Further pressure on costs

Scottish firms face £109m rates hike after inflation surge

shop closure

Shops are closing due to higher costs (photo by Terry Murden)

Scottish Businesses face being hit by a £109 million rise in business rates next April, according to an industry leader.

The rise is linked to September’s retail prices index which came in at 3.9%. The English poundage figure is tied in statute to RPI. 

The Scottish Government has over the past decade opted to match the headline poundage rate which is applied in England.

Business rates in Scotland generate a tax take of £2.8 billion each year and so a 3.9% rise equates to a potential £109m increase in ratepayers’ bills next year, says the Scottish Retail Consortium.

Retail accounts for a fifth of business rates, which means Scottish retailers could see their bills rise by around £22m.

The recent Barclay Rates Review recommended that Scotland switch annual inflationary increases in the poundage rate from RPI to CPI.

The SRC’s most recent quarterly town centre shop vacancy rate increased to 9.3% in July 2017, up from 7.5% in July 2016. Almost one in every ten shops lies empty.

In August Scottish Government figures revealed that employment in the Scottish retail industry had shrunk by 16,400 over the past eight years, down 6.3% over the period. The number of retail stores was down 1,831 over the past eight years, down 7.5%.

Commenting on the possible 3.9% uplift in Scottish business rates, Ewan MacDonald-Russell, Head of Policy of the Scottish Retail Consortium, said: Scottish businesses will be concerned at the potential for costs to rise further unless action is taken.

“The Scottish economy is already under significant pressure and a further hike in business rates is liable to deter private sector investment and further squeeze tight margins.

“The retail industry in Scotland is undergoing significant transition and retailers are seeking to respond positively with substantial investment in new technology, a more skilled workforce and better logistics. However, this is made all the harder by the rising cumulative burden of government-imposed costs which is an acute problem and is holding back investment.”

“Scottish Ministers have the opportunity to take a different approach in the upcoming Budget.  Instead of looking for a short-term cash grab, they should focus on the overall competitiveness of the economy. Increasing rates in this manner only increases the burdens on businesses, and could indeed produce further inflationary pressures. That’s not going to help drive sustainable growth.”


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