Business
Business Rates Relief cut ‘spells disaster’ for Welsh hospitality sector

THE ANNOUNCEMENT was made last year, but this week the reality kicked in.
The Business Rates Relief has been cut in Wales has kicked in and the hoped-for u-turn has not materialised.
The substantial reduction in business rates relief for hospitality firms has stirred significant concern amongst business owners and industry representatives across Wales.
Effective from 1 April 2024, the relief has been cut from 75% to 40%, accompanied by a 5% rise in rates. This decision is part of a broader strategy to redistribute financial resources to support essential services, particularly the health service, amidst ongoing fiscal pressures.
Finance Minister Rebecca Evans has acknowledged the difficulty of these decisions, emphasising the government’s commitment to managing a tight budget in challenging times. However, the reduction in support has sparked fears of financial strain and potential closures within the hospitality sector.
Industry Response
The announcement has been met with dismay by industry leaders, who warn of the competitive disadvantage Welsh businesses will now face. David Chapman, Executive Director of UKHospitality Cymru, highlighted the stark contrast with England, where businesses continue to benefit from the 75% relief. “This disparity will undoubtedly place Welsh businesses at a competitive disadvantage, particularly small businesses that will see their counterparts across the border enjoying frozen rates,” Chapman said.
A typical pub or restaurant in Wales is now expected to pay £6,400 more than one in England, a disparity that could have severe implications for the viability of many establishments.
Budget Cuts and Tourism
The reduction in business rates relief is not the only financial challenge facing the Welsh hospitality and tourism sectors. The Welsh Government’s budget for 2024/25 also includes a £16m cut in funding for tourism, culture, and sport. Given the strategic importance of tourism to Wales’ economy and cultural identity, this decision has been met with criticism. The sector, already facing intense economic challenges, views the cut as a significant setback that could undermine long-term confidence and investment.
Political and Community Reaction
Stephen Crabb MP, pictured here with restaurant owner Dan Mills, has been vocal in his efforts to highlight the challenges facing the hospitality sector, especially in regions like Pembrokeshire that rely heavily on tourism. Crabb has been engaging with local business owners, bringing attention to the sector’s struggles at both the local and national levels. “The upcoming season should be a time of optimism, but the reality is far different due to these financial challenges,” Crabb stated, emphasising the need for greater support to ensure the sector’s competitiveness and sustainability.
The Welsh Conservatives have strongly criticised the Welsh Government’s decision, with Andrew RT Davies MS, the party’s leader, and Tom Giffard MS, Shadow Minister for Tourism, both calling for a reevaluation of the relief cut. They argue that the reduction could be catastrophic for businesses already contending with the post-pandemic economic landscape, urging the government to maintain competitive rates relief.
Calls for Reconsideration
Amid growing concerns, FOR Cardiff, representing businesses within the city, has issued an open letter to the Minister for Finance, urging the Welsh Government to reconsider its approach to business rates relief. The organisation highlights the critical role of high street businesses in the everyday economy and warns of the potential for widespread closures without adequate support. Carolyn Brownell, FOR Cardiff’s Executive Director, called for a more gradual approach to tapering relief, suggesting that some of the government’s capital funds could be redirected to provide targeted support where it’s most needed.
Looking Forward
As the hospitality sector braces for the impact of these financial changes, the debate continues over the best path forward. Industry leaders, political figures, and community representatives are calling for a balanced approach that supports businesses through these challenging times while addressing the fiscal needs of the country.
The coming months will be crucial in determining the long-term effects of these decisions on Wales’ hospitality sector and broader economy.
How many pubs and restaurants will survive?
Business
Drakeford resists call to exempt children from tourism tax

