between 15 and 25 per cent in sales. Parking fees are being reinstated in full by Carmarthenshire County Council.

Some councils attempt to legitimise this tax by pointing to upkeep costs for car parks—one even suggesting that it costs them £145 per parking space per year. Well, personally I’ve not come across one of what must be a gold-plated parking space. Whilst we realise that parking fees are the responsibility of local authorities, there are many ways the Welsh Government can use to—well, let’s put it as mildly as possible—encourage those authorities to review their car park policies. I urge the Welsh Government to look again at what it can do to take away this blight on the high street business. Thank you.

I welcome the opportunity to take part in today’s debate, albeit about half an hour ago I wasn’t taking part in the debate, but now I am. So, if the Chamber can bear with me, I’ll be grateful. But it is a really important issue, and the motion that is before us today touches on—as the Member for Neath highlighted—regeneration of the high street and the importance of that regeneration being underpinned by viable businesses that have cash going through their businesses. Business rates is one of the simpler systems that take money out of those small businesses that desperately need to retain cash to create jobs and create opportunities for investment.

This isn’t the Conservative Party coming here and demanding of the Minister to do things and just putting a wish list before him, as very often might happen here on a Wednesday afternoon, because the Conservatives, in fairness, have a strong record, whether it might be on business rates or high-street regeneration. David Melding, when he was the business and economy spokesman, back in 2009 I think it was—in the third Assembly—actually brought forward our business rates policy of bringing forward business rate relief for businesses up to £12,500, tapered up to £15,000. During debate after debate in this Chamber, the then economy Minister, Ieuan Wyn Jones, rubbished those claims and said that it was completely unreasonable to request that for businesses, and ultimately the Welsh Government, time and time again, turned a deaf ear to those pleas—pleas that were underpinned by representations made by the Federation of Small Businesses, the Institute of Directors, the Confederation of British Industry and many businesses and chambers of commerce around Wales. And yet here we are, in 2016, with a revaluation that has just been undertaken that is placing a huge question mark over the viability of many, many small and medium-sized businesses on high streets the length and breadth of Wales.

I appreciate, from what the First Minister said yesterday when he was touching on this point, that he seems to think that representations are only coming from Cowbridge and the Vale of Glamorgan and Monmouthshire via Nick Ramsay and other representations from Monmouthshire. I have to say that the representations that I’ve received in the meetings that I’ve attended seem to have this issue across the whole of Wales, and it is an issue that the Welsh Government does need to respond to. That, surely, is what our role is: to come here and actually make the Government of the day aware of our postbags and aware of the representations we are receiving.

So, I do hope that the Minister will use this opportunity of the debate today. Obviously, the Government have put an amendment down—a ‘delete all’ amendment—but I do hope that the Minister, in his address to the Chamber this afternoon, will use that positively to outline the measures that the Welsh Government will take. I understand that he will draw on the £10 million transitional fund that has been put forward by the Government to date, but businesses and business leaders are clearly saying that that just clearly isn’t meeting the need of businesses with the valuation exercise that has been undertaken, and the bills that small businesses on the high street, in particular, are facing and will have to be paying as of 1 April next year.

It was, in some respects, encouraging to see the First Minister yesterday actually allude to the fact that there might be—there might be—a little bit of movement in this area. Again, I would hope that the finance Minister will use his response to the debate today to maybe give some light in this tunnel. We can argue whether the English system is better or the Welsh system is better. The fact of the matter is there are many thousands of businesses the length and breadth of Wales that, if they do not receive a bigger helping hand, will not be around this time next year. That, surely, should be the pre-requisite of the Government to address these concerns.

I would also like to spend a little bit of time of my address, irrespective of the merits of the scheme that has been put forward to date from the Welsh Labour Government here, on the Valuation Office Agency appeal process, which is another area that has been pointed out to me as a cause for concern, and in particular the length of time that the valuation office is taking to respond to requests from businesses and the time it is taking for businesses to get on to the valuation office’s website to actually see what their new valuation is, and actually see the documentary evidence as to how that valuation has been arrived at. I draw as reference—and, as I said, if I’d realised I was speaking, I certainly would have brought the letter down that I received yesterday from the Hare and Hounds in Aberthin, which is a public house that some people in this Chamber may or may not know, on the substantial increase that they are facing in their business rates. The writer to me highlighted the length of time of the process that they would have to go through in the appeals mechanism, to understand in the first place the way they could appeal and then the way, the methodology, in which the valuation office had arrived at their substantial increase in business rates. This is a business that is facing that demand having to be met in little over four months’ time, and so, I would hope again that the Cabinet Secretary will be able to give us some assurances in his response today as to what level of support and understanding he has, that the valuation office is able to give to businesses in the appeals process, and also to give confidence to Members that businesses will not be penalised if they find obstacles put in their way in progressing those appeals. And I do urge the Chamber today to support the motion that’s before us that does seek to put that plank of support on the floor for small businesses to walk across and, ultimately, be there this time next year.

