Official Report 291KB pdf
Good afternoon, colleagues. I would like to start, as today we have a heavy agenda.
I own a small business.
I own a small business and am a member of the Federation of Small Businesses, the Forum of Private Business and the Scottish Council Development and Industry. I pay them subscriptions, but none of them pays me any money.
I will declare an interest on behalf of my colleague Gil Paterson, who should be here any minute, if you want to move on, convener.
I will remember that.
I should probably declare that I am a shareholder in a small business.
Just to be on the safe side, I should say that I have a part-time researcher who is a part-time small businessperson.
Anybody else? Kenny is not sure—if you are in doubt, tell us.
I was going to be facetious, but I will not bother.
My personal assistant also has a small business.
Bristow, you do not own a small business, do you?
Sadly, I do not.
Before we continue, I welcome John Swinney and Fergus Ewing, who are here as members of the Enterprise and Lifelong Learning Committee. As this is a new Parliament, MSPs can attend any committee meeting to ask questions, and John and Fergus have chosen to come along today. I certainly have no objection to their being here. If they wish to ask questions, they will be allowed to do so.
We intend to give a 10-minute run-through of our proposals for a small business rates relief scheme. I hope that you all received copies of our paper from the clerk on Friday. We thought it best if you questioned us on all aspects of the scheme.
Hitherto, I thought that there were two separate issues: the need to avoid sudden changes in transitional relief for big and small companies and the tilting of the scheme to help smaller businesses. As I understand it, your scheme, in effect, brings the two issues together. Is that right?
That was not the original intention. I set out to examine the situation for small businesses. I did not produce this report with transitional relief in mind. However, I would imagine that a relief scheme of 50 per cent and 25 per cent would take a block of property value completely out of transitional relief. It would no longer apply.
People such as the assessors have written to say that they are not unsympathetic to your point, but that they think that a clear cut-off point raises problems, in that many of the people whose rateable value is more than £5,001 would appeal. If, with advice from other people, we could devise a more gradual scheme that met the same objectives, would you be happy to go along with it?
We would be concerned about the administration of the scheme. We would want it to be kept as simple as possible, to deliver benefits to small businesses. There are thresholds, exemptions and allowances for all forms of taxation, whether personal or business.
How would your scheme impact on chains of small businesses, which might each employ two or three people? They might be in a dozen property locations in a local authority area, but be part of one company.
The difference between appendix A and appendix B illustrates that problem. I arbitrarily elected to take out advertising hoardings. The reason for that was that most advertising hoardings will fall into a category of below £5,000 rateable value, but are certainly not occupied by a small business. Most are occupied by major plcs, which derive a pretty good income. No system will ever be perfect, but the drafters of any legislation much take into account the categories of properties. They are not defined—I am sure that the assessors will advise on this—in valuation law. Hidden codes are there, however, and I think that they could be used. There needs to be an in-depth examination of the classes and categories.
On the question of how businesses near the margins are affected, my calculation from your proposal of 50 per cent relief for businesses with a valuation of up to £5,000, with a poundage of 48p, is that there would be a £1,200 reduction. Your proposal for business between £5,000 and £7,500 rateable value is 75 per cent. To clarify that, are you suggesting that, if a business is just over the margin—at £5,001 rateable value—it would pay 75 per cent, and have only a 25 per cent discount on the entire rateable value, or would it get a 50 per cent discount on the first £5,000 and a 25 per cent discount on the next £2,500?
The difficulty with setting any threshold and with any relief scheme is that there will be people at the margins who will be upset. That is the case with council tax banding for houses. I am sure that the Scottish Assessors Association can produce statistics on people at the band edges who appeal.
Paragraph 4.5 in the Scottish Executive's consultation paper, "Non-Domestic Rates—