MARK DRAKEFORD resisted calls to exclude under-18s from the Welsh Government’s plans for a tourism tax from 2027.
The finance secretary told the Senedd’s finance committee that exempting children from the levy as in some other European countries would lead to a “significant fall” in the tax take.
He said: “I see that you have heard from a range of voices who argue that particular groups ought to be excluded from the levy…. This is a broad-based tax with a low charge – if you narrow the base, the only way you can sustain the take from the tax is to put the charge up.”
Prof Drakeford said taking under-16s out of the £1.25-a-night levy would see the estimated £33m revenue fall to £21m, “eroding the chances that the levy will be of any use.”
He stressed: “If the committee wants to argue for excluding children from the levy, you are arguing for a higher charge on the people who are left – you can’t have both.”
Prof Drakeford pointed out: “Children buying sweets pay VAT. Children are not excluded by the virtue of being children from the taxation system.”
He defended the visitor levy bill after a report found the levy could lead to between 250 and 730 job losses and cost the Welsh economy £16m to £47m a year.
The finance secretary was questioned about the economic impact assessment by Calvin Jones, a professor at Cardiff University, as he gave evidence on February 12.
He said: “Professor Jones’ report deals with a set of complex considerations. It has, inevitably, to make a series of assumptions and deal with a series of uncertainties. It assumes, for example, that all 22 local authorities have adopted the levy from day one.”
Rejecting suggestions the report undermines the case for a levy, Prof Drakeford told the committee some witnesses exclusively referred to figures for a worst-case scenario.
He said: “I did think there were some witnesses who came before you who presented Prof Jones’ report as though it was a set of predictions rather than a range of possibilities.”
Prof Drakeford added: “Even if the impact was at the top end, you are talking about a few hundred jobs in an industry that employs over a million people…. This is not an industry, I think, that will struggle to accommodate the impact of the levy.”
Pressed about the timing with the sector still recovering from the pandemic, he said: “When some organisations have said to you ‘oh, not now’, what they really mean is ‘not ever’.”
Prof Drakeford stressed “There’s a long lead in, this is not an idea that has suddenly been put in front of the sector and there’s a long path in front of us as well.”
He said the earliest any council could introduce a local levy would be April 2027, adding that he expects only a modest number of local authorities to do so initially.
Peredur Owen Griffiths, who chairs the committee, raised the “cumulative” effect of policies such as national insurance and the 182-day rule for holiday lets to qualify for business rates.

Prof Drakeford replied: “We’re familiar with the argument about comparing apples and pears but that list, I think, is the full fruit salad because they’re all completely different issues.”
He told the committee many microbusinesses in the tourism sector will be no worse off after the UK Government’s decision to increase employer national insurance contributions.
Asked about introducing a day-visitor levy rather than an overnight tax, the former First Minister said: “I didn’t want to see the search for the perfect driving out the possible.”
Prof Drakeford rejected suggestions that families could upend their holiday plans over the proposed £1.25-a-night levy, arguing it will have a marginal impact.
He said: “There are so many other factors that will have an impact both on costs and people’s decision-making which will loom far larger than the visitor levy.
“On the whole, what we hear from the continent where this is commonplace is that visitor levies are broadly invisible to the end user.”
Prof Drakeford explained the bill would require councils to consult on whether to adopt a levy then report annually on the use of the revenue raised.
He told committee members: “The idea that you could easily slide a bit of that money away towards something else, I don’t think will be easy.”
Prof Drakeford said the visitor levy bill, which would create a fee-free register of providers, will be followed by a second bill on licensing accommodation in the autumn.
Business
Last chance to buy high-quality homes at Carmarthenshire site