Thank you very much, and I call on the Cabinet Secretary for Finance and Local Government, Mark Drakeford.

Thank you very much, Deputy Presiding Officer.

Wel, agorodd Russell George y ddadl, ac ategaf yr hyn a oedd ganddo i’w ddweud wrth bwysleisio cyfraniad pwysig y diwydiant manwerthu i economi Cymru, drwy gyflogaeth uniongyrchol yn y diwydiant a thrwy gysylltiadau’r gadwyn gyflenwi. Gwnaeth Jeremy Miles gyfres o bwyntiau pwysig ynglŷn â sut y gellir cefnogi economïau lleol a chanol trefi, a gosododd Mohammad Asghar ac Adam Price y cyd-destun cyfnewidiol y mae’n rhaid i’r stryd fawr weithredu ynddo heddiw, o doiledau cyhoeddus i siopa ar y we. A thynnodd David Rowlands sylw at y ffaith fod y ffactorau hyn yn mynd yn llawer ehangach na Chymru. Yn ei gyfraniad, canolbwyntiodd yn arbennig ar effaith ffioedd parcio ar y stryd fawr. Rwy’n edrych ymlaen at ei gefnogaeth yn y ddadl ar y gyllideb derfynol pan fydd yn awyddus, yn ddiau, i groesawu’r £3 miliwn sy’n rhan o’n cytundeb â Phlaid Cymru ar y gyllideb ddrafft ac sydd yno’n benodol er mwyn gostwng ffioedd parcio yn ein stryd fawr, ond i wneud hynny mewn ffordd sy’n ein galluogi i gasglu’r dystiolaeth gadarn a gwneud asesiad priodol o effaith y ffioedd hynny ar nifer yr ymwelwyr â’n strydoedd mawr.

Ddirprwy Lywydd, rwy’n gobeithio y gwnewch chi faddau i mi os byddaf, yn yr hyn sydd gennyf i’w ddweud, yn canolbwyntio’n fwy penodol ar y thema sydd wedi’i hadlewyrchu amlaf yn y ddadl y prynhawn yma, sef effaith ardrethi annomestig a’r ymarfer ailbrisio diweddar. Mae’n bwysig fy mod yn nodi hanes yr ymarfer hwnnw. Mae’r gofyniad i gynnal ailbrisiad bob pum mlynedd wedi’i nodi mewn statud, ond penderfynodd Llywodraeth y DU ohirio ailbrisiad 2015 am resymau na fydd angen i’r Aelodau yma ddyfalu llawer i ddychmygu pam fod y dyddiad hwnnw’n anghyfleus iddynt. Yn anfoddog, a chan ystyried yr effaith ar dalwyr ardrethi ar hyd y ffin, a’r rhai sydd ag eiddo yng Nghymru yn ogystal â Lloegr, penderfynwyd gohirio’r ailbrisio yng Nghymru hefyd, ac mae rhan o’r prynhawn yma yn ymwneud ag ymdrin ag effaith yr oedi hwnnw.

Jeremy Miles referred to the economy committee’s report, and I warmly welcome the report, too. There were a number of interesting aspects, as we saw at the beginning of the debate, in the way that the committee had gone about gathering its information.

Rwy’n cytuno â nifer o’r argymhellion yn yr adroddiad diddorol hwnnw ac edrychaf ymlaen at ymateb yn ffurfiol iddo. Rwy’n credu y dylem edrych ar ddichonoldeb ailbrisio amlach, a fyddai’n helpu i lyfnhau’r newid gêr sydyn a welwn a’r hyn sy’n digwydd pan fyddwch yn oedi cyn ailbrisio. Fel y mae’r adroddiad ei hun yn ei ddweud, os ydym i wneud hynny—os ydym i newid, er enghraifft, i gylchoedd tair blynedd—ni all ddigwydd yn syml drwy gyflymu’r system bresennol a gwneud iddi weithio’n gyflymach; byddai’n rhaid i ni gyflawni’r ymarfer ailbrisio mewn ffordd wahanol. Er mwyn gwneud hynny, byddai’n rhaid i ni ddibynnu ar Asiantaeth y Swyddfa Brisio, oherwydd unwaith eto, mae’n bwysig—[Torri ar draws.] Ie, Andrew.

I’m grateful to you for taking an intervention. Obviously it’s been touched on in the debate—business rates and the valuation of property are a longstanding tax system in this country. Therefore, by your comments, do you believe that any reform of that system would rely on a property base to it, rather than maybe a turnover tax system or some form of recognition of the internet? Because you’re alluding to the fact that maybe any reform would be property based in its foundation.

