The next item of business is a debate on motion S6M-04162, in the name of Tom Arthur, on the Non-Domestic Rates (Coronavirus) (Scotland) Bill.
15:25
I am pleased to open the stage 1 debate on the Non-Domestic Rates (Coronavirus) (Scotland) Bill, which was introduced in the Scottish Parliament on 14 December 2021.
Non-domestic rates play a key role in balancing the need to deliver a competitive and sustainable tax environment with ensuring that we have sufficient resources to fund public services. The aim of the bill is to deliver fairness to all ratepayers by ensuring that any effects of Covid-19 are considered for all properties at revaluation, rather than through use of “material change of circumstances” provisions. Outside a revaluation, the rateable value or net annual value of a property can be amended—for instance, to reflect material changes of circumstances. A material change of circumstances is typically a physical change to a property, such as an extension or demolition, or it could be a major change in the specific area where the property is located, such as with the tram works in Edinburgh.
Under the Non-Domestic Rates (Scotland) Act 2020, the definition of “material change of circumstances” was amended, with effect from 2 April 2020, to exclude changes in general economic circumstances. That reflected the fact that we are moving to three-yearly revaluation cycles and a one-year tone date, which will allow valuations in the future to be more closely aligned to current market values, thereby removing the need for appeals on the basis of a change in general economic circumstances.
Since the start of the coronavirus pandemic, more than 40,000 appeals on non-domestic properties have been lodged. That abnormal spike at this point in the revaluation cycle indicates that most appeals have been lodged because of the pandemic.
We do not believe that the provisions on material changes of circumstances are appropriate in relation to Covid-19. Any impact on rental values arising from Covid-19 or Covid-19 restrictions is part of general market conditions and therefore should be considered at revaluation, when all relevant impacts on values across all properties will be taken into account. That view is shared by the United Kingdom Government, the Welsh Government and the Northern Ireland Assembly. We announced on 23 June 2021 that we intended to take measures to rule out Covid-19 appeals.
The minister has made it clear that, in the next revaluation, impacts of Covid that might occur in the longer term can be taken into account as part of the general market situation. Will he encourage the assessors—who are, of course, independent—to engage with industry sectors that believe that they have been impacted severely and for a long time by Covid, to make sure that assessors are aware of such serious factors, which are extremely important in arriving at the correct rateable value?
Mr Ewing is absolutely correct to acknowledge the independence of assessors. We all recognise the significant impact that Covid has had, and continues to have, on general and prevailing economic conditions. I have no doubt that all of us, in all our roles and responsibilities across society in Scotland, will take that into account.
The Cabinet Secretary for Finance and Economy, the Minister for Business, Trade, Tourism and Enterprise and I carried out, over summer 2021, an extensive consultation and engagement exercise with all the major business representative bodies. The meetings provided an opportunity to discuss our approach to supporting business during the pandemic and its priorities in the recovery period. The matter of appeals was not raised as a substantial concern.
The bill builds on the Valuation and Rating (Coronavirus) (Scotland) Order 2021, which came into force on 1 December 2021. The order specifies that, in calculating the rateable value of properties in the 2017 valuation roll,
“no account is to be taken of any matter arising on or after 1 April 2021 that is directly or indirectly attributable to”
Covid-19.
Will the minister give way?
I will in one moment. Primary legislation is, however, required in order to go back further and to extend the rule to net annual value, from which rateable values are derived.
Is it not also right that, during that consultation, the specific intentions of the bill were not raised with industry and other stakeholders?
We have had a process of engagement, which we announced on 23 June last year. We also had the order, which went before the Local Government, Housing and Planning Committee and which could only go back as far as April 2021 because it was secondary legislation; primary legislation is required in order to go back further. There was engagement with business, and there was the work that the parliamentary committee undertook.
We also undertook to do a partial business and regulatory impact assessment. Considered work has been done to ensure that business has been engaged and consulted, and the views of business have been taken into account.
We have to make some progress. The bill that is under discussion provides that in calculating the net annual value or rateable value in relation to any property in the 2017 valuation roll,
“no account is to be taken of any matter occurring on or after 2 April 2020 that is (whether directly or indirectly) attributable to coronavirus.”
That date aligns with the date from which the definition of “material change of circumstances” was clarified by the Non-Domestic Rates (Scotland) Act 2020.
The bill does not apply in respect of changes to the physical state of a property or to the question whether a property should or should not be included in the valuation roll—for instance, if someone started working from home as a result of the pandemic—nor does it remove the right of appeal. Rather, it will provide clarity, consistency and fairness to all ratepayers by ensuring that any effects of Covid-19 are considered for all properties at the next revaluation in 2023.
In fact, we intend to delay the disposal deadline for appeals by one year, to 31 December 2023, so that appellants who made a Covid appeal can make an informed decision, once Parliament has finished considering the bill, on whether they wish to pursue or withdraw the appeal.
Although appeals have been submitted for over 40,000 properties, that is less than one fifth of all non-domestic properties in Scotland and, as the Federation of Small Businesses has pointed out previously, not many small businesses are among them. That fact might reflect our generous support package for small businesses, but it likely also reflects the fact that well-resourced and professionally advised property owners and occupiers are more likely to know about the “material change of circumstances” provisions and, therefore, to have appealed. Meanwhile, a number of large and multinational firms that have been largely unaffected by, or have even been successful during, the pandemic have also made appeals against their properties’ valuations.
This is a hugely complex issue, and the outcome of any appeal is uncertain. It cannot be assumed that appeals would be successful. We believe that the right time for market-wide economic changes to be reflected is at revaluation.
We are strengthening revaluations following the independent Barclay review of non-domestic rates, to ensure that they more closely reflect market circumstances. First, we are increasing the frequency of revaluations from every five years to every three years, and we are reducing the time between the tone date and revaluation. Secondly, we have delayed the next revaluation by one year, to 2023, and brought forward the commitment to a one-year tone date, which will be 1 April 2022. Both of those measures have been welcomed by the business community in Scotland.
As we all know, Covid-19 has had a major impact on the economy. We responded swiftly and on an unprecedented scale to support business through the pandemic. Businesses have benefited from over £4.6 billion of support since the start of the pandemic, and that has included around £1.6 billion of Covid-related rates relief. For the past two years, we have provided 100 per cent relief for retail, hospitality, leisure and aviation, with no financial cap. We were the only Government in the UK to do that. We are preventing a cliff-edge return to full liability for businesses in the retail, leisure and hospitality sectors by continuing relief at 50 per cent for the first three months of 2022-23, which is capped at £27,500 per ratepayer.
I am grateful to the convener and members of the Local Government, Housing and Planning Committee for their scrutiny of the bill. I welcome the committee’s support for the general principles of the bill, and I have responded in writing on the various issues that were raised in its report. As the committee recognised, the realities of dealing with Covid-19 were challenging and we had to act, both to mitigate the impact on assessors of large volumes of appeals and to protect the public finances more generally. We acted quickly to support the business community when it needed it most and we have continued to support businesses throughout the pandemic.
