Northern and Leith MSP Ben Macpherson has hailed the Scottish Government’s business rates rise cap, saying it’s a commitment to local businesses. Opposition MSPs have welcomed the decision but say it’s a humiliating U-turn by the Finance Secretary.
The rethink comes following strong pressure from Scotland’s hospitality industry, who said that many businesses ‘are simply not able to shoulder the increased costs’.
9,500 more businesses across Scotland will benefit from a tailored package of additional business rates support, Finance Secretary Derek Mackay announced yesterday. Under existing support seven out of ten 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.
The tailored package will help businesses in the key sectors of hospitality and renewables nationwide and those with offices in Aberdeen and Aberdeenshire to deal with increases to their property values under the forthcoming national revaluation of business rates. Mr Mackay announced details of the support in a statement to parliament.
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. Now, 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
Mr 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.”
Loyal SNP MSPs welcomed the rethink. SNP MSP for Edinburgh Northern and Leith Ben Macpherson backed the Scottish Government’s proposals on business rates after Finance Secretary Derek Mackay announced a wide-ranging relief scheme that will offer strong support to businesses across Edinburgh.
Following a question from Edinburgh Northern and Leith MSP, the Cabinet Secretary for Finance Derek Mackay agreed to write to all eligible businesses to inform them of this new threshold and to encourage them to take up the Small Business Bonus and benefit from the rates relief they are entitled to.
Ben Macpherson said: “This is a very welcome announcement by the Scottish Government, once again showing the SNP’s commitment to local businesses across Edinburgh. It is a substantial package of support ensuring that many businesses will not see any rise in the rates that they pay – protecting businesses who were facing large rates rises in my own constituency, in Edinburgh and right across the country, particularly businesses in the hospitality sector.
“Following the revaluation of non-domestic rates, I received several messages from local businesses concerned at the increases they were facing and have made sure that these legitimate concerns were expressed and understood throughout all areas of government.
“The Scottish Government have undoubtedly listened to businesses across Scotland, recognised the pressures that they were facing, and taken strong action to support and grow businesses across Scotland.
“This cap of 12.5% to the increase of non-domestic rates for many sectors – including the tourism and hospitality sectors, most relevant in Scotland’s capital – together with the overall 62% of businesses in Edinburgh that will see either a decrease or no change in the bills that they pay, demonstrates the significant extent to which the SNP Government is committed to supporting the growth and success of businesses in Scotland.
“It is time for the opposition parties to put their political opportunism to one side and to get behind the substantial support that the Scottish Government is proposing.”
City of Edinburgh Council Finance Convener SNP, Cllr Alasdair Rankin said: “I am pleased that the Scottish Government has responded positively today to the concerns it has heard from businesses. For Edinburgh, this means that for 62% of businesses in the city there will be no increase in business rates. Also, today’s announcement places a 12.5% cap on business rates increases in the city’s substantial hospitality sector. All hotels, pubs and restaurants will benefit from this measure. Furthermore, the announced measures will have no adverse effects on the Council’s budget. In all, businesses in Edinburgh will pay £11.7 million less in business rates than before this announcement.
“I am glad that the Cabinet Secretary for Finance has said that all the representations he has recently received will be taken into consideration in the review of business rates in Scotland which is due to report in July.”
‘Put their political opportunism to one side’, Ben? Opposition parties welcomed the business rates relief measures but, politics being politics, couldn’t resist a wee dig at the Finance Minister.
The Tories said Mr Mackay had denied for weeks that there were problems with business rates revaluations and their finance spokesman Nurdo Fraser said it was “all too typical from a government who falls asleep at the wheel and only wakes up when it crashes into a wall”.
Labour’s Holyrood finance spokeseperson Jackie Baillie welcomed the changes, but added that she was “positively dizzy with the speed of the u-turn” by Mr Mackay.
Andy Wightman MSP, Local Government spokesperson for the Scottish Greens, said the package of measures from the Scottish Government to address concerns about business rates shows the need for proper scrutiny of Holyrood’s second-biggest source of income.
Andy Wightman will prompt a debate at Holyrood’s Local Government Committee today about the lack of scrutiny of business rates by attempting to annul the Non-Domestic Rate (Scotland) Order 2017.
The Local Government spokesperson for the Scottish Greens and MSP for Lothian, said: “This last-minute package of measures from Scottish Ministers underlines the need for proper scrutiny of non-domestic rates, which generate almost £3billion a year for council services. If local councils had more control over this vital economic tool they would be better able to respond to local needs, avoiding the kind of uncertainty many small businesses have faced in recent months.
“The need to open up discussion of this issue is clear, and I look forward to ministers’ response to my bid in committee to annul their Non-Domestic Rates Order.”
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