No, Chair, I’ll address that point now. I would have come to it later, but I’ll do it now, by all means. I was simply referring to one of the recommendations in the Economy, Infrastructure and Skills Committee’s report about the current system. Am I interested in exploring an alternative system, a reformed system, for non-domestic rates? I am. I’ve set work in hand. Does that have to be property based? I don’t think it necessarily has to. As we heard in Adam Price’s contribution, there are a series of alternatives that are already well rehearsed in terms of land value taxation, a sales tax, or a local income tax, as Plaid Cymru’s sister party in Scotland has advocated. What we lack are hard data that would show how those alternatives would actually and practically impact in the Welsh context. The research that I’ve commissioned is about looking at how we would apply those ideas. I think the merits of the ideas are well rehearsed. There’s lots of work already done. What we lack is applied understanding of whether or not they would lead to better outcomes in the Welsh context. If we can do that, then we’ll have a better informed debate about whether a more fundamental shift in the way that we raise money in this way would be right in the future, and I hope we’ll be in that position during this Assembly term.

For now, we are obliged to operate within the system that we have, where we have a valuation office. It’s a statutory body, it is entirely independent from Welsh Government, it carries out revaluations, it reaches those conclusions, the parameters are enshrined in primary legislation, but the revaluation must be revenue neutral. While there are firms, absolutely—I understand, and I have read letters from individuals in this position—who find their bills going up, that can only happen because there are many other businesses in Wales who find their bills going down. Revaluation raises no more money at all. It simply redistributes the burden in a way that is fairer because of revaluation. If we didn’t have revaluation, the system becomes more and more unfair year on year, and that’s a point recognised in the committee’s report.

The VOA published its draft rating list on 30 September, and it did that to give ratepayers a six-month window to check the detail for their property and its associated valuation. Ratepayers can use those six months to notify the VOA of any errors that they believe have been included in that revaluation, and to ask for the VOA to reconsider it. That does happen. Once the new list comes into effect, ratepayers who still dispute their valuation can appeal, first of all to the VOA itself, and then there are rights of appeal right up to the High Court. Approximately 35 per cent of all appeals do go on to result in a change to the rating list.

I agree that the appeals take too long and the system is too cumbersome, and I will bring forward proposals to reform the appeals system here in Wales. But I won’t be doing it in the way that the system has been reformed in England, where I believe the table has been tilted too far against the ratepayer, and too much in favour of the VOA.

Now, because we know that there are patterns of gains and losses, we know that we have to introduce a system to smooth the impact for those who are adversely affected. That’s why we have a £10 million transitional reliefs scheme, and it will provide additional support to more than 7,000 ratepayers in Wales. It will be fully funded by the Welsh Government, unlike the system in England, which simply involves taking money from one set of gainers to try and give it to losers. We will reform our £100 million small business rate relief scheme. I’ll take a number of the points made in the debate this afternoon in that reform, and we’ll consult widely with stakeholders on the design of a permanent scheme where I think we can do better, provide more help to the businesses we want to help, and so see our high streets thrive better in the future.

Thank you very much. I call on Nick Ramsay to reply to the debate—Nick.

Thank you, Deputy Presiding Officer, and can I thank the Members who’ve taken part in this debate this afternoon? It’s a very timely debate given the consequences of next April’s rates revaluation are now becoming clear—and I would say only recently becoming clear, certainly to the businesses out there that are going to be faced with increases.

As Russ George said in opening, the situation we find ourselves in here is in direct contrast to that in England, where the UK Government have announced plans to increase rate relief for small firms, ensuring that no company with a rateable value of less than £12,000 would pay any rates at all. I’ve heard what a number of Members have said in this Chamber this afternoon, criticising the situation across the border in England. Certainly, it isn’t perfect. No system of taxation is ever perfect, or indeed business rates revaluation, but there’s no doubt at all that businesses in my constituency are looking across that border and they are seeing aspects of the way the revaluation has been handled in England that are better than have happened here or certainly are better than are promised here. So, I would bear that in mind. This is clearly not the perfect situation across the border, but I think the Welsh Government would do well to look across the border and to look at ways that we can improve the sort of support that we’ve got here.

The businesses I’ve spoken to—and there have been many; I’ve got just a handful of the e-mails I’ve received in the last couple of days. I can’t remember, since being elected to this Assembly, having an issue that has caused such anguish in such a short space of time and generated such a flurry of e-mails. I can see David Rowlands nodding; this is obviously not just a situation that is affecting my office. There really is anger out there. There is despair, I would say. I even had an invite to a closing-down sale from one shop in Monmouth for next April/May, after this is due to take effect. So, let us be under no illusion at all about the extent of concern and worry that there is out there across Wales in those areas that are affected by these increases.

