Scottish business groups unite to oppose devolution of rates to councils

Business groups fear the abolition of a uniform non-domestic rates system could cause issues for firms. Picture: John Devlin
Business groups fear the abolition of a uniform non-domestic rates system could cause issues for firms. Picture: John Devlin
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Business groups from across Scotland have united to oppose the devolution of non-domestic rates to councils ahead of a crunch Holyrood vote on the issue, arguing such a move would create an uneven playing field for firms.

The Scottish Retail Consortium (SRC), in conjunction with 26 other organisations, has written to MSPs to share its concerns regarding proposals that could see the abolition of the Uniform Business Rate and nation-wide rates reliefs.

The collective call comes ahead of the final Stage 3 vote on the Non-Domestic Rates (Scotland) Bill, which is expected to be debated at Holyrood in the next few weeks.
An amendment proposed by Green MSP Andy Wightman at the Stage 2 vote in December, which would see local authorities handed full control of the levy, was passed thanks to votes of opposition members - a move condemned at the time as “reckless” by finance secretary Derek Mackay.

Those arguing in favour of devolving business rates to councils believe it could give them more flexibility to produce a system which responds to the needs of local enterprises.
Mr Wightman claimed it would “hand councils the biggest ever fiscal transfer of power since Margaret Thatcher took it away”.
But the SNP - which opposes the amendment - claimed it would adversely impact more than 100,000 businesses across Scotland.

In its letter to MSPs yesterday, the SRC said: “Our ambition is for a competitive rates system and one that better reflects economic and trading conditions. It is why we have supported the thrust of the Bill.

“However, we are profoundly concerned with the abolition of the Uniform Business Rate and Scotland-wide rates reliefs, and the consistency and predictability they bring.

“We fear this could lead to higher business rates bills, at a time when the poundage rate is already at a 20-year high and with a further increase pencilled in for this Spring, and when businesses want to invest and grow the Scottish economy.

“We therefore urge you and fellow MSPs to overturn these amendments, which simply introduce fresh complexity, cost and unpredictability into the rates system, and which are at odds with the rates reform agenda of ensuring competitiveness and minimising complexity.”

Mr Wightman said: “My proposal to hand councils the biggest ever fiscal transfer of power since Margaret Thatcher took it away has been resisted by this centralising SNP Government and the lobbyists who have their ear, but that doesn’t mean it shouldn’t be considered.

“Non-domestic rates should reflect local circumstances and needs, so naturally local democracy should be trusted to make those decisions. It would be the fairest and best deal for local businesses.”

SNP MSP Kenneth Gibson said: “The move to scrap over £308 million of relief - which is strongly opposed by the SNP – will impact more than 100,000 businesses across Scotland.

“These plans would deliver a body blow to Scottish businesses and could risk the delivery of vital local services, the work of charities and third-sector organisations.

“Experts have raised concerns over the impact of the proposed changes, warning it will create added costs and deter investment.

“Opposition parties must heed those warnings, and backtrack on this disastrous move at the final stage of the Bill – in order to support our economy and make Scotland the best place for business to invest.”

In a response to the letter from the business community, public finance minister Kate Forbes said she echoed concerns that the amendment to devolve control of rates to local authorities would create risk and uncertainty for both ratepayers and local authorities.

“The Non-Domestic Rates (Scotland) Bill was introduced to support growth, improve the administration of the system and increases fairness as envisaged by the Barclay Review of Non-Domestic Rates.

“It is clear from the strength of feeling of Scottish businesses as expressed in your letter that the Bill, as amended by the Conservative, Labour and the Green Parties, does not currently do so.

“I am writing to confirm the Scottish Government’s unequivocal support for the Uniform Business Rate. The Scottish Government shares your collective view that the amendment supported by Opposition MSPs at Stage 2 introduces complexity, risks and potential unpredictability into the rates system. Non-domestic rates play an integrated role in the current wider local government finance arrangements by providing certainty and protection to local government funding whilst also ensuring certainty for ratepayers across Scotland.”