Retailers hit out over SNP's rate hike for supermarkets

RETAILERS have labelled the Scottish Government's decision to single out supermarkets and other large retailers for extra business rates increases as "madness", after finance secretary John Swinney told parliament these would be subject to rates rises next year.

Fiona Moriarty, director of the Scottish Retail Consortium (SRC), admitted the government's announcement, included in the Budget statement, took her by surprise and argued the policy risked driving out much-needed investment.

"This is an outrageous, unexpected and unjustified move by the Scottish Government. Retailers already pay a quarter of all business rates, the highest proportion of any business sector. Supermarkets and other large retailers play a vital role in the Scottish economy, providing jobs, services, value and choice as well as investing in training and regeneration. John Swinney is jeopardising future development, growth and jobs in the Scottish retail sector.

"It can only damage retailers' ability to maintain and create employment and will certainly lead them to question investment decisions north of border. Politicians of all parties must oppose this madness."

Liz Cameron, chief executive of Scottish Chambers of Commerce likened the tax to a "hammer blow" on the sector.

However, the Federation of Small Businesses (FSB) backed the tax increase for big retailers.

Andy Willox, the FSB's Scottish policy convenor, welcomed it as a "move to redress the balance between town centres with independent retailers and supermarkets and out of town developments".

There was also welcome for the government's commitment to ringfence 2.5 billion for investment in capital projects, including the new Forth crossing.

This would be handled by the Scottish Futures Trust (SFT) using a debt-financed "Non-Profit Distributing" (NPD) model.

Barry White, chief executive of SFT, said the investment programme, which fund a range of projects such as the Aberdeen Western Peripheral Route, an M8 upgrade and the Edinburgh Sick Kids hospital, was a "good deal for Scotland".

He said: "This 2.5bn investment in Scotland's infrastructure will support economic recovery as well as growth and help protect jobs in the construction industry."

But Paul Brewer, partner and public-sector specialist at PwC in Scotland, worried the money might not come fast enough to have an impact before cuts announced last month to capital spending take effect.

He said: "The fly in the ointment, however, is that for most of these investments it will be at least 18 months of planning and procurement before a brick is laid.

As a result, this is unlikely to have much impact on the 800m cut in capital spending in 2011-12."

The Scottish Chambers' Cameron said the "ambitious" SFT programme was "important" and welcome" but she added that the government could still make further cuts to its overall budget.

David Lonsdale of CBI Scotland said other positives to the Scottish Government's budget plans were a 15m boost to stimulate broadband investment, the freezing of council tax and the decision not to use the "tartan tax".

Dr Lesley Sawers, chief executive of the Scottish Council for Development and Industry (SCDI) was "disappointed" about cuts affecting key economic areas such as education, tourism and enterprise.

David Hutcheson of the Institute of Directors Scotland also said there should also be concerns about the 26.5m cuts to the to tourism and Scottish Enterprise but that the SNP's budget presented "grounds for cautious optimism".