I return to my opening comment that the bill seeks to ensure fairness for all Scottish ratepayers while maintaining the integrity of the non-domestic rates system and the stability of public finances.
Therefore, I move,
That the Parliament agrees to the general principles of the Non-Domestic Rates (Coronavirus) (Scotland) Bill.
Members may wish to be aware that there is time in hand for me to give time back for interventions.
15:35
I am pleased to speak in the debate on behalf of the Local Government, Housing and Planning Committee and to follow the minister’s opening speech. I thank him for responding to the points raised in the committee’s stage 1 report and for providing a written response to our conclusions in advance of the debate.
As was noted by the minister, the primary purpose of the bill is to ensure that no account can be taken of any matter that is directly or indirectly attributable to coronavirus when calculating the rateable value of business premises for the period from 2 April 2020 to 1 April 2021. That is, in effect, an extension of changes that were made through the Valuation and Rating (Coronavirus) (Scotland) Order 2021, which applied from 1 April 2021.
Primary legislation is required to give effect to the extension, as the order could not be applied retrospectively. The committee recognises the real risk that, in the absence of these legislative changes, successful appeals would reduce non-domestic rates income and impact adversely on public finances. Although we have no way of knowing what the outcome of such appeals might be, the bill’s financial memorandum provides illustrative examples that show that a 50 per cent reduction in rateable values could reduce council revenues by more than £550 million and that even a 5 per cent reduction would reduce revenues by £56 million.
The committee appreciates that, if it is passed, the bill will protect council revenues. In doing so, it will also protect the Government from the risk of having to reimburse councils for lost income resulting from reduced valuations based on factors arising from the pandemic.
It has been a slightly unusual stage 1 experience, as our scrutiny of the bill has, in essence, repeated our previous scrutiny of the Valuation and Rating (Coronavirus) (Scotland) Order 2021 in the autumn of last year. We gave detailed scrutiny to the order at the time and no new issues of significance arose in our evidence taking on the bill. Nevertheless, I am grateful to the stakeholders who provided written evidence to the committee to assist our scrutiny and to the minister for his oral evidence. I also thank the other members of the committee for the constructive manner in which they approached our scrutiny of the bill.
Turning to the bill itself, the committee recognises that the difficult realities of dealing with the economic impact of Covid have meant that the Government had little option other than to act, both to mitigate the impact of large volumes of appeals on assessors and to protect the public finances more generally. We received comments from some stakeholders about what they saw as a lack of consultation and engagement on the bill. The absence of a business regulatory impact assessment was also highlighted in written evidence. However, we understand that the Scottish Government’s intentions were made clear in June last year and that the Government has engaged widely with the business community on its approach to supporting businesses through the pandemic.
Will the member take an intervention?
I will in a moment.
I thank the minister for confirming that a BRIA had, indeed, been published, but I note that that happened only in late January, more than six weeks after the bill was introduced and towards the end of our consultation period.
I compliment the committee on its two reports, the earlier of which dealt with the order. Is it not true that both reports mentioned concerns about consultation? Does the member think that, between the order and the bill, that issue has been satisfactorily addressed?
Yes, speaking for myself and on behalf of the committee, we think that that has been sufficiently addressed.
During our scrutiny of the bill, we also considered the Government’s approach to taxation based on Adam Smith’s four principles of taxation. In addition to the principle of engagement, which I have already touched on, we were particularly interested in the principle of certainty.
In “The Wealth of Nations”, the Kirkcaldy-born philosopher who came to be known as the father of modern economics wrote:
“The tax which each individual is bound to pay ought to be certain, and not arbitrary. The time of payment, the manner of payment, the quantity to be paid, ought to all be clear and plain to the contributor, and to every other person.”
The fact that the bill makes retrospective changes to tax policy by removing the rights of ratepayers to challenge their rateable value due to a material change of circumstances caused by public health emergency measures appears to go against that principle. Indeed, stakeholders—including the Scottish Chambers of Commerce and the Scottish Property Federation—highlighted their strong opposition to the change in their written evidence to the committee. The Chambers of Commerce, for example, described it as being
“completely at odds with key principles of certainty and fairness in a modern taxation system.”
The committee is clear that we would not want to see this policy decision as setting any kind of precedent in terms of retrospective changes, and we welcome the minister’s assurances that the principles of certainty and engagement would underpin future non-domestic rates policy. However, we also recognise that the challenging realities of dealing with Covid-19 left the Government with little option other than to act.
We also welcome the decision to respond to what the minister described as stakeholders’ “key ask” in avoiding a “cliff edge” on 31 March by maintaining 50 per cent relief for the retail, leisure and hospitality sectors for a further three months. However, we are mindful that that relief benefits only certain sectors of the economy.
We also heard from the minister that around £4.5 billion was provided in support to businesses during the pandemic, which we very much welcome.
On the workload of assessors, we note that more than 40,000 material change of circumstances appeals have been lodged since the start of the pandemic. We welcome the Scottish Government’s proposal to extend the disposal deadline from 31 December 2022 to 31 December 2023 and look forward to considering the relevant secondary legislation in the coming weeks. However, we remain concerned about the potential volume of work that assessors may face during the coming years. Although we appreciate that it is not for the Government to direct assessors on how they manage their workload, we would welcome updates on the numbers of appeals withdrawn and the overall volumes of material change of circumstance appeals that assessors have to dispose of. I thank the minister for confirming that his officials will explore with the Scottish Assessors Association how best that information can be provided.
I will draw my remarks to a close by confirming that the committee recommends that Parliament support the general principles of the bill. I look forward to hearing other members’ contributions to the debate and to further considering the bill at stage 2 in the coming weeks.
15:43
I thank the organisations that have contributed to the work of the Local Government, Housing and Planning Committee. I also thank the committee clerks—they are sitting right beside you, Presiding Officer—for the work that they put in to help us with the bill.
As we emerge from the pandemic and the focus, rightly, shifts to economic recovery, it is important that we look to create the most supportive and dynamic business environment. We are all acutely aware of the significant impact that the pandemic has had on businesses, local government and the workload of assessors, and the significant and unsustainable backlog that has built up.
During the pandemic, there have been 49,400 non-domestic rates appeals; in comparison, pre-pandemic, only 5,774 appeals were lodged.
The Scottish Conservatives accept one of the main principles behind the bill, which is
“to extend this rule to cover both net annual value and rateable value and to cover the period back to 2 April 2020, the date on which the Scottish Government amended the definition of ‘material change of circumstances’ to exclude changes in economic circumstances.”
The bill is a sensible measure to update Scotland’s non-domestic rates and appeals system. As we have heard, that has taken place in England and Wales to help mitigate the impact of the pandemic.
The Local Government, Housing and Planning Committee agreed that, because of the level of scrutiny that had already taken place on the order, an extensive programme of evidence taking was not necessary.
We heard a number of views from stakeholders throughout the period, and it is clear that there is a need to look at improving the appeals system in Scotland, which I hope that the minister has taken on board. He has given an assurance that the bill will not remove the right of appeal, and he has confirmed that the Scottish Government intends to
“introduce legislation to extend the disposal deadline by a further year beyond 31 December 2022.”—[Official Report, Local Government, Housing and Planning Committee, 15 March 2022; c 4.]
