Scottish business rates rise would 'put rocks in retail industry's rucksack'

Business groups have stepped up their calls for the Scottish Government to avoid raising business rates ahead of next year’s budget.

The Scottish Retail Consortium has warned any increase to non-domestic business rates, currently set at just under 50p, would “set alarm bells ringing” across the retail sector as it continues to recover from the Covid-19 pandemic.

However, businesses could be hit by an increase in the poundage to help cover pay offers for next year’s budget. John Swinney, the interim finance secretary, is facing a significantly worse financial picture than the Government had predicted as recently as April. He will set out the Government’s tax plans as part of the Scottish budget on December 15.

Business rates are at their highest level since devolution in 1999 and have risen 18 per cent from 40.7p to its current rate of 49.8p since 2010.

The Scottish Retail Consortium are among those calling for business rates to not rise in April.

David Lonsdale, the SRC’s director, warned a further rise would be “gruelling” for retail shops and limit the possibility of regenerating high streets still reeling from the pandemic.

He said: “A growing cross-section of Scottish commerce and industry is voicing serious doubts about the wisdom of hiking up the business rate next April, something which was ominously mooted in the Scottish Government’s recent spending review.

"The business rate is already at a 23-year high and any uplift next spring would set alarm bells ringing across retail and other sectors with a significant property footprint in Scotland. If the increase matched the current inflation rate, it could add £60-65 million just to retailers’ rates bills alone next April.

"Such a hike would be gruelling for stores to absorb, and make rejuvenating high streets and retail destinations even harder. It would be putting rocks in the retail industry’s rucksack as it seeks to recover and climb out from some of the worst trading conditions seen in decades.”

In submissions to the Scottish Parliament, the Scottish Chambers of Commerce called on the Government to “place a moratorium” on all policy measures, which would increase business costs, deliver “fundamental reform” of the business rates system, and cut the headline poundage rate. The Scottish Council for Development and Industry has also called on the Government to review the planned increase in business rates.

A Scottish Government spokesperson said any final decisions on business rates would be taken as part of the budget process.

They said: “Ministers are in regular dialogue with business leaders, who have made clear the high cost of doing business in the UK is significantly hampering their ability to recover following the pandemic and impacts of Brexit.

“The Scottish Government supports the wider calls from businesses for measures related to energy prices, VAT reduction, staff shortages, handling business loans and tackling inflation. These are desperately needed direct support that only the UK Government has the powers to deliver.

“Decisions on non-domestic rates will be taken as part of the Scottish Government’s forthcoming budget in line with the Framework for Tax 2021 and prevailing economic conditions, as well as the make-up of the tax base.”

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