First, I will clarify why I lodged the motion to annul the order. Since 1989, the tax rate—the poundage—has been set by central Government under secondary legislation. Prior to 1989 and prior to the Conservatives centralising this local tax, it was set by individual local authorities.
Since the order is considered under the negative procedure, the only means of scrutinising the decision of ministers about the rate that is to be set is through a motion to annul the relevant Scottish statutory instrument. I therefore lodged the motion to allow a modest degree of scrutiny. It is not and has never been my intention to deny local government these important resources, and I add that I decided to lodge my motion before the recent publicity about revaluations. My intention was solely to provide an opportunity for some scrutiny and not to introduce a Trojan horse for any wider political goals of other parties.
Originally, I intended also to lodge a motion to annul SSI 2017/9, which concerns the small business bonus scheme, but I decided to take things one at a time. However, I will illustrate why that, too, would benefit from greater scrutiny. I am engaged with constituents in Edinburgh to reform the planning regime for short-term lets because of concerns about residential amenity and the accelerating clearance of the residential population in central Edinburgh. I mention that because the holiday let properties that declare themselves to be liable for non-domestic rates—not all of them do so—and which I have looked at so far have been eligible for 100 per cent rates relief, despite having tens of thousands of pounds in turnover.
Because of the regulations that we will consider under another agenda item, the owners of those holiday let properties, who are often outside Scotland, will pay absolutely nothing to the City of Edinburgh Council to contribute to the costs of maintaining the city that provides their income. Instead, the Parliament subsidises those—in my view—undeserving proprietors by compensating councils with public funds. That is just one example of how the small business bonus scheme is flawed. However, I reiterate that, notwithstanding the merits of any criticism of that, there is no easy means of scrutinising the detail of such policy that arises from the legislative regime for non-domestic rates.
I hope that the cabinet secretary will agree that Parliament should be able to scrutinise relief schemes that involve the expenditure of hundreds of millions of pounds. Under the previous agenda item, I heard him talking about the opportunities at stages 1, 2 and 3 of the budget process but, with respect, those are debates and not opportunities for detailed scrutiny. It is scrutiny that I am concerned about.
I am aware that the Barclay review is examining non-domestic rates and I expect Parliament to debate its findings, but I want Parliament also to be given an opportunity for more fundamental examination of the non-domestic rates regime. There are much more fundamental questions of tax design to consider that go well beyond the Barclay review’s terms of reference and, indeed, bring into question the very existence of the non-domestic rates regime. One of the Scottish Government’s economic advisers, James Mirrlees, has argued that we should scrap the business rates system.
The public consultation for the Barclay review asked one question, which was:
“How would you re-design the business rates system to better support business and incentivise investment?”
It said nothing about the degree of central control versus more local control and nothing about the range of exemptions that have historically existed for things such as agriculture. The Barclay review will not be looking at those important things, and that is why, in this place, we need to consider deeper questions about the future of the non-domestic rates regime.
As I mentioned, the Barclay review says nothing about local government per se, but non-domestic rates are an important part of local government finance and they should be part of any future review of local taxation. I know that the cabinet secretary is keen to talk to other parties about how we take forward further reforms to local taxation, and I look forward to those discussions, which I hope can take place once the Budget (Scotland) Bill is safely on the statute book.
In the meantime, first, will the cabinet secretary assure me that he recognises that there is a case for better on-going scrutiny of all the variety of secondary legislation that comes to Parliament? We should not have to lodge motions to annul to get that scrutiny. Secondly, does he recognise that there is a case, whether he agrees with it or not, for returning at least part of the rate setting and tax design to local authorities so that they can take decisions on their tax bases to suit circumstances in their different areas?
I move,
That the Local Government and Regeneration Committee recommends that the Non-Domestic Rate (Scotland) Order 2017 (SSI 2017/8) be annulled.