Ex-RBS executive to lead reform
Holyrood urged to ‘go further’ than English rates review
Ken Barclay, former chairman of RBS Scotland, will consider how business rates might better support business growth. His appointment was announced by the First Minister at the FSB annual conference in Glasgow.
The decision was welcomed by a number of business organisations.
The First Minister also committed her party to the small business rates relief scheme and said almost 100,000 small business premises in Scotland now pay zero or reduced rates, saving businesses more than £1bn.
She acknowledged that the rates system was “still a source of concern for some of you” and that it can “sometimes discourage investment, and that it should be simplified”.
She said: “So there may well be a case for making changes – but that case needs to be considered carefully and the needs of all ratepayers must be balanced.
“I can confirm today that Ken Barclay, the former chair of RBS Scotland , has agreed to chair the group which will recommend changes to business rates.”
She said the review will be completed in 2017.
“I can also make it clear that the review, and Scottish Government actions, will be guided by three clear principles.
“Firstly the intention of the review will be to make recommendations which, overall, are revenue neutral. This is not an exercise in increasing overall tax revenue, it is about ensuring taxation is fair.
“Secondly the small business bonus scheme will be retained until at least 2021.
“And finally, the business rates system should reflect the ambition I outlined at the start of this speech – that Scotland will be the best place to do business anywhere in the UK.”
Mr Barclay said: “This will be a detailed examination of the Scottish business rates system and I look forward to listening to the businesses who pay rates to hear their views.”
“The Chancellor this week has proposed further cuts to the business rates paid by many small firms,” she said. ” The Scottish Government will now receive funding from this business rate cut to spend here in Scotland as it sees fit.
“And I believe it should use that money to go further than our counterparts south of the border. The fact is that, over the last ten years, business rates have been this Scottish Government’s cash cow.
“In 2005, income from businesses was under £2 billion. It is now closer to £3 billion. To put that in percentage terms, while Council tax has barely risen at all over the last decade, there has been a 42% increase in revenue from local businesses.
“Now, of course, a number of smaller firms have had their rates discounted by the small business bonus over the last few years.
“But many small and medium sized firms in high value properties – such as a family hotel in Edinburgh – don’t qualify.
“If your business property has a rateable value of £20,000, you are now paying an extra £1,500 a year to the Scottish Government compared to when the SNP won the last election.
Ms Davidson said that while the review took place the poundage rate should be frozen.
“Scottish Ministers have had their pound of flesh from firms across Scotland over the last decade. It’s time to give the small firms, the job creators and the innovators, a break,” she said.
Andy Willox, the FSB’s Scottish policy convenor said: “Small firms from up and down Scotland will be pleased to hear of the Scottish Government’s intentions to review the system.
“But with just over a year until the next revaluation, action may need to be taken now to make the system more user-friendly.”
“The review heralds a great opportunity to recast business rates for the decades ahead and we look forward to engaging with Mr Barclay and the Review to ensure the reformed system is modern, sustainable and competitive.
“Business rates are set to generate £2.8 billion in tax revenues over the next year, up from £2.1 billion just six years ago. A fundamentally reformed rates system and substantially lower tax burden would increase retailers’ confidence about investing in new and refurbished shop premises, create more jobs and help revive high streets and town centres.
“We would encourage all of Scotland’s political parties to commit in their upcoming election manifestos to delivering a reformed and more competitive business rates system.”
Hugh Aitken CBE, CBI Scotland Director, said: “The appointment of Ken Barclay to lead the Scottish Government’s review of business rates is welcome news, and we look forward to working with him and his team on this important issue.
“It’s vital that the review makes the business rates system simpler, fairer and more competitive. Working together with firms, the review should set out what the best business environment in Scotland can look like.”
“We will be working with our members to assist the Government in bringing forward constructive reform and we are encouraged by the First Minister’s statement that the review is about fairness and overall, revenue neutrality.
“Any changes to the rates system in Scotland must balance the need to raise money for public services, with the need to be fair to business.
“We continue to advocate the need for a rates system in Scotland which will encourage investment, both foreign and domestic, into our commercial property sector – a sector which is adding £6bn per annum to the Scottish economy now and has the potential to deliver much more.”
- Ms Sturgeon also used her speech to pledge a commitment to awarding public contracts in Scotland to smaller firms. In addition, she revealed her intention to deliver universal superfast broadband north of the border.
Mr Willox said: “We warmly welcome her commitment to universal superfast broadband in Scotland. And, the First Minister is right to highlight that we need to redouble efforts to make public contracts easier to access for the smallest Scottish firms.”