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

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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

Haverfordwest airport to be leased out to make it cost-neutral to council

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SENIOR Pembrokeshire councillors are to lease Haverfordwest airport as part of plans to make the council-run facility, which had a circa £119,000 deficit last year, cost-neutral to the authority.

Last year, Pembrokeshire County Council’s Cabinet, members heard the financial position at the council-supported Haverfordwest/Withybush airport deteriorated in 2022/23, with an out-turn position for 2022/23 of £238,000.

That loss has been reduced to an expected £119,000 for 2023/24 “following an extensive review of the operations of the airport”.

Following scrutiny committee backing for the airport to be leased, a more detailed recommendation was presented to Cabinet on May 20, seeking approval of the lease to “an existing stakeholder / established aviation company,” by giving delegated authority to the Assistant Chief Executive, with relevant input from officers.

The report before Cabinet said the lease would be for an initial 10-year term, with a requirement to obtain/keep a CAA [Civil Aviation Authority] Cat II licence and at a market rent, which would “make the airport cost-neutral to the council from the day the lease is signed, whilst also ensuring that an operational airport remains for Pembrokeshire to benefit from”.

“Any lease would have to allow the operator to run the airport on the commercial terms of their choosing to give a chance of long-term sustainability, so, the council will lose full control of how the airport operates.

“However, any lease will require that the airport be maintained to an acceptable standard and that a CAA Cat II licence is maintained. If these terms of the agreement are breached, then the facility will return to the council.”

Deputy Leader Cllr Paul Miller, presenting the proposal and moving approval, said: “The airport is a valuable facility and one I’m keen to maintain; I personally recognise that maintaining an ongoing public subsidy is not something we’re particularly keen to do indefinitely.”

He added: “What the lease, we believe, will do is maintain a franchising CAT II airport in Haverfordwest and remove our liability from day one.”

Members heard conversations were ongoing with Pembrokeshire Agricultural Society over continued use of part of the site for the annual Pembrokeshire County Show.

Cllr Miller said he was “a huge supporter” of the show, and it was hoped the lease will broadly allow it to continue as before, adding that officers “are getting involved to ensure a smooth transition, and one the show is comfortable with”.

New Cabinet Member for Planning & Regulatory Services Cllr Jacob Williams said: “I don’t think this administration, or any administration, can afford to lose the farming community, one of the oldest and biggest county shows in Wales; it’s so important we don’t lose the ongoing relationship between the agricultural society and the council.”

Following a discussion in private session, members unanimously backed the leasing of the airport.

The council intends to exclude Hangar 5 [indoor trampolines] from any lease, and also includes the option to take back part of the site that may have the potential to be developed as a solar farm or industrial units.

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Business

Seafish begins formal industry consultation to revise levy structure

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SEAFISH, the public body that supports the UK seafood industry to thrive, has started formal consultation with its levy payers and the wider seafood industry on proposals for a new levy model.  

Levy is due on the first sale of seafood, both domestically landed and imported, in the UK. It is not charged on farmed salmon, trout, and freshwater fish species because these species are excluded by primary legislation. Nor is it currently charged on canned, bottled and pouched seafood products.  

The levy collected is used by Seafish to provide support, advice and services across the whole UK seafood supply chain.  

During the Seafish Strategic Review in 2021, the seafood industry recognised the need for a review of the levy system given it had not changed since 1999. There was general agreement that an improved levy model was needed to ensure Seafish had a stable financial model and could continue to provide the support industry needs, now and into the future.  

The Seafish Board held informal consultations with the seafood industry in spring 2023 on proposed changes to the levy system. In December 2023 the Board released a response to the Informal Consultation which set out how it had considered the feedback received from stakeholders and had revised the package of levy amendments in response.  

The Seafish Board is now holding the statutory consultation on the proposed changes. The consultation will be open for twelve weeks until Friday 9 August.  

Seafish is collecting feedback via an independent online survey and anyone with an interest in the Seafish levy as well as the wider seafood industry are invited to respond. They will also be hosting a series of webinars for stakeholders interested in learning more about the proposed changes. 

