Exclusive: Four years of 'inaction'
Councils accused of not using power to cut business rates
Empty shops are often a result of soaring business rates (pic: Terry Murden)
A retail leader today accuses Scotland’s councils of failing to support local businesses by not using a power given to them four years ago today to cut business rates.
Only three of the country’s 32 councils – Perth and Kinross, Aberdeen City and Aberdeenshire – have used the discretionary power under the Community Empowerment (Scotland) Act 2015.
In that time rates have soared to a 20-year high and have been seen as one of the main causes of small firms – particularly shops – going to the wall.
David Lonsdale, director of the Scottish Retail Consortium, said: “It is exactly four years since local councils first got the power to reduce business rates, however barely any have bothered to act on it.
“This is hugely disappointing at a time when one out of every ten shops in our town and city centres is lying empty, and with several further casualties revealed of late on our high streets.”
Mr Lonsdale said “concrete action” is urgently needed to cut the cost of doing business and to rejuvenate Scotland’s high streets.
“In its first four years this increased responsibility for local authorities has conspicuously underwhelmed and risks being viewed as a flop due to lack of take up by councils. Ministers must redouble their efforts to get more councils to capitalise on this opportunity to provide relief to our high streets.
“Whilst Aberdeen, Aberdeenshire, and Perth & Kinross are to be commended having taking action previously, more widespread adoption by councils of this local rates relief is – for the moment at least – like the hole in a Polo Mint, missing.”
The fourth anniversary of the Scottish legislation coincides with a report from the Commons Treasury Committee stating that the business rates system in England is “broken, unfair and a drag on business investment and growth”.
Suren Thiru, Head of Economics at British Chambers of Commerce, was among a number of business leaders who welcomed the report and said it should prompt a commitment from the political parties to take action.
“It’s time we had a modern system, fit for the 21st century economy, that greatly reduces the upfront costs faced by businesses, rewards investment, and is simpler to administer,” he said.
Helen Dickinson chief executive of the British Retail Consortium, said: “We strongly welcome this excellent report. The Treasury Select Committee has identified key flaws in our broken business rates system.
“Any party that wants to support local high streets should commit to implementing the Committee’s reforms as a first step.
“Business rates are a significant driver of store closures and job losses and retailers have been getting a raw deal for too long. While retail accounts for 5% of the economy, it pays 25% of the business rates.”
Mike Cherry, national chairman at the Federation of Small Businesses, said: “It’s critical that politicians get a grip of this unfair tax that seemingly can’t be challenged.
“There must be a significant reduction in small firms’ rates bills.”
Scotland went through a reform of business rates following an investigation by former banker Ken Barclay, but pressure remains for further change.