Scottish firms call on Derek Mackay to revamp business rates

Derek Mackay is being called on to revamp business rates. Picture: Andrew Cowan/Scottish Parliament
Derek Mackay is being called on to revamp business rates. Picture: Andrew Cowan/Scottish Parliament
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Four leading business groups are calling on finance secretary Derek Mackay to revamp business rates otherwise Scottish firms will end up at a multi-million pound competitive disadvantage.

Scottish Engineering, the Scottish Property Federation, the Scottish Retail Consortium and the Scottish Tourism Alliance have made the call ahead of Mr Mackay’s Scottish budget on December 14.

The groups have taken the step following last week’s UK budget which saw Chancellor Philip Hammond say that rates rises in England and Wales are to be based on the Consumer Price Index (CPI) measure of inflation.

Changing business rates indexation from the higher Retail Price Index (RPI) measure of inflation to CPI means that the levy will rise by three per cent in April rather than four per cent.

READ MORE: Scottish private schools face £5m business rate tax hike

Control over business rates are devolved to Holyrood and it they are kept in line with RPI north of the border, Scottish firms will pay approximately £25 million to £30 million more.

Scottish firms operating from medium sized and larger premises already pay more than they would in similar premises in England to the tune of £62 million each year, due to last year’s doubling of the Large Business Rates Supplement from 1.3 p to 2.6 p.

The Barclay Review of Business Rates, commissioned by the Scottish Government, said that failure to go down the CPI route would leave Scottish businesses at a competitive disadvantage.

Bryan Buchan, Chief Executive of Scottish Engineering, said: “Given current concerns over forecasted low economic growth and our relatively poor performance in terms of productivity, the government should be doing all it can to stimulate business. Adoption of CPI as the basis of business rates increase calculations would be of assistance and a helpful step forward to achieving a refreshed rates system that offers a real stimulus to new and growing businesses.”

David Melhuish, Director of the Scottish Property Federation, said: “ By limiting any poundage increase, the government can begin to bring the overall business rate for large Scottish ratepayers back into line with England, as recommended by Barclay, and at the same time also support smaller Scottish ratepayers.”

David Lonsdale, Director of the Scottish Retail Consortium said: “With shop vacancies increasing and one in every ten retail premises now empty, there is a pressing need to keep down the cost of doing business. Scottish Ministers have said they want to pursue the most competitive business rates regime in the UK, and implementing Barclay’s recommendations on tying uplifts in business rates to CPI rather than RPI would help towards achieving that goal of competitiveness.”

Marc Crothall, Chief Executive of the Scottish Tourism Alliance, said: “The Scottish Tourism Alliance fully supports calls for increases in the business rates poundage in Scotland to be linked to the CPI from April, following the Chancellor’s announcement last week that firms south of the border will benefit from the lower level of calculation.”

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