Business rates relief motion fails

Opposition parties have failed in a last-ditch effort to stop a cut in business rates relief.

Business will soon be liable for 90 per cent of the full rateable value on a property if it lies empty for more than three months, compared with 50 per cent under the previous rules.

The Scottish Government hopes the levy will encourage businesses to bring empty properties back into use and expect it to generate an extra £18 million for the Scottish budget.

The levy was debated for the final time at Holyrood’s Local Government Committee this morning.

It is necessary to balance the books and revitalise town centres, according to local government minister Derek Mackay, who acknowledged that “nobody likes paying more taxes”.

The charge is “voluntary” as businesses can avoid it by letting out their premises, SNP MSP Stewart Stevenson said.

But businesses have already cut rents “to the bone”, according to Conservative local government spokeswoman Margaret Mitchell, who described the change as “an extended penalty on already hard-pressed businesses”.

The committee’s two Labour MSPs backed Ms Mitchell’s motion to annul the levy but they were outvoted by four SNP MSPs.

Ms Mitchell said: “Asserting that this rate relief cut will be an incentive shows just how out of touch the SNP Government is.

“Don’t they realise people are cutting rental income to the bone to try and rent out empty properties?”

She added: “In reality, this is an extended penalty on already hard-pressed businesses.

“The evidence from the sector is that landlords are doing all they can to cut rents.

“The Scottish Property Federation (SPF) has listed examples of property owners cutting rents by up to half just to get the properties let out.

“This is hardly the behaviour or absentee or disinterested landlords.”

Mr Mackay said: “Nobody likes paying more taxes and I wouldn’t be surprised that some groups have expressed that opinion.

“We have studied very closely the Royal Institution of Chartered Surveyors’ view of this and we have listened very carefully to the SPF, CBI and others, and come to the conclusion that there were things that we could do to make this policy better.”

He outlined two recently-announced policies, New Start and Fresh Start, which provide rates relief for new and revived business premises.

“We do have to balance the books,” he added.

“The silence was deafening during the budget debate on what other parties would do to balance the books.

“I didn’t hear any substitute finance for the £18 million we think we will realise in terms of this particular budget saving.”

SNP MSP Stewart Stevenson said: “The Conservatives have to say where the funds that might be coming to the Government from this voluntary - because it can be avoided if you let your premises - £18 million might otherwise be placed in the Government’s books.”

Labour MSP John Pentland said: “This instrument, rather than an incentive, is possibly a problem which could add to empty properties.

“We don’t have any confidence in achieving its objective because we don’t believe the work has been done to back it.

“There has been no business regulatory impact assessment or other impact assessment, and it’s possible that we believe this measure could be counter-productive.”