The committee highlighted the absence of a BRIA. It was unusual for no BRIA to accompany the bill, and that is a departure from the Scottish Government’s guidance. As the convener stated, we said in our report that we would welcome assurances from the Scottish Government, which we have now received, that that does not set a precedent for future bills that are introduced to the Parliament.
The UK and Scottish Governments have provided significant support to Scottish businesses throughout the pandemic. The UK Government provided 100 per cent rates relief for all eligible retail, hospitality and leisure properties, which was extended by the Scottish Government. That relief was worth around £10 billion in 2020-21. The Government announced that it would extend the scheme for the first three months of 2021-22 at 100 per cent, followed by a nine-month period of relief at 66 per cent, subject to a cash cap for businesses. Taken together, those support measures for business rates relief have been worth £16 billion for retail, hospitality and leisure properties.
During the committee’s consideration of the bill, I put on record my concerns around the administration of support schemes in some cases and that the schemes have not been transparent. Businesses have reported to MSPs the various winners and losers in accessing the schemes, which the minister has acknowledged. Although every Government was driving hard to get money out to support businesses, we should pause as part of this work and look at how schemes were administered by different local authorities.
Moving forward, it is important to look at how the Scottish Government intends to target additional resources that result from UK Government measures to support businesses, especially when it comes to those that are most in need of support and, in particular, small and medium-sized enterprises.
I turn to the important issue of support for businesses. Scottish National Party ministers offered rates relief of 50 per cent for retail, hospitality and leisure businesses for three months only, and capped that at £27,500. Scottish Conservatives have called for 75 per cent relief for those sectors, and I hope that ministers will take that on board and look at what additional support can be provided to those key sectors of our economy. Scottish retailers have called for ministers to permanently lower business rates in Scotland. Firms from the retail, hospitality and leisure sectors were fully exempt from non-domestic rates during the pandemic until 31 March.
I agree with the point that Fergus Ewing made. We must consider how we can support businesses and ensure that any changes are as straightforward as possible, so that businesses understand any new business rates environment that might emerge in future financial years.
Today’s debate is a welcome opportunity to look to the future. Recovery from the pandemic and driving economic growth must be key priorities for not only the Scottish Government but local authorities. With the council elections less than a week away, it is clear that local councils face significant financial pressures, which will only increase in the coming years.
Our town centres and high streets took a major hit during the pandemic. Local businesses that thrived before Covid have closed or are struggling to pay their bills. Many shops, restaurants, pubs and hotels have still not recovered to pre-pandemic levels of business.
During the pandemic, local councils played a major role in supporting businesses by distributing essential grant funding to them. It is important that, as we continue to recover from the pandemic, local councils remain a key player in driving local growth. They must continue to have the flexibility to support businesses that fall between the cracks of national schemes and to support local partnerships in the rebuilding of local economies across the country.
It is still not clear how consumer habits have shifted because of Covid. There has been a move by many retail outlets towards online shopping and deliveries of goods and food. It is clear that we need more support for businesses to rebuild their customer base and to encourage footfall in our town centres.
The UK and Scottish Governments and our councils need to respond to the short-term and long-term changes in consumer habits. They also need to look towards how they can support any challenges that such changes present, so that businesses that want to continue to have an online presence can get additional support to manage that and set up the necessary information technology projects and teams.
Scottish Conservatives want the Scottish Government to keep business rates relief in place for the coming financial year and to consider introducing longer-term discount schemes for businesses, especially, as I have highlighted, those in traditional town centres and high streets, which have faced such huge pressures. Business Gateway services are essential for business start-ups and scale-ups, which is why Scottish Conservatives have called for and support the further development of the Business Gateway.
Scottish Conservatives will support the bill to update Scotland’s non-domestic rates legislation. We also support the committee’s recommendations. The legislation is similar to what has been put in place in England and Wales, and it is the most straightforward way of sustaining an already overwhelmed appeals system.
I hope that today’s debate gives us the opportunity to put on the record a number of concerns about further support for assessors and some of the other points that were put to the committee during stage 1. I hope that the Scottish Government will address those concerns and that we make sure that businesses across Scotland are now given all the support that they need to come back from what has been an awful time during the pandemic.
15:51
I am grateful for the opportunity to open the debate on behalf of Scottish Labour. If it is passed, the bill will ensure that the impact of Covid-19 between 2 April 2020 and 1 April 2021 cannot be used while determining the rateable value of non-domestic property unless it resulted in a physical change to the state of the property. Labour supports the bill.
As the minister said, the bill does the same thing for the period between April 2020 and April 2021 as the Valuation and Rating (Coronavirus) (Scotland) Order 2021 does for the period from 1 April 2021 onwards. Labour supported that order at committee and, therefore, Labour also supports the general principles of the bill. It seems to be the most sensible way of proceeding, given the level of appeals that have been made.
With that said, it is always important to look at the concerns that stakeholders have raised about the bill and the order. A number of concerns were raised about lack of consultation on the original order. It is essential that the Government makes it clear that that omission does not set a precedent for future legislation.
It was also noted that there are fears that the policy decision sets a precedent for retrospective changes to tax policy. Again, it is therefore important that we have clarity. The Government has assured the Parliament that the principles of certainty and engagement will underpin future non-domestic rates policy, and Labour will hold the Government to that commitment.
More concerning than all of that should be the state of our high streets. As other members have said, before the pandemic, we would only need to walk into our local town centres to see the problems—a lack of diversity of business, high vacancy rates and a lack of footfall, leading to what many reported as the death of the high street.
With almost 20,000 small businesses being lost during a single year of the pandemic, it is critical that we look at what we can do to support the rebirth of our high streets. At the heart of that must be support for businesses that are coming out of the pandemic. Part of it must be a review of non-domestic rates and the approach to the calculation more generally.
As the subject has been raised on many occasions, I revisited the last time that I spoke on it, which was in 2019, and I am concerned that the problems that I raised three years ago remain. The revaluation process remains too complex and difficult for the majority to understand, and the Government has still not addressed the workload pressures for assessors, which, by the start of the pandemic, had led to a perfect storm. I said at the time that it was ridiculous, and it remains ridiculous, that a business would struggle to understand the revaluation process. The process should and, indeed, must be totally transparent to all businesses.
When businesses do not understand the process, is it any wonder that 40,000 properties lodged an appeal in relation to the impact of the pandemic between January 2020 and March 2021? Would we expect the same number of appeals if business owners understood the revaluation process and felt that they were being treated fairly and being engaged in the process? Does the situation not indicate that there is a need for more support for businesses as we come out of the pandemic?
By clearing up confusion about the revaluation process and providing further targeted support for the businesses that have been worst hit by the pandemic, we could reduce the workload pressure on assessors by simply removing the requirement for businesses to appeal in the first place.
