Welsh business minister Edwina Hart has proposed no immediate changes to business rates for charity shops, but at the same time made clear that the matter is not closed.

In her response to the recent Task and Finish Group report that recommended cuts to business rates relief for charities, Hart said that she has written to the UK government and devolved administrations “to initiate discussion on the recommendations that concern relief levels for charities and social enterprises”.

“Some of the specific recommendations raised by the Task and Finish Group would need primary legislation,” Hart said. “These include recommendations to reduce the mandatory relief available to charities. Therefore I am keen to understand how the proposals of the Group sit within a wider UK context.”

She promised: “My focus on business rates policy will not diminish.”

Hart also said that the Business Rates Task and Finish Group is currently involved in conducting a further review, a report of which she expects “in the coming weeks”.

The original report on improving the high street in Wales, commissioned by Hart herself, called for new limits on the rates relief for charity shops according to the rateable value of the premises; the cutting of rate relief for all charity shops from 80 per cent to 50 per cent, and limits on the number of charity shops in a given area.

Hart also said that the sale of new goods in charity shops “should be monitored more effectively”, and that she would be working with the minister for local government to ensure this happens.

Charities feel insecure about future

The prevailing reaction among voluntary sector organisations to Hart’s announcement was that while it is good news in the present, it still leaves them feeling uneasy about the future.

Liz Rawlins, PR and communications manager at Tenovus, told civilsociety.co.uk that the charity does not feel reassured, and that it would not be changing its stance on halting plans to open a further 14 shops, as reported yesterday.

“It hasn’t left us feeling any more secure,” Rawlins said. “Our understanding is that the minister has said that they can’t alter charity rates relief now because changes would have to be made to the law.

“But rather than leaving it at that, she said she is speaking to the UK government about changing the law. So it will take time. It won’t happen tomorrow, but they are pursuing it.

“It’s still on the cards. There is an obstacle in the way, but the impression we get is that rather than stopping they are going to go around it.”
 
Mike Taylor, retail director at the British Heart Foundation, said that while he was pleased that the minister has listened to the concerns of the public on the business rates relief issue, he too has longer-term concerns.

“We remain confident that common sense has prevailed for now, but the issue has not totally gone away,” Taylor said.

“Our charity shops are invaluable in the fight against heart disease and help fund our lifesaving research programme. It’s a relief that their contribution to the cause has not been threatened, for now, by a rate rise.”

CRA: ‘pleased but still uncertain’

In a statement, the Charity Retail Association said it was pleased that the Welsh government had not made any immediate changes to rate relief, but added it was “deeply regrettable” that it has not taken the opportunity to dismiss the Task and Finish Group proposals on restricting rate relief completely.  

“This leaves charities with a huge amount of uncertainty when planning for the future, and could damage the high street,” a spokesman said.

“We accept the minister’s proposals on monitoring the sale of new goods in charity shops, which the Task and Finish Group’s report acknowledged makes up only 4.4 per cent of charity shop sales on average.

“We support charity shops becoming involved in Business Improvement Districts; we shall explore how best to help our members so they can play an important and meaningful role in these schemes.”

Tax-avoidance reference 'unhelpful'

The spokesman added that it was “disappointing” that the minister mentioned tax avoidance in her statement. Hart said that this was another issue she has raised with the UK government, after the Task and Finish Group suggested that some charities were benefiting from empty property rates in a way that "may be considered simply as a tax-avoidance strategy".

“There is no evidence that charity shops are engaged in tax avoidance and this language is unhelpful,” the CRA spokesman said.

Two schemes to re-animate high street

Hart's report also outlines broader plans to tackle the decline of high streets in Wales.

She unveiled two new schemes, to be administered by local authorities: the first, dubbed ‘Open for Business’, aims to bring long-term empty shops back into use through a 50 per cent discount on business rates for the new occupiers for the first year.  

The other will ensure that new developments completed over the next three years are exempt from empty-property rates for 18 months.