Business rates plan to plough cash back into deprived areas

A pilot project in areas such as Granton or Craigmillar is being considered following "productive" talks between city leader Jenny Dawe and Scottish Finance Secretary John Swinney.

The council, politicians and business groups have long campaigned to see more of Edinburgh's rates invested in the city. At present, 90 per cent of the money is lost to other parts of Scotland.

Under the new scheme, a first for Scotland, all the rates raised in areas of deprivation would be spent on developing and improving those areas.

Cllr Dawe said: "This is a novel idea we strongly support and which could have great benefits for the city. It's only right we should look at ways of investing the wealth created in Edinburgh back into our communities and economy.

"Nothing is set in stone and there is still a lot of work to do. However, we are cautiously optimistic."

During the Holyrood election campaign, Alex Salmond told the Evening News the call to retain more business rates income for Edinburgh was "a very fair request".

It is not yet known how the money would be spent, although the council said it would be in a way that would help strengthen the local economy. Graham Birse, deputy chief executive of the Edinburgh Chamber of Commerce, wants to see the money used to encourage small business start-ups.

The chamber itself operates "business incubators" in both Granton and Craigmillar, and Mr Birse believes funding more affordable office space can help attract firms to a struggling area.

He said: "As a social intervention, there are a lot of advantages because we cannot leave disadvantaged communities floating at sea.

"It boils down to what you spend the money on: if it is social policy, education, health. Boosting the economy is a different intervention entirely.

"If you give firms affordable business space, support and advice, as well as cutting down on red tape, then their success will be to the benefit of the local area."

A Scottish Government spokesman said the meeting between Cllr Dawe and Mr Swinney had been "productive". He said Mr Swinney had told the finance committee he would like to "explore the options for allowing councils to reduce business rates to below a certain ceiling, on the basis that if it created a hotspot, they would be allowed to retain any additional income from new business growth."

The spokesman said this was not the Government's formal position, simply an idea Mr Swinney thought "worthy of consideration".