Scottish Labour is calling for retail, hospitality and leisure properties in Scotland to receive the same 50 per cent rates relief as is being offered in England this year, so that they are given equal support on the road to recovery. That is one small step that the Scottish Government could take today to support the bounce-back of the high street. Is the Scottish Government ready to do what is required?
Businesses out there are keen to recover. Small and medium-sized enterprises account for the highest share of employment in Scotland, so it is important that we all do what we can to support the growth of SMEs across Scotland.
We move to the open debate. I advise members that, as we have quite a bit of time in hand, I can be very generous.
15:57
As a member of the Local Government, Housing and Planning Committee, I am delighted to contribute to the debate.
When the Minister for Public Finance, Planning and Community Wealth gave evidence to the committee, he explained that the aim of the bill is
“to ensure fairness for all Scottish ratepayers while maintaining the integrity of the non-domestic rates system and the stability of Scottish public finances.”
He also said that the bill provides ratepayers with “clarity and consistency” on the policy around material change of circumstances appeals. He explained:
“Typically, the term ‘material change of circumstances’ has been used to reflect either physical changes to a property, such as an extension or demolition, or certain major changes in a specific area, such as the tram works in Edinburgh. The intention of the change in definition”—
which was introduced by the Non-Domestic Rates (Scotland) Act 2020—
“was to reflect recent case law and the move to a three-year revaluation cycle by restricting the circumstances in which general economic factors can be regarded as being relevant to a change in valuation.”
With more than 40,000 MCC appeals having been lodged since the start of the pandemic, the Scottish Government’s view was that economic changes to rateable values that had resulted from Covid-19 should be considered at revaluation rather than under the MCC provisions, at which point the impact across all properties would be taken into account. It is key to note that that view was shared by Administrations across the UK.
The minister also made it clear that the bill would not remove the right of appeal and that it would be for appellants to decide whether they wanted to pursue or to withdraw their Covid appeals. Given that such appellants might not feel that they will be in a sufficiently informed position to take such a decision until Parliament has finished its scrutiny of the bill, the minister confirmed that the Scottish Government intended
“shortly to introduce legislation to extend the disposal deadline by a further year beyond 31 December 2022.”—[Official Report, Local Government, Housing and Planning Committee, 15 March 2022; c 5, 2-3, 4.]
The committee welcomed the Scottish Government’s intention to extend the disposal deadline from 31 December 2022 to 31 December 2023, and it looks forward to considering the relevant legislation in due course.
The bill has three guiding principles. It provides clarity and consistency, and underlines the fact that the economic shock of the Covid-19 pandemic on the business community will best be addressed by Scotland’s new three-year business rates revaluation roll. The approach that is taken in the bill ensures the fairest route forward for all ratepayers.
The bill will also protect the revenues of local authorities, thereby avoiding putting unnecessary pressure on public services. At this point, I should declare that I will remain a serving councillor for one more week.
It is also worth highlighting that, since the start of the pandemic, co-ordinated Scottish Government support for business has reached more than £4.5 billion. As we know, Covid-19 had a major impact on the economy. The Scottish Government responded swiftly, and on an unprecedented basis, to support businesses through the pandemic. It introduced 100 per cent retail, hospitality, leisure and aviation relief for 2021-22 and continued relief at 50 per cent for the first quarter of 2022-23 for the retail, leisure and hospitality sectors.
The minister also explained that, following the Barclay review of non-domestic rates, the Scottish Government had strengthened revaluations to ensure that they would more closely reflect market circumstances by increasing the frequency of revaluations from five-yearly to three-yearly and reducing the time between the tone date and the revaluation. As the minister said, the next revaluation has been delayed by one year to 2023 and the Scottish Government has brought forward its commitment to the introduction of a one-year tone date to 1 April 2022. Both measures have been universally welcomed by Scotland’s business community.
It is important to note that the ruling out of coronavirus considerations does not apply to changes to the physical state of a property.
The bill gives businesses and local authorities clarity and consistency for the next few years. Challenges remain as we recover from the pandemic and deal with the cost of living crisis. Our high streets are at the heart of our communities, and I know that the minister is working closely with businesses, with the retail strategy being one example of that. We all have a duty to work closely with our business communities in the next few years.
Please support the bill.
16:01
Probably for the last time, I remind members of my entry in the register of interests, which shows that I am a councillor on Aberdeen City Council. It has been a huge honour to serve as a councillor for my home town, where I was also lucky enough to be co-leader of the council. I pay tribute to all the staff at Aberdeen City Council, which was the UK council of the year in 2020.
Over the past five years of my being a councillor, the issue of non-domestic rates has been one of the biggest that the north-east has faced. I have spent much time on the topic, meeting local businesses and trying to understand the issues that they face. I will say more about that later.
The Conservatives welcome the bill as a sensible measure to update Scotland’s non-domestic rates and appeals, as England and Wales have already done. However, what we are supporting is a very small sticking plaster for a system that is fundamentally broken.
The bill that we support today will not help the thousands of businesses in the north-east that have been failed by the business rates system. In 2017, businesses in the north-east faced huge increases in their rates bills when the valuation was assessed at the peak of oil and gas activity, only for new bills to arrive just as the sector faced one of its biggest slumps, which also impacted on the area.
We now have a crazy situation in which the non-domestic rates income from businesses in Aberdeen is more than that from businesses in Edinburgh, which is staggering when we consider that Edinburgh is much larger and has a far bigger population than Aberdeen has.
Back in 2017, after a huge outcry, the then finance minister Derek Mackay had to announce a £40 million package of rates relief for the office and hospitality sectors in Aberdeen and Aberdeenshire to mitigate extortionate rises of sometimes up to 400 per cent in non-domestic rates. Although it was welcome, that rates relief package helped only certain sectors and still burdened them with increases of at least 14 per cent each year.
Amazingly, businesses were told by the courts that no material change of circumstance had taken place and businesses in the north-east were told by the Scottish Government that they would have to wait for the revaluation to take place to fix the discrepancy. Along with Aberdeen and Grampian Chamber of Commerce, I campaigned for the revaluation date to be brought forward, but those calls fell on deaf ears in Government. Businesses were then dealt another slap in the face when the revaluation date was delayed.
This bill means that businesses that made improvements to mitigate the effects of Covid will not be penalised for those. However, the fact that we need the bill shows one of the biggest flaws in the non-domestic rates system, which David Lonsdale of the Scottish Retail Consortium highlighted at yesterday’s meeting of the Economy and Fair Work Committee: businesses are penalised for investing in and upgrading their premises. We are now in a position in which a business may be struggling and its owners may want to invest to protect the business but know that the stakes and risks will be higher. That must be a near impossible position for many businesses.
Something needs to change. The rates system that we have at present is killing our high streets. Just today, we have seen an article in The Press and Journal that tells how a local businesswoman, Julie Hulcup, opened a hair and beauty salon on Aberdeen’s Union Street. It explains that she overcame obstacle after obstacle over the past two years but her rates bill proved to be the final straw. Faced with a tax bill of over £1,900 per month, she has thrown in the towel, and she fears that more businesses could soon go the same way. We need such local independent businesses on our high streets, but the Scottish Government has failed them.