Information on the consultation, which consists of the Formal Consultation Paper (available in Welsh and English), the draft Regulation, and an Economic Impact Assessment can be downloaded from the Seafish website here.  

The proposed changes to the Seafish levy include: 

  • The current sea fish levy rate of 0.903p/kg will be increased to 1p/kg. This will be renamed the “Category 1” levy. 
  • The current levy rate that applies to mussels, cockles, and pelagic fish (as defined in regulation) will increase from 0.258p/kg to 0.5p/kg over a three-year period.  
  • The current levy rate for whelks will increase from 0.4515p/kg to 0.5p/kg 
  • The levy for mussels, cockles, pelagic fish (as defined in regulation) and whelks will be renamed the “Category 2” levy.   
  • The levy rates for manufactured fishmeal and ‘fish destined for’ fishmeal will also increase, as follows: 
  • Manufactured fishmeal will increase from 0.175p/kg to 0.315p/kg.   
  • Fish destined for fishmeal will increase from 0.035p/kg to 0.05p/kg.    
  • For the first time levy will apply to canned, bottled, and pouched seafood products, for those species within the scope of the levy. 
  • The levy for all seafood and seafood products would be adjusted annually, subject to a cap on the annual adjustment of 2%.  
  • Minor changes to the administration of the levy to make collection and payment more efficient. 

Mike Sheldon, Chair of the Seafish Board, said:  “After our informal consultation last year, we have taken industry feedback on board and made further revisions to refine the proposed levy adjustments. It is our priority to make the levy fit for purpose, fairer for all and ensure we can continue to deliver the support industry have told us they need, now and in the future.  

While we appreciate that the seafood industry is under financial pressure, our proposed changes strike a good balance, minimising impacts on the industry while allowing us to effectively support the seafood sector as an organisation. 

This consultation is an important step in shaping a levy that better serves our stakeholders.” 

Once this formal consultation process ends Seafish will make formal recommendations to government, and these will be considered by relevant Ministers across the UK Government and the Devolved administrations. There is not a timeframe for when Ministers will reach a decision yet, but businesses will have as much notice as possible before any changes come into effect so that they can plan ahead.    

Any queries about the consultation should be sent to [email protected] 

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Dragon LNG Opens Expression of Interest for 9 Bcm/a Capacity from 2029

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DRAGON LNG has announced the launch of an Expression of Interest (EOI) process for its 9 Bcm/a capacity, set to be available from September 2029.

Operational since 2009, Dragon LNG is one of three LNG terminals in the UK and has been integral to the nation’s energy security. The terminal has received over 300 cargoes, handling up to 25% of the UK’s winter LNG imports in recent years.

The terminal is known for its flexibility and reliability, boasting an impeccable safety record. Capacity holders can access the liquid National Balancing Point (NBP) and Title Transfer Facility (TTF) hubs, expanding their market reach. Situated on the largest estuary in Wales and one of the deepest natural harbours globally, Dragon LNG can accommodate vessels up to 217,500 cubic metres. It features two storage tanks with a combined capacity of 320,000 cubic metres. The terminal can send out up to 298 GWh per day (or 25.6 million cubic metres per day) of natural gas. Since the commissioning of its reliquefaction plant in 2018, which prevents boil-off losses during storage, Dragon LNG offers a ‘zero send-out’ product, enhancing value and flexibility for customers.

Dragon LNG is also advancing its commitment to sustainability. Following the successful installation of renewable electricity generation capacity, the terminal aims to achieve Net Zero emissions by 2029. This initiative will lower the carbon intensity of LNG processed through the terminal, reducing associated carbon costs.

The EOI process will remain open until Monday, 1st July 2024. Interested parties can express their interest by completing the form available at www.DragonLNG.co.uk/2029capacity-EOI.

Based on the feedback received, Dragon LNG plans to hold a capacity auction in the winter of 2024/25, pending regulatory approvals.

For further information and discussions regarding this opportunity, interested parties can contact the team at [email protected].

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