Call to cut business rates
Retailers and BCC call for decisive action on Budget and Brexit
David Lonsdale: ‘investment will be more critical’ (pic: Terry Murden)
Business groups are today calling for decisive action from the UK and Scottish governments on the Holyrood Budget and Brexit in order to bolster confidence.
Scottish retail chief David Lonsdale says there should be no delay to passing the Scottish Budget to avoid adding to current uncertainty and “sobering” economic growth forecasts. The British Chambers of Commerce says businesses will not forgive politicians if there is a disorderly withdrawal from the EU.
In its submission to the Finance Secretary and to Holyrood’s Finance and Economy Committees, the Scottish Retail Consortium says the Scottish Budget must be passed in “a timely fashion”.
The four-page submission from the leading industry representative body praises the positive measures unveiled in the Budget but says weak forecasts mean lifting commercial investment and consumer spending will become “even more critical”.
It notes the headway being made on business rates, but says there is more to do to alleviate the growing rates burden and improve competitiveness. It calls for councils to be allowed access to a new town centres fund to cut business rates.
The SRC says “the burden of business rates remains onerous. This is felt especially by retailers who account for 22% of all rates paid.
“We therefore welcome the action taken in the Budget to bear down on the headline poundage rate over the coming year. Whilst we would have liked Ministers to have gone further, the below-inflation rise is a clear acknowledgement of our arguments and concerns.
“This decision to strike a headline rate a touch below that which applies in England will, we estimate, shave £2 million off the rates bills of retailers in the coming year than would otherwise be the case. That said, their rates bills will still rise in April by 2.1% (circa £15 million) at a time when Scottish retail sales by contrast have risen by merely 0.5% over the past 12 months.
“Unfortunately the large business rates supplement remains twice that which applies in England, a blot on the government’s record.
“This higher rate simply makes it more expensive to operate on our high streets and retail destinations and raises the hurdle for attracting commercial investment. Eradicating this discrepancy would mark a positive step towards delivering on promises of a globally competitive business environment.
“The rates system only seems to function through an increasing myriad of exemptions and reliefs that continue to grow as a proportion of the total overall amount paid. This highlights the need for reforms which make the tax more modern and competitive.
Call to use town centres fund to cut rates
“The Budget document mentions that councils have the power to cut business rates in their areas, however we are not aware of any of the 32 councils doing so in the current year. Indeed only three have done so, and for a time-limited period, since councils gained this power over three years ago. Ministers should redouble their efforts to get more local authorities to capitalise on this opportunity to support high streets and town centres.”
The SRC said it welcomes the town centres fund and says it should be opened up to Business Improvement Districts and others with ‘good ideas’. It says councils should be allowed to use the new fund to cut business rates in their area, and Scottish Ministers should reduce the large business rates supplement which captures many town centre properties in its net.
There is backing for the decision to protect those on modest or low earnings from income tax rises and says the industry is “open” to the council tax being replaced or reformed. However, changes should “take into account the impact on consumers”.
Adam Marshall: Business communities won’t forgive politicians who allow a disorderly Brexit (pic: Terry Murden)
The SRC’s comments coincide with the first solid data of the new year. The British Chambers of Commerce’s quarterly economic survey – the UK’s largest private sector survey of business sentiment and a leading indicator of UK GDP growth – finds that the UK economy ended 2018 stuck in a weak holding pattern.
It says the economy has stagnating levels of growth and business confidence as a result of heightened Brexit uncertainty and other economic pressures.
It finds that recruitment difficulties in manufacturing are the joint highest on record, with services sector recruitment difficulties hovering near a record-high.
As Westminster prepares to return from recess next Monday, the business group is calling on all political parties to find a way forward and ensure that the UK does not face a messy and disorderly exit from the EU.
It says avoiding a chaotic Brexit would bolster business confidence and investment, and give businesses some much-need clarity on trading conditions in the near-term.
Responding to the results, Dr Adam Marshall, director general of the BCC, said: “The UK economy is in stasis. While it’s not contracting, it’s not growing robustly either.
“Throughout much of 2018, UK businesses were subjected to a barrage of political noise and drama, so it’s no surprise to see firms report muted domestic demand and investment. In this new year, the government must demonstrate that it is ready to act to turbo-charge business confidence.
“With little clarity on the trading conditions they’ll face in just two months’ time, companies are understandably holding back on spending and making big decisions about their futures.
“The government’s absolute priority now must be to provide clarity on conditions in the near term and avoid a messy and disorderly Brexit. Business communities won’t forgive politicians who allow this to happen, by default or otherwise.
“Brexit is hoovering up all of government’s attention and resources, but it’s far from the only cause of uncertainty.
“Given the magnitude of the recruitment difficulties faced by firms clear across the UK, business concerns about the government’s recent blueprint for future immigration rules must be taken seriously – and companies must be able to access skills at all levels without heavy costs or bureaucracy.”