The rates system is killing our high streets. It is driving businesses away and stifling investment. There is a downward spiral that has been accelerated by Covid, and this devolved Government needs to take its head out of the sand and act quickly.
I am grateful to Mr Lumsden for giving way. I ask this question in a spirit of genuine engagement. He raises and articulates his concerns and those of his constituents about the non-domestic rates system. He will be aware that we had the independent Barclay review several years ago and that the UK Government recently published a fundamental review of the business rates system for England. That ultimately articulated measures that we have already started to implement in Scotland, such as a move to three-year valuation and a relief similar to our business growth accelerator. However, that review recognised that a tax on commercial property is a fundamental part of a balanced business tax system.
The member has articulated a range of concerns. I am genuinely interested in hearing his views on reform. Are there particular measures that he would like to be implemented? Does he believe that there should continue to be a property-based tax? Does he believe that there needs to be an alternative means of taxation? What are his views? Does he believe that the system should continue to exist as it is but that there should be a different set of reliefs?
I am taking advantage of the time in hand, Presiding Officer, but I am very keen to hear the member’s views on how the system should be reformed.
Before I call Mr Lumsden, I note that I have been generous because I indicated that we have a bit of time in hand. That is the only reason.
Absolutely, Presiding Officer.
It is good that the minister mentioned the Barclay review. That is one of the areas that I have spoken to businesses about quite a lot over the past five years, and those businesses felt that the remit of the Barclay review was too tight. It was only about tinkering around the edges. It would have been better if there had been a review that was more wide ranging than Barclay was allowed to be. Such a review could have engaged with businesses and brought out better ideas on how we could have a fit-for-purpose system that will help to improve our high streets.
The Government must not just cross its fingers and hope for the best. That will not work. Urgent action needs to be taken now, before more retail businesses go to the wall. The Covid business rates support packages were, of course, welcome, but they delayed and masked the issues that we now face.
We welcome the bill as a first small step, but more needs to be done. The Scottish Government has the powers; it now needs to stop sitting on its hands and use them.
16:08
I remind members of my entry in the register of members’ interests. I will continue to be a serving councillor in South Lanarkshire for the next week.
The Non-Domestic Rates (Coronavirus) (Scotland) Bill will ensure fairness for all Scottish ratepayers while maintaining the integrity of the non-domestic rates system and the stability of the Scottish public finances. In considering the bill, there are some key points that we must note about the non-domestic rates landscape. First, the purpose of the bill is something that has been supported by the Scottish Assessors Association, and it will be implemented in England by the Conservative Government and in Wales by Labour.
Secondly, we must consider the bill alongside the Scottish Government’s wider support for businesses and other organisations that are liable for non-domestic rates. Under the SNP, Scotland has the lowest business rates poundage in the UK. Furthermore, the SNP Government’s continuation of the small business bonus scheme over the current session of Parliament will ensure that 100,000 business properties in Scotland pay no rates.
On top of that, when Covid struck, the Scottish Government froze poundage rates, in effect, and implemented 100 per cent rates relief for the retail, hospitality and leisure sectors. For the first quarter of the new financial year, the Scottish Government has introduced a 50 per cent relief for those sectors. I am sure that that will be a welcome buffer as we look forward to what I hope are better months and years ahead.
As well as reliefs, the revaluation of premises in a timely manner is important for businesses and local authorities. The Scottish Government has already implemented shorter revaluation cycles. It is important that the impact of the current economic climate on rateable values across all properties will be taken into account during the upcoming revaluation period. Ratepayers will continue to have the right to appeal decisions by valuation boards and to request reviews following changes to premises.
Over the pandemic, co-ordinated Scottish Government support for businesses has totalled £4.5 billion.
For local authorities, non-domestic rates, alongside council tax, are an important revenue-raising tool. However, it is also important that there are opportunities to tailor business rates according to local circumstances. That includes discretionary relief powers for the third sector and sports organisations. Furthermore, the Community Empowerment (Scotland) Act 2015 gave councils a new power to create and fund their own localised business rates relief schemes, in addition to existing national schemes.
I welcome the ability for councils to have rates reduction schemes but, given that councils have so little money, it is difficult for them to do anything with that. Does the member agree that it would probably be more beneficial to allow councils to have more flexibility when it comes to business rates, so that they may raise more money and can make their reduction schemes more effective?
The current discretionary powers of local government are not being fully utilised. I would like to see more of that and more talks with the Convention of Scottish Local Authorities. The relief schemes allow councils to better reflect local needs and to support communities.
Another useful tool is the business rates incentivisation scheme, which encourages councils to grow their local business tax base and maximise income. That scheme was suspended during the pandemic, but its reintroduction could perhaps help to support economic recovery as we move forward.
In conclusion, the bill is necessary in order to support public finances. As I have mentioned, it is just one part of the wider non-domestic rates landscape in Scotland. Under the SNP, Scotland benefits both from the lowest business rates poundage in the UK and from the most generous relief schemes. Given the consensus from Governments across the UK that the policy is necessary, I hope that the general principles of the bill will be agreed today. I support the motion.
16:13
The topic of business rates is arcane, esoteric and drier than the Saharan sands—and it attracts certain anoraks, not excluding myself, to contribute to debates, as I am doing today.
Nonetheless, it is hugely important to business and to the Government. That struck me many years ago—in 2008, I think—when we introduced the small business bonus scheme. I was visiting a lady hotelier in Kingussie, who asked what it would mean for her. I told her to get her rates bill so that I could calculate what she would save. She brought the bill to me. I looked at it, did some calculations—I hope that I got them right—and said, “You are going to save several thousand pounds.” She looked at me and said—the only time that it has ever happened in rather a long political career—“Mr Ewing, I love you.” I enjoyed that moment. [Laughter.]
To be serious, I will make a few brief reflections and one plea to the minister. The reflections are as follows. Are the forecasts of future total non-domestic rates revenue somewhat optimistic? They went down to £2 billion last year, they are £2.8 billion this year, and they are going up to £3.2 billion, £3.1 billion and £3.2 billion. When retail is suffering, online business is growing and offices are not being used for much, I wonder whether we can make such optimistic forecasts. If we get the figures wrong, ordinary individuals will have to pay through their taxation.
I also wonder whether the assessors will be able to perform the work within the time limit in the three-year cycle of revaluation and whether it might be sensible to discourage frivolous appeals. When I was in business, I made several of those because I thought that I would just chance my arm and see whether I could get some money off, as all businesses do. Cost recovery is the normal principle. A small fee of £50 or something like that would discourage completely frivolous applications, which simply clutter up the system.
I come to the main point that I want to make. I want to make a plea. True to my anorakish tendencies, I have waded through the bill and the explanatory memorandum, and I have studied the evidence session in which Marc Crothall, Paul Togneri, Leon Thompson and others gave evidence. It is well worth considering seriously the import of what they say with regard to the next revaluation.