ONLY six properties remain for sale at a popular housing development in Cross Hands.
Parc Cerrig – which has easy access to the A48 and M4 – has three and four-bed homes for sale from £284,995 to £344,995. Help-to-Buy Wales is available at Parc Cerrig, meaning customers could buy a home with a minimum deposit of 5%.
The houses have been built by Persimmon Homes, West Wales’ largest developer, which has a five-star ranking from the Home Builders Federation, which means nine-in-ten customers would recommend them to a friend.
Cross Hands is a village close to Carmarthen, while the development is a short walk from a range of amenities, including big brands at the excellent retail park, two supermarkets, a number of independent shops and eateries, schools, a doctor’s surgery, and a cinema. Llanelli and Swansea are 20 and 30 minute drive away, respectively.
Interested buyers are encouraged to act quickly to secure their dream home in this desirable location. With interest expected to be high, potential buyers are advised to act quickly to secure their dream home on this desirable development.
During the housebuilder’s time at Parc Cerrig, Persimmon has overseen the construction of 198 new homes. For more information or to arrange a viewing of the final properties, please visit the Persimmon website at persimmonhomes.com or contact our sales team directly on 01269 503893.
Commenting, Persimmon Homes West Wales’ sales director, Sharon Bouhali, said: “With only six homes remaining at Parc Cerrig, we’re excited to offer this final opportunity to own a high-quality home built by a five-star builder at this development, where families will also benefit from the brand-new primary school and a local community centre.
“Located in the beautiful county of Carmarthenshire, Parc Cerrig is conveniently close to Swansea, Llanelli, the M4, and several coastal towns and their wonderful beaches.
“As we approach the end of our time here, we encouraging potential buyers to act swiftly and secure their dream home in this delightful part of the country.”
Business
Welsh business activity sees renewed expansion in January

Output increases for the first time since August 2024
BUSINSESS activity in Wales experienced renewed growth at the start of 2025, according to the latest Cymru Growth Tracker data from NatWest. The findings indicate a fresh rise in output, with business confidence remaining positive as companies entered the new trading year.
The Wales Business Activity Index—a seasonally adjusted measure of month-on-month changes in output across the manufacturing and service sectors—rose to 50.7 in January. This marked a third consecutive monthly increase and the first expansion in activity since August 2024. The figure was up from 48.9 in December, signalling a marginal improvement in business performance.
Business confidence remained strong, while the decline in employment and backlog levels eased. However, inflationary pressures intensified, with costs and charges rising at historically high rates. Firms sought to pass these costs on to customers, resulting in the sharpest increase in selling prices in ten months.
Economic trends and business confidence
Jessica Shipman, Chair of the NatWest Cymru Regional Board, commented: “January data saw a return to output growth at Welsh businesses, with improvements in the sales environment in specific sectors driving expansion. Firms remained cautious about employment but were confident that demand conditions would improve as the year progressed.
“Although cost burdens remained elevated compared to historical trends, Wales recorded the slowest rise in input prices of the 12 monitored UK regions. However, output charges continued to increase, approaching the UK average, as businesses sought to protect their profit margins.
“The Bank of England’s recent interest rate cut has made monetary policy less restrictive, with further easing expected later in the year.”
Comparison with UK trends
Welsh business activity mirrored UK-wide trends, which saw overall expansion in January. However, only four of the 12 monitored UK regions—London, the North East, the South West, and Wales—registered an upturn in activity. Some firms noted increased demand in specific sectors, though the broader sales environment remained subdued.
While new orders in Wales continued to contract, the rate of decline was weaker than the UK average. Of the ten UK regions reporting lower sales, Wales recorded the slowest decline.
Despite these challenges, business sentiment remained positive, with firms anticipating stronger economic conditions and planned capacity expansions. Of the 12 monitored regions, only the North East, Scotland, and Northern Ireland reported weaker optimism.
Employment and inflationary pressures
Welsh private sector firms reported a fifth consecutive monthly decline in workforce numbers in January. While job losses eased, Wales still experienced one of the sharpest reductions in employment among UK regions, with only the East of England and the West Midlands seeing steeper cuts.
Backlogs of work continued to decline, though at a slower pace than previous months. Firms attributed this to lower new orders, allowing them to process outstanding business more efficiently. The rate of backlog reduction remained quicker than both the UK and long-term series averages.
Meanwhile, input prices surged at the fastest rate since April 2024 due to unfavourable exchange rate movements, rising labour costs, and increased supplier prices. However, Wales recorded the slowest rate of cost inflation among the 12 UK regions.
Output prices followed a different trend, with Welsh firms passing higher costs on to customers at a faster rate. Scotland and Northern Ireland were the only UK regions to report a slower rise in selling prices.
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