3,500 businesses in financial jeopardy after five Plaid Cymru & independent-led councils make policy change

This week, five Welsh councils chose to amend their criteria on which accommodation businesses qualify for the Business Support Grants announced by the Chancellor back in March. Research has shown this will result in over 3,500 small businesses missing out who are desperately in need of the grants to cover their costs following booking cancellations during the lockdown.

Vacant second homes not commercially let already pay up to a 50% premium on their Council Tax in these counties, but Councillors in Gwynedd, Anglesey, Pembrokeshire, Ceredigion and Carmarthenshire have decided to apply extra stringent criteria for the commercially-run, holiday let part of the sector which are on the business rates scheme. These holiday lets must have demonstrated that they are commercially let and provide an accommodation service to visitors for at least 140 days per year. The updated criteria on the Gwynedd council website includes:

· The self-catering accommodation can produce two years of trading accounts to 31 March 2019

· 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%)

Councillors have previously claimed that such holiday lets are “unethical[1]” and are not “legitimate businesses[2]”. Holiday lets, when independently assessed by the Valuation Office, are often small enough to benefit from small business rates relief, up to 100%.

However, the new criteria – only applied to this sub-sector of the holiday accommodation market – risks throwing an estimated 3,500 accommodation providers who are genuine commercial enterprises into financial ruin. There are 8,640 holiday lets across the five counties which are commercially run and managed. Research has shown that around 41% of accommodation providers were registered after the two-year accounting period so fail on the first criteria alone. Therefore at least £35m in grant aid will not reach those desperately in need[3].  The research also revealed that the majority (76%) of commercially run holiday lets were owned and managed by individuals local to the county[4].

Evidence from local holiday let owners who have recently lost their jobs are also worried that how the third criteria is measured will mean they miss out too. This minimum income level criteria does not apply to small business owners of B&Bs, cafés, gift shops, or any other type of business which could form less than 50% of the business owner’s income.

Robert Craven owner of Hen Efail Cottage in Conwy said

“We opened for business in July 2018 so do not meet the first criteria. We had in excess of 320 days booked last year and we had matched that by the end of February for this year. I run the business myself so it is my main income. We have lost between £3900 and £7000 a month but still have all the outgoings such as mortgages, utilities and marketing costs to pay. As a local who lives two miles from the cottage I feel especially let down by my council who are unnecessarily penalising me because I’ve not been operating long enough.”

Alan Wheal, owner and resident of a holiday let in Gwynedd said

“I was on the national living wage working in a local retail shop. My holiday let supplemented my income and was 40% of my total earnings but I was laid off when the shop closed earlier in the year so I now rely on it for 100% of my income. According to the new criteria I may miss out just when I need the help the most. I only have so much in savings and will run out soon with all the costs to cover. I feel incredibly let down by my council.”

Heather Drake, resident and owner of a commercial holiday let in Gwynedd said

“I have retired on a small pension and supplement this with the income from my holiday cottage. I’ve had sleepless nights worrying over the council’s treatment of us. I live in the same village but after this is all over I’ve become so upset and disillusioned I’m just going to close the holiday let to visitors.”

Richard Bond of Finest Retreats who commissioned the research said

“It is clear that the new criteria has been poorly thought through and hard-working local people are now facing severe financial difficulty. Long term tourism in the county is jeopardised. The councillors have made this policy because of objections they have towards the small business rates relief calculation, but punishing commercially run holiday let providers because of this is not the answer. It means a huge number of legitimate businesses will fall between the cracks. Punishing those who are no different to small shop owners and B&Bs and are a vital part of the tourist ecosystem is blind to the reality of who these people are and how they rely on this income from their holiday let businesses.”

 

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