Every revaluation brings major change. The last one hit the small hydro sector hard. There were absolutely stratospheric increases, and we have had to bring in relief to 2032 to counteract that. The system is not really supposed to work like that.
The key issue is that Covid has had short-term impacts—we have discussed that today—but it will also have serious longer-term impacts. For example, I know from many hours of discussion with many people in tourism, including Marc Crothall and Leon Thompson, and especially with people in inward-bound tourism—people coming to Scotland from other countries—that that sector, which includes tour operators, airports and visitor attractions, such as the whisky centre, which is a brilliant attraction but is entirely dependent on foreign visitors for a very large proportion of its customers, is finding that they are thinner on the ground. Is it not the case that there has been a long-term change in patterns, so that fewer people may have foreign holidays both from here and inbound from other countries? That is probably the case.
When Paul Togneri gave evidence to the committee, he argued with force that the way of calculating rates for licensed premises is particularly harsh. The point was also made that the total cumulo increase in debt in coronavirus business interruption loan scheme loans and coronavirus large business interruption scheme loans—CBILs and CLBILs—and bounce-back loans was £4 billion across the whole business world. If the debt of Scottish business as a whole has increased by that amount because of Covid, that will, of course, have long-term consequences, as money that is borrowed has to be paid back.
I will conclude, Presiding Officer, because, obviously, I do not want to get into bother with your good self.
My plea to the minister is that, although the assessors are entirely independent—and rightly so—that does not mean that they cannot engage with and listen to business. Will the minister encourage them to do so, particularly with regard to those sectors that feel that they have a strong case to say that Covid has not, sadly, just delivered short-term pain but caused them very serious structural and systemic difficulties that surely must be taken into consideration at the next revaluation?
16:18
It is a pleasure to follow Fergus Ewing—although I hope that it is not quite the same pleasure that his constituent had. His speech was powerful, and it raised some important issues to be addressed—not just today, but going forward—about how our business structure has changed as a result of Covid. Many members across the chamber will have heard exactly the same cries from various areas of business about the challenges that they face.
It is a pleasure to contribute to this stage 1 debate. I echo Alex Rowley’s comment that the Labour Party will support the bill at this stage. However, it is a missed opportunity. Scottish Labour believes that the Government could do much more to support our towns and high streets through Scotland’s local tax system. We lost almost 20,000 small businesses during a single year of Covid, and many more are likely to follow if the SNP fails to support small business adequately in the recovery.
The bill deals with the specific problems and challenges that businesses face on our villages’ and towns’ high streets and, indeed, in the cities. The economic climate and the Government have, between March 2020 and March 2021, overseen a reduction by 19,805 in the number of businesses in Scotland—a drop of 5.4 per cent. There is the lowest number of enterprises in Scotland since 2014. Our business enterprises have been stretched to breaking point by the crisis, so renewed help is urgently required from the Scottish Government.
I will take the opportunity to hint at some of the procedural failings in the bill—not simply to highlight them, but to make the plea that, when we go on to restructure non-domestic rates, we include in the process people who understand. We should include industries that have reflected the changes and experts who have lived experience, who can help to guide and create a system that will work.
I am grateful to the convener for taking my intervention on the committee’s reports, both of which are excellent. In its report on the 2021 order, the committee expressed concerns about stakeholder engagement and a lack of consultation. Stakeholders again raised concerns about that with the bill, especially in relation to the business and regulatory impact assessment. It has now been published—a few days ago—but it was published late and it sits at the core of our consideration. Those documents should feed into decision making by committees and members in the chamber about whether they want to support a bill at stage 1.
When he was before the committee, the minister said:
“I am confident that there has been sufficient opportunity for engagement and consultation in the extensive process that I have outlined. The process has allowed issues to be aired and considered, and business has had the opportunity to feed into it.”
He went on to say that, in his experience, throughout the
“extensive engagement with the business community … the issue … was not raised to any meaningful extent.”—[Official Report, Local Government, Housing and Planning Committee, 15 March 2022; c 7.]
I welcome the letter from the Government dated 26 April, which, in a paragraph headed “Consultation and Engagement”, simply talks about the failure to publish the business and regulatory impact assessment. There is no real explanation for the lack of engagement when the bill was introduced or about the specific points that were raised. That concerns me. Industry and stakeholders have expressed concern about the level of input that they had. Their input will be crucial to how we redesign the system. They are the experts and we should listen to them.
The committee now accepts the level of consultation. It is right that I draw attention to that, because I was going to criticise it. However, I ask the minister whether he can provide assurance about the level of consultation. I also ask him for an assurance about retrospective alteration in tax procedures. I know that that has been given in writing, but I would be grateful if he could put it on the record.
16:23
I really enjoy speeches by my friend and colleague Fergus Ewing. He can certainly brighten up a dull day. He should be selling a course of 10 speeches. Many members would learn a lot if they came here to listen to him.
I recall other colleagues’ speeches. I always came to the chamber to listen to David McLetchie’s speeches because they were excellent. I also used to come to listen to Tom McCabe from Labour, who used to sit up the back. Their speeches were wonderful.
This is a fairly short debate in which the speeches are probably longer than the bill. However it is important and it is worth emphasising that, as some members have described, the purpose of the bill is to ensure fairness for all non-domestic ratepayers in Scotland and to maintain some stability in the public finances.
The bill ensures that the effects of Covid cannot be used as a material change of circumstances to lodge an appeal. As other members said, that has happened in Wales, Northern Ireland and England. That MCC route can still be deployed, of course, but only when physical changes are made to a property or major changes occur in an area.
At the outset of the committee’s consideration of the bill, we heard about the potential for a huge number of Covid-related appeals, which, if they were permitted, would put serious pressure on assessors’ ability to get through the workload. If such appeals were successful, they could significantly reduce public finances for our local services. The Minister for Public Finance, Planning and Community Wealth addressed that and said in his response letter to the committee’s report that he has extended the disposal deadline for all the permitted appeals, which is to be welcomed.
We heard from the Federation of Small Businesses that there are not many smaller businesses among the appellants, while larger multinationals that perhaps enhanced their profitability during Covid could have been in for an unwarranted windfall if they had been successful in their appeals. The committee agreed that the Scottish Government’s proposal, in line with other jurisdictions that have been mentioned, was the right and, probably, the only approach to take.
Some of the issues that cropped up during the committee’s deliberations focused on consultation and engagement, which have been mentioned by a couple of members today. Some respondents said that the proposals were not sufficient. The minister was pressed on that at committee; he explained then, as he did in his opening remarks today, that he had intimated his intentions as early as June 2021 and that extensive consultations had, in fact, taken place. I think that it is fair to say that, on balance, the committee accepted that explanation from the minister.
As I recall, the other main consideration was whether the BRIA that has been mentioned by a couple of members should have accompanied the bill. The committee noted that that was a departure from the norm. In his response to the committee’s report, the minister reminded us that
“A Business and Regulatory Impact Assessment (BRIA) was published on the Scottish Government website”.
The Government might have made that a bit clearer, however, and it could have drawn the committee’s attention to it. That remark was welcome.
