What now for business rates in Scotland?
A week after The Herald launched its Reset the Rates campaign, attention is turning to how the Scottish and UK governments will respond to calls for reform of the business rates system.
The support generated across the Scottish business community suggests the campaign has tapped into concerns about a system many believe is holding back investment and regeneration. The Herald certainly has no plans to stop campaigning for meaningful change to a system that many businesses argue is no longer fit for purpose.
To recap, The Herald, with the support of more than 20 influential company leaders and groups from across the business community, wrote to First Minister John Swinney and Prime Minister Andy Burnham to implement six changes to make the business rates system fairer, simpler and more sustainable.
The Herald launched the campaign a week ago (Image: Damian Shields/ Newsquest)
The six reforms proposed by the campaign are:
• Adjust thresholds for the small business bonus scheme to ensure small firms remain within its scope
• Create a national business rates assessor to avoid regional disparities
• Deliver a fairer deal for hospitality and tourism accommodation
• Introduce safeguards to prevent individual businesses facing sudden unaffordable increases following revaluation cycles
• Ensure major online operators pay their fair share to benefit the business community as a whole
• Press the UK Government to restore the business premises renovation allowance relief to help bring vacant sites back into use The importance of these proposed changes was underlined by interviews with business owners carried out during the campaign.
As part of our reporting, we spoke to business owners and industry leaders across Scotland who highlighted the flaws of a system which they say is unfair, unpredictable and increasingly unaffordable.
Read more:
- Scottish business rates 'ripe for reconsideration', says leading academic
- ‘Stacked against us’: Glasgow restaurateur's warning for hospitality
- Sir Tom Hunter warns Scotland's 'punishing' rates system is driving away investment
- 'Sword of Damocles' hanging over Scots tourism business after rates hike
With those concerns now firmly in the spotlight, what happens next? What opportunities are there for government ministers in Edinburgh and London to improve a system which in its current form is a risk to Scotland’s economic vitality?
Even if Mr Swinney and Mr Burnham decide to implement the measures that The Herald has called for, it would naturally take some time for that to happen. Jenny Gilruth, Scotland’s Deputy First Minister, reiterated last week that she has committed to reviewing the business rates system, which was announced in a statement to the Scottish Parliament in June. But so far little if any detail has been forthcoming from such a review.
Equally, while a review of the methodology used to calculate bills for the hospitality sector – a huge bone of contention for that sector - has been commissioned by the Scottish Government, it has already been delayed.
Ministers originally appointed BJ Gill KC to lead the review in February after scores of hospitality businesses were served notice of sharp rises in rates bills late last year, following the most recent revaluation of non-domestic property.
But following BJ Gill’s appointment as solicitor general for Scotland in June, the timetable for the review has been pushed back. Advocate Jonathan Murphy, who has practiced in valuation for rating, was appointed to take over the review in September but, having initially expected to report at the end of this year, it will now be next summer before it reports. Ministers have said it will consider the recommendations of the review before the 2029 revaluation cycle.
While the fruits of the two pieces of work commissioned by the Scottish Government will take some time to appear, there are perhaps other ways in which the system could be changed more quickly to help ease the burden on some in the business community.
Colin Borland, Scotland director at the Federation of Small Businesses, said there could be an opportunity as soon as this week, following the Budget that Chancellor John Healey unveils tomorrow.
Writing in The Herald on Monday, Mr Borland noted that should the Chancellor announce any further business rates relief for firms in England, “that will generate extra sums in consequentials for Scotland”.
He said: “In such a case, there will be a clamour for those funds to be spent on easing the cost burden on Scottish firms when the Scottish Government’s Budget is unveiled in December. “What better way to fund the Reset the Rates campaign calls?”
One thing that is for sure is that our campaign is far from over. With a UK Budget, a Scottish Budget and two separate reviews of the rates system on the horizon, there will be no shortage of opportunities for ministers to show whether they are serious about addressing concerns that businesses say are impeding investment, growth and the vitality of town centres across Scotland.