Business rates help ‘doesn’t get to root of problem’

The Scottish government’s finance secretary Derek Mackay has responded to fierce criticism of the country’s business rates regime by announcing that “9,500 more businesses across Scotland will benefit from a tailored package of additional business rates support.”

Mackay said the package will help businesses in the hospitality and renewables sectors and those with offices in Aberdeen and Aberdeenshire to deal with increases to their property values under the forthcoming national revaluation of business rates.

Scottish Chambers of Commerce CEO Liz Cameron welcomed the support “for certain sectors and parts of the country” but said the move did not get “to the root of the problem. ”

The Scottish government claimed that under existing support, seven out of 10 premises are expected to pay the same or less in rates next year and more than half of all premises will pay no rates at all.

It said: “The Scottish government has already acted to cut the poundage by 3.7%, take 8,000 businesses out of the large business supplement and extend the small business bonus scheme so 100,000 properties – half of all business premises – benefit from 100% rates relief.”

It argued that the additional support package includes:

  • Almost 8,500 hotels, pubs, restaurants, cafes and other accommodation will benefit from a cap on any increase to bills of 12.5%
  • Support for more than 1,000 offices in Aberdeen and Aberdeenshire with increases in bills capped at 12.5%
  • Relief for renewables companies, including hydro
  • Confirmation of free revaluation appeals – with no fees or restrictions as in other parts of the UK
  • Early government action on the findings of the Barclay review into Business rates – due in July
  • Working with any local authority to introduce a local rates relief scheme to support key sectors or localities

Mackay said: “This is the first business rates revaluation since 2010 and takes account of the changes in property values during the economic recovery.

“It is conducted by independent assessors appointed by local government.

“Although councils retain all the revenue from business rates, and have the power to offer rate reductions, it has become clear that there are some sectors and regions where the increase in rateable values is out of kilter with the wider picture of the revaluation.

“I have listened and decided that we will act nationally to tackle the impact.

“Hospitality businesses, such as hotels and pubs, across Scotland will see rises capped at no more than 12.5%, recognising the concerns that have been raised with me over the scale of the increases and the valuation methodology which sets them apart from other sectors.

“In addition offices in Aberdeen and Aberdeenshire will see any rise capped at 12.5% in recognition of the effect of the drop in oil price on the local economy.

“Companies working in the renewables sector, including in hydro, will also receive further support, with continuing relief for those projects with a community ownership model.

“These additional measures come on the back of significant support for business already set out in our Draft Budget 2017-18.

“I have already committed to raising the threshold for those who qualify for 100% relief under the small business bonus — meaning 100,000 properties will pay no rates at all under the scheme next year and around 9,000 properties will be up to £7,000 a year better off than their equivalents in England.

“To reduce the impact of bills overall, I confirmed plans to reduce the poundage — the rate at which the tax is paid — by 3.7%.

“With these changes, seven out of ten business properties will pay the same rates or less than this year – with more than half paying nothing at all.

“With the further measures we are now taking, combined with the powers and investment we have provided to local councils, that is a good deal for businesses, a good deal for public services, and a good deal for the Scottish economy.”

Scottish Chambers of Commerce CEO Liz Cameron said: “We welcome the Scottish Government’s recognition that this year’s business rates revaluation is causing major problems for a large number of Scottish businesses.

“This announcement of additional support measures for certain sectors and parts of the country are to be welcomed and will deliver much needed support when it is most needed.

“What it doesn’t do, however, is get to the root of the problem.

“That is why Scottish Chambers of Commerce has proposed a full expert review of the methodology of valuations in the hospitality, motor trade and energy sectors, with a view to ensuring that every business in Scotland can be confident that it is subject to a correct business rates valuation of its premises.

“This would complement the ongoing work of the Barclay Review of Business Rates, which is a more general and less technical appraisal of the system.

“The Scottish Government’s additional measures, together with such an expert review and the Barclay Review of business rates can combine to enable long-overdue change to the structure of Scotland’s outdated business rates regime.

“Scotland’s business community stands ready to assist in making reform work.”