As the committee’s convener made clear in her speech, it is an unusual step to take to change tax policy retrospectively by removing rights of appeal in certain circumstances. However, the committee agreed that, on balance, there was not really any other option open to the Scottish Government to enable it to deal with the issues that have been thrown up by the pandemic.
As we know, non-domestic rates relief has been a feature of the Scottish Government’s approach to taxation, and it has taken more than 100,000 small businesses out of the rates system altogether, which has been described as “a lifeline” by the Federation of Small Businesses. Retail, hospitality and leisure businesses have been given 50 per cent relief for a further three months into 2023, which follows on from the full 100 per cent relief that they have had over the past two years.
An interesting but important aside, which was noted and is hidden away in paragraph 65 of the committee’s report, recalls the announcement that was made by the UK Government, the day after this Parliament went into recess in March 2021 for the Scottish Parliament election, that £1.5 billion was to be made available for business support, and that Scotland’s consequential share of that would be £145 million. As the minister will recall, I continually sought confirmation of whether Scotland had received that support. In the most recent committee meeting, the minister made it clear that, in his opinion, that cash has now been received. That is very welcome, even if it was more than a year late in coming.
Our committee recognised that the Scottish Government has had to act rapidly to get help out to businesses and to mitigate the potential significant and serious impact of tens of thousands of appeals.
With that, I am content to recommend that Parliament support the general principles of the bill.
We move to the closing speeches. I call Alex Rowley to wind up on behalf of Scottish Labour.
16:28
There is broad agreement across the chamber that it is necessary to take the steps that are being taken today. However, there is also broad agreement around a few issues. When the minister was speaking, Fergus Ewing asked him about encouraging assessors to engage with businesses. I am not sure that the minister answered that, but my experience before Covid was that many businesses found it difficult to understand how assessors had reached the conclusions that they had reached. When they tried to engage with them, they were quick to point out that they are independent. However, being independent does not mean that assessors should not be engaging with businesses or that they should not be having discussions with businesses, and businesses should be able to understand why they are being asked to pay the sums that they are being asked for. That is a clear message when it comes to looking forward.
The minister asked somebody what steps they would take to address the replacement or to make the system fairer. I would say to the minister that the first step must be to ensure that the system is transparent. Businesses have to understand why they are being asked to pay what they are being asked for.
That raises the wider issue of business support. Over many years, local authorities have been cutting back local economic development services and local business services. Douglas Lumsden said that the bill would be like putting a sticking plaster on a broken system. Part of the process has to be to look at what support businesses need. We all accept that the pandemic has had an impact on businesses, and Miles Briggs made that point. It has been a dreadful time. At this stage, we certainly could not say with confidence that pre-pandemic levels of business will resume. Many people’s lifestyles—the way that they shop and so on—have changed. We do not know what the final impact of the pandemic will be, particularly on our high streets. Local authorities are ill equipped to put in place the levels of support that need to be in place.
There could be a wider strategic review that looks at working with business, particularly high streets. A few years ago, the then finance secretary, Derek Mackay, made a big thing of announcing, at the last minute, £50 million of investment for high streets in his budget, which got a lot of positive press. At the time, my response was, “How much more street furniture and cobbles can we actually make to make places look better?” I do not know whether David Torrance is in the chamber, but my classic example of that would be Kirkcaldy High Street. There has been masses of investment there by Fife Council, looking at the street furniture and pavements, but the fact is that the shops still sit empty. The John Smith business park, which is expanding, is up the road. There is masses of free parking and there has been huge investment there. The footfall is massive. At Christmas and at other busy times, we cannot get near it. There is the comparison. That is because decisions were made on a planning policy level—I am referring to a previous planning policy—that have resulted in the high street being killed. I have talked to the minister about this and he is keen to look at how we move forward. If the Parliament is going to have the discussion, instead of simply throwing money at high streets, let us have a wider discussion with businesses and local authority partners about how we revive town centres. Otherwise, I fear that we will throw more money after more money and end up with the same result.
Business Gateway services and economic development services should be strengthened at a local level. We should have local and regional economic development strategies across Scotland that link skills and opportunities and work with businesses. We really need to have a fresh approach if we are going to create the businesses of the future and invest in them. If we do not, we will not grow our economy—it is as simple as that. The priorities must move forward. Fergus Ewing mentioned the structural difficulties that are in place at the moment.
Presiding Officer, I have reached my five minutes. I am sure that there will be consensus. We will support the bill.
16:33
Mr Ewing is on fine form in the chamber these days, which must be because he is free of his ministerial shackles. He entertains us on a regular basis. He made an important point that the debate is for anoraks but it is nonetheless an important one. He is absolutely spot on. One could easily argue about the complexities and the difficulties of the debate, but it really matters, especially if we are going to help businesses get back on their feet and recover from what many inside the community say has been the most difficult period in their history. It is wholly understandable that Covid-19 has created numerous concerns for businesses, not least because of the effect of the virus and the accompanying restrictions on the ways that they have had to reorganise themselves.
Of course, that has had huge implications for the rateable value of many properties. In turn, it is not at all surprising that there have been a large number of material change in circumstance appeals lodged on the grounds of, for example, social distancing measures, increased home and hybrid working, or, in many cases, the requirement to actually close down businesses altogether, which has sometimes been temporary but sometimes has not. All of those have had huge implications for property valuations, and we have to be cognisant of the fact that that is very serious for a range of businesses.
When he was speaking on behalf of the Conservatives at the start of the debate, Miles Briggs made the point that the number of appeals related to the pandemic is just under 50,000, which is obviously a huge increase in comparison to 2018-19, when, if my memory is correct, the total was something around the 5,700 mark. That is a huge difference, and the Scottish Government—quite rightly, in my opinion—concluded that the majority of those appeals relate specifically to the implications of the Covid pandemic. We are keen to support the Scottish Government on that basis.
The just under 50,000 properties that are the subject of appeals have a combined rateable value of £3,929 million, which corresponds to an estimated total of £1,117 million in net rates income in 2021, so we are obviously not talking about low levels of money. That is why the legislation is so very important.
As others have mentioned, if the bill is passed, it will mean that no account can be taken of any matters relating to coronavirus when determining the net annual rateable value of non-domestic property. That means that, for any appeals that are lodged, a change in rateable value could not be considered on the ground that the value of the property has been affected by the coronavirus pandemic, with effect from 2 April 2020.
The Scottish Government, like the UK Government, is absolutely right to be of the opinion that any impact on rental value arising from Covid-19 or the restrictions forms part of the general market conditions and therefore should be considered as part of the wider revaluation. Martin Whitfield and Fergus Ewing raised important points about the engagement process that has to take place. That is essential, and it is quite right that if appeals on the ground of Covid-19 were permitted in relation to material changes of circumstances, rateable value would have to change constantly, which is surely neither sensible nor practical.
There is widespread agreement on the principles of the bill. The fact that no significant issues were raised in the submissions suggests that there is also widespread support for the bill across the business sector. What is interesting—this has come out in the debate this afternoon—is that the general discussions about the bill have revealed other issues.
My colleague Douglas Lumsden made interesting points about what has happened in the north-east. Twice this afternoon, Alex Rowley raised serious questions about what is happening in our high streets and the planning that goes alongside that. We have had comments about the Barclay review—its intentions and implications—and Miles Briggs referred to the fact that perhaps we need to review the appeals process.
Of course, the bill has reignited the debate about future reform of non-domestic rates, especially that it is an outdated and overly complex system that is tied up with far too much red tape, and the debate will, no doubt, continue. As we approach revaluation—pandemic permitting—it is in no one’s interest to delay reform for too long. The consideration of reform is as important as the revaluation. As Liz Cameron quite rightly said to the Scottish Chambers of Commerce, the current business rates system is just “not fit for purpose”. She made the point that the pandemic has done untold damage to our high streets, so reform is desperately needed to breathe new life into local economies.
Returning to business post-pandemic is, of course, not going to look like business before the pandemic. She is right to argue for simplification of what is a highly complicated system. I think that David Lonsdale also made that point yesterday at the Economy and Fair Work Committee, and I am sure that there is a debate in there for another day. However, the bill has reminded us of the deep-seated concerns of the business community, and we really cannot ignore those for too much longer.
Likewise, to accompany the discussions that are taking place in the Finance and Public Administration Committee about the impending fiscal framework renegotiation, there is discussion about what constitutes fair taxation. Ariane Burgess mentioned the principles of fair tax and the principles of Adam Smith, but I think that we have to apply those principles with a more modern approach. The Finance and Public Administration Committee and perhaps the Economy and Fair Work Committee have to be very keen to do that as quickly as is possible.
I will sum up by saying that we welcome this afternoon’s debate. We see it as essential to the business community, and I repeat that the Scottish Conservatives will support the motion.
I call Tom Arthur to wind up on behalf of the Scottish Government. Minister, you have seven minutes.
16:41
I begin by thanking members from across the chamber for their constructive, considered and thoughtful contributions. I also strongly welcome the support of parties across the chamber for the general principles of the bill.
As Liz Smith touched on, a bill such as this, and particularly one for which there is broad consensus in the Parliament on its general proposition, will invite consideration of a broader range of issues. I note those points regarding wider reform of non-domestic rates and, indeed, the issues around our town centres and high streets. I intend to touch on those points in a moment.
I will reflect initially on some of the key points pertaining to the bill. A number of members have mentioned scrutiny and consultation, and I take those points very seriously. At committee and in my written response to the committee, I sought to provide some of the reasoning and rationale for that issue. I think that we recognise that the bill is born of an extraordinary and unprecedented period in all our lives—the Covid pandemic. That has necessitated actions that have perhaps been considered unique and unusual across legislatures on these islands. I note that the UK Government was in a position in which the subordinate legislation on Covid-19 appeals, which preceded its own primary legislation, was introduced and passed in the space of two days.
We have sought to give as much clarity as possible; hence we alerted Parliament to our intentions in June of last year and proceeded with the order where we could, with regard to subordinate legislation, before the introduction of the bill that we are considering. The Local Government, Housing and Planning Committee convener’s comments suggest that the committee is now satisfied that there has been a degree of consultation. I also recognise the point, which I believe that Mr Briggs made, that the process of scrutiny that was undertaken with regard to the order obviated the need for more extensive scrutiny when the bill came before the committee for consideration.
I reiterate that I recognise that this is perhaps a unique set of circumstances, which have arisen ultimately in response to the unprecedented set of circumstances that we have faced with regard to the pandemic.
I want to be clear that, as I said in my opening remarks and to the committee, the bill does not remove any existing rights of appeal. Indeed, we have extended the disposal deadline to ensure that appellants are not negatively impacted and that they will have that opportunity to consider once the Parliament has completed its deliberations on the bill.
I will turn to a few of the contributions. I commend my friend and colleague Fergus Ewing for what is an art and a skill requiring years of parliamentary experience: bringing humour to a debate on non-domestic rates.
More importantly, I thank him for his informed and considered contribution to the debate. I take his points very seriously. I am sure that, as a long-serving minister, he fully understands that I have to respect the independence of assessors. However, I note that members have made their views on that very clear in the chamber this afternoon. I remind members that the Scottish Government continues to engage with assessors regularly on a range of issues, particularly around workload. We would expect assessors to notify us if there were any particular resource implications arising from their workload.
Does the minister share Fergus Ewing’s concerns around the intake of non-domestic rates in the next three to four years?
That point was well articulated.
Moving on to broader consideration of the prevailing economic circumstances that we are inheriting from Covid, it obviously had unique impacts and the health protection measures that were introduced will have had unexpected impacts. However, looking broadly at the impact on town centres and retail, it has been recognised that Covid accelerated existing trends. In the steering group that worked on the development of the retail strategy, one contribution noted that potentially 10 years of change had been compressed into the space of 14 months. We have to respond to that.
I recognise the points that Alex Rowley made. Although I recognise the importance of the taxation system in relation to the viability of our town centres and high streets, we all recognise that it goes far beyond that. There are three areas of responsibility that I lead on in Government where action has been taken to address the concerning issues regarding the viability and future of our town and city centres.
First, we have published the retail strategy and, in due course, I will announce the composition of the industry leader group for that strategy, which has been broadly welcomed.
Secondly, we have recently published a second town centre action plan, which responded to the independent review. That is a call to action that has been published in partnership with COSLA and will be delivered jointly.
Thirdly, we have just completed the consultation phase of the draft national planning framework 4, which members had an opportunity to consider in full last week. I reiterate that my door is always open to discuss any aspects of NPF4, including policies around town centres and town centre first assessment. I am very keen to hear views on that.
We are also taking action around funding for our town centres. We have the place-based investment programme of £325 million over five years. Mr Rowley made reference to town centre funds, and £25 million of the PBIP is the regeneration capital grant fund. We also have, for example, the vacant and derelict land programme, which is worth £50 million over this session of Parliament, and the Scottish land fund, which we are doubling to £20 million per year. Since 2016, that has been open to urban settings as well, and I have seen at first hand some of the impact that it has had.
The minister is absolutely right—I am sure that members would have lots of debates about what is the right tax and what the levels of taxation should be. However, does he agree that the biggest complaint from a lot of the business community concerns the complexity of the system? They are seeking considerable simplification of a lot of the tax measures. Does the minister see that as an important part of the consultation? It does not matter what political flavour we might discuss; does the minister accept that that is the key issue for a lot of businesses?
Minister, could you start to bring your remarks to a conclusion?
Certainly, Presiding Officer.
I recognise the point that Liz Smith is articulating. The Barclay reforms that we are in the process of implementing will go some way towards leading to simplifications, particularly around appeals. I give an undertaking to reflect and to engage regularly with business on those matters.
I reiterate my thanks to all members across the chamber for their contributions to the debate and welcome the Parliament’s support for the general principles of the bill.
That concludes the debate on the Non-Domestic Rates (Coronavirus) (Scotland) Bill.
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Scotland’s Census 2022