I appreciate that this is not a problem across the whole of Wales. We are not saying it is. There are certainly, as the Cabinet Secretary said, businesses that have actually done quite well from the business rates revaluation. That is an aspect of any revaluation; you would expect that. I think what we haven’t seen before is the scale of the detriment to the large minority of those businesses affected. I think what is becoming clear, as Andrew R.T. Davies said in his contribution, is that the scale of the number of businesses that are affected by this problem is now increasing. We weren’t quite aware of the number of areas affected. We knew that Cowbridge was affected. I knew that Monmouth was affected. But I now know that Chepstow is affected and other rural areas, so this is a far greater problem than we first anticipated.

Those businesses that are affected are facing huge hikes—10 per cent in some cases. Of course, as we’ve said—. And higher than that in a few other cases; I know one business in Chepstow that is facing up towards a 100 per cent increase due to different conditions. This has been exacerbated by the multiplier, which I understand is a necessary condition of maintaining a revenue-neutral approach to revaluation. But, nonetheless, the multiplier is affecting this and, of course, then the absence of an adequate system of rate relief, which those businesses need to see.

Let’s be frank, as many Members across the Chamber have been, about what we’re talking about here: this is nothing less than the nail in the coffin for many businesses across this country. We talk a lot in this Chamber, as Mohammad Asghar said, about the need to support businesses, of retail premises, the need to regenerate our high streets. We’ve had debates on that and other parties have, and we’ve had committee reports on regenerating our high streets, but all of this will be for nought if, at the end of the day, we do not address the problem that our businesses are facing, not in 10 years’ time or 20 years’ time, but next year, when this fully comes into effect. So, unless we tackle this head-on now, then a lot of the other discussions that we’ve been having in this Chamber over the last few years will be academic.

As our motion highlights, the current shop-vacancy rate is already at almost 14 per cent, with the projected rate of store closures higher in Wales than anywhere else in the UK over the next two years. So, we, sadly, are not starting from a great place at the outset of this process. So, we really cannot afford for things to get worse. We cannot afford not to tackle this problem head-on and to make sure that these companies, these businesses, that need support, get it.

Adam Price—in your comments, Adam, you made a very interesting number of points, actually, calling for a complete overhaul of the whole business rates regime, which you described as a 400-year-old tax. And, of course, it’s an attractive proposal to get rid of a regressive tax. The real question, of course, which you did move on to talk about, is what do you replace it with, and you suggested a land tax as one possibility. And, of course, unless you don’t mind losing the income if you get rid of that tax—which, of course, the Welsh Government couldn’t afford to do, so we would need replacements, and the Cabinet Secretary mentioned this as well.

So, we’ve heard some options provided for an alternative, and I think we all agree this is definitely worth exploring; we agree with that aspect of your motion. We shouldn’t shut the door on the wholesale reform of business rates within Wales and, as you’ve said, because of withdrawal from the European Union, one of the corollaries of that, actually, is we can now look at the way that taxation works in Wales and we can look at doing something here that might not have been possible a few years ago. However, this does need much more work, and what we are talking about now is providing immediate assistance to those businesses affected, not next year, not in two years’ time, but now.

We talk a lot in this Chamber, but I don’t think there’s ever been a case where action was more required than now—and immediate action. As Janet Finch-Saunders said—well, Janet Finch-Saunders provided a showcase of Welsh Conservative policy since the election, and before. You made a very, very strong case, Janet—I know you’ve had direct experience of this in Llandudno in your constituency—a very strong case for providing far more and very real support for small businesses and retail premises across Wales. Your message was very simple, at the end of the day, and, of course, this is actually a quite straightforward problem that needs a straightforward solution, and that is greater support.

I would point out to you, Jeremy Miles—I agreed with some of the things you said, actually, but I would point out that, in today’s autumn statement, which you did question as to whether there was much support for businesses, the Chancellor has announced that rural rate relief in England will be increased significantly. So, they are looking in England at providing far more support for businesses in rural areas across the border, so I think anything less here in Wales would not be good enough. And, as Russell George said in opening this debate, why do we put up with second best? Why don’t we make sure that the system that we’re going to have here in Wales is actually world class—UK class at least? This doesn’t just need to be an adequate solution to this problem; let’s do something here that really can set the support for businesses in Wales on a footing with businesses across the UK and put them ahead of the game. We’ve been talking about that for a very long time, but, as I said, the time now is for action.

In conclusion, Deputy Presiding Officer, let’s be ambitious for Wales. Let’s use this problem, this short-term, medium-term problem, to move forward and provide a system that is up to dealing with the challenges of today and the challenges of tomorrow. Let’s incentivise local economies, let’s make sure that our businesses are best able to deal with the challenges that they are facing. But if we can’t get over this hurdle that we are facing over the next few months, then we are going to find it very difficult to get over the hurdles that the next few years will present us with.

Thank you very much. The proposal is to agree the motion without amendment. Does any Member object? [Objection.] Thank you. Therefore, we defer the voting under this item until voting time.

Voting deferred until voting time.