Stance on business rates taken by UK Chancellor must be matched or bettered in Scotland - Roddy Smith

Ask any Scottish politician if they want to see their city centres and town centres flourish and they’ll declare unanimously that they do – of course they do! Yet ask them for their position on business rates and they’ll start to shuffle their feet awkwardly.

Deputy First Minister John Swinney, currently also acting as Cabinet Secretary for Finance, has a massive call to make on business rates when he announces his budget for the Scottish Government. Will he match or better the stance taken by UK Chancellor Jeremy Hunt in his Autumn Statement, when he declared that business rates would not increase next April? We certainly hope so.

Business rates in Scotland are at a 23-year high, and along with staff costs represent the biggest outlays for many businesses in the city centre of Edinburgh. They are a barrier to investment, discourage growth, and threaten a retail and hospitality sector that is already struggling from a combination of existential challenges.

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The impact of the pandemic and its restrictions – in particular its enormous acceleration of online retail and its detrimental impact on physical shopping – allied with soaring energy costs, runaway inflation, and labour market shortages have created a perfect storm.

Roddy Smith, CEO, Essential EdinburghRoddy Smith, CEO, Essential Edinburgh
Roddy Smith, CEO, Essential Edinburgh

And so, the last thing we need, is yet another increase in costs. The Scottish budget will make decisions on the poundage business rate and associated reliefs and thresholds for the 2023-24 financial year. Recently, Scottish Assessors have made decisions on the rateable value of a number of businesses. Retail has seen some very welcome decreases although hospitality and office-based businesses have seen increases, in some cases quite substantial.

Mr Swinney’s wide range of responsibilities include responsibility for a strong economic recovery from Covid – and this needs business investment to retain Scotland’s competitiveness so a fair business rate system would go some way to supporting this.

Edinburgh is recovering from the pandemic and recently there have been some really positive signs of footfall returning and some growing consumer confidence. We cannot do anything to suppress this. We have seen significant inward investment in the city centre, especially in hospitality providers including several new and proposed hotels. The development of the St James Quarter has been the single biggest change/investment in a generation – this has been the catalyst for change on Princes Street and George Street.

There must be a degree of fairness. Businesses investing in our city centre face large costs for doing so, including business rates, that are not reflected in the operations of online retailers often fulfilling orders from warehouses with lower costs relative to turnover and certainly lower rates. Out of town centres such as Fort Kinnaird, Straiton and The Gyle all enjoy much lower rateable values.

Proposals for a Tourist Visitor Levy to collect more revenue from visitors to our city add to the already large tax burden on businesses, higher costs which eventually have to be met by the consumer in an already challenging environment.

The Scottish Parliament’s Economic and Fair Work Committee reported after taking evidence on the issue of Non-Domestic Rates (business rates): “The committee consistently heard that the current system works against investment and growth in town centre retail and that the NDR system should be rebalanced to support town centre development."

Essential Edinburgh’s core purpose is to support the business community in the city centre to provide a fantastic experience for our workers, residents and visitors.

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The Government must raise revenue through business rates, and businesses know the importance of this to our overall economy and to fund quality public services. The question is one of equity and fair taxation. We must support our business community, not increase their costs burden for minimal direct return. The rates collected in our capital support investment nationally, not in Edinburgh.



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