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Amendment opposed

MSPs reject plan to switch business rates to councils

Multrees Walk, shop, retail, Edinburgh

Shop workers feared impact of change (pic: Terry Murden)

MSPs today voted against plans to switch business rates to Scotland’s town halls after business groups, trade unions and the main local government umbrella group raised concerns.

The outcome of months of lobbying was confirmed after Labour said it would oppose a proposed amendment to the Non-Domestic Rates bill.

Labour’s local government spokesman Sarah Boyack said the party’s decision followed concerns raised by COSLA, businesses and shopworkers’ union Usdaw.

With the Scottish government already committed to rejecting the amendment by Green MSP Andy Wightman it had little chance of success.

Switching control to 32 local authorities would have seen the end of the uniform business rate and some small business tax relief benefits.

Ms Boyack said: “While we firmly support the principle of devolution, we have listened to the concerns of councils, businesses and workers about the impact that this particular proposal would have.

“Councils across Scotland are at tipping point, and it is crucial they are empowered to ensure they can fund high quality local services.

“We welcome the Scottish Government’s commitment to speeding up work on fiscal empowerment, and its pledge to deliver proposals on the Fiscal Framework in time for the next Parliamentary session. But we urge ministers to act now to address the funding shortfalls in local government.”

Ms Boyack has also secured a commitment from the Scottish Government to consult on student tenancies and private student accommodation, including the provision of welfare services and accommodation for vulnerable students.

Ms Boyack added: “As the minister, Kate Forbes, acknowledged in her response to me, the owners of private student accommodation ‘benefit from local services yet contribute nothing to the cost of providing these services’.

“But having consulted with the NUS and university interests, I don’t want us to take the risk of rates being passed onto students through rent hikes or extended tenancies.”

Labour’s statement came as retail workers’ trade union Usdaw said the proposed change would exert ‘upward pressure on the poundage rate’, exacerbating the challenges facing the retail sector.

Almost 30 industry groups urged cross-party rejection of the proposed amendment to the Non-Domestic Rates Bill to hand control of business rates to local authorities.

Ken Barclay, author of a government-commissioned review of business rates said that devolving rates was not part of his proposals.

David Lonsdale, director of the SRC, said: “Retailers, and the business community as a whole, will breathe a huge sigh of relief that MSPs have listened and voted to retain the consistency, simplicity and predictability that the Uniform Business Rate brings, and that the reckless plan to abolish it has been defeated.”

The FSB’s Scottish policy chairman, Andrew McRae, said: “MSPs had a big call to make today. If they didn’t amend this legislation, we’d have seen bills going up and national reliefs axed. This was not the time to hit small businesses with new annual rates bills in excess of £7,000.

“Our MSPs are to be congratulated for recognising this threat and acting decisively to address it. 

“All eyes are now on the tomorrow’s final vote on the Bill as a whole.  We urge all MSPs to back the Bill as amended and get what is, on the whole, a sensible and long overdue package of reforms onto the statute book.”

Tracy Black, CBI Scotland director, said: “Scottish firms will be relieved to see common sense prevail with the Uniform Business Rate being protected, avoiding further complications to the business rates system.

“As the economy continues to stutter, businesses have long called on politicians to support a simplified rates system that encourages greater investment.”

Liz Cameron, chief executive of the Scottish Chambers of Commerce, raised some concerns about other aspects of the bill that will remain, including removal of ratepayers’ appeal rights when there is a change in economic circumstances.

She also noted that the Bill has devolved powers on setting of empty property relief to local authorities “which will create differences in treatment of empty properties in different local authority areas.”

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