Business rates are being capped in Scotland to help deliver a “competitive advantage” over the rest of the UK, finance secretary John Swinney told MSPs yesterday.
Annual increases to rates will not rise above 2 per cent, in line with a decision by Chancellor George Osborne for businesses in England and Wales.
The cap was announced as Mr Swinney set out the Scottish Government’s funding package of almost £10.6 billion for local councils over the next year.
He also expanded the Small Business Bonus Scheme, with the threshold for companies with multiple properties being increased from a rateable value of £25,000 to £35,000.
The finance secretary, speaking at Holyrood yesterday, said the move would bring an extra 4,000 additional properties into the discount scheme.
Mr Swinney said: “Business rates play a part in attracting and retaining businesses in Scotland.
“In the Autumn Budget Statement last week, the Chancellor announced that the annual increase in the business rates poundage in England and Wales would be capped at 2 per cent.
“To maintain the competitive advantage enjoyed by Scottish businesses and maintain Scotland’s position as the best place to do business, we will match that cap and restrict the increase in the rates business pay to 2 per cent.
“And to reinforce our commitments detailed in Scotland’s Future, we will go further in our support for small business.”
The SNP government’s plan to cap rates for firms was welcomed by Scottish business leaders last night.
Liz Cameron, chief executive of Scottish Chambers of Commerce, said the cap will save businesses millions of pounds next year. “This is a welcome mitigation of the original plan to raise business rates by 3.2 per cent next year,” she said.
“Equally welcome is the extension of the threshold of the Small Business Bonus Scheme for businesses with multiple properties, which will assist an additional 4,000 businesses across Scotland.”
Andy Willox, of the Federation of Small Businesses (FSB), said: “The small business bonus continues to give enterprises in Scotland a real advantage.
“Over the last few years, our members have faced spiralling overheads and tough credit conditions. This scheme has injected Scottish smaller enterprises with working capital at a time when they needed it most.”
The 2 per cent cap gives firms in Scotland a “level playing field”, he added.
Laura McMahon, of the Confederation of British Industry (CBI), welcomed the changes for small firms, but said: “It is disappointing that the return to a level playing field on rates for larger retailers remains elusive.
“Larger retailers are still burdened with a Scotland-only rates surcharge of £95 million, which doesn’t apply down south.”
The Scottish Retail Consortium’s head of policy, David Martin, said: “This one-off change will help retailers invest in jobs and the communities in which they operate.”
Meanwhile, Labour attacked Mr Swinney’s settlement for local councils, which the party said would leave authorities starved of funding for services.
Labour local government spokeswoman Sarah Boyack said: “The SNP have broken local authority finance through their sustained and underfunded council tax freeze that actually costs people more money as charges to deliver services are increased to provide vital funds.
“Since 2008 almost 35,000 jobs have been lost within councils as the SNP continue to grasp power back from local authorities. This has an impact not only on service delivery but also across communities who rely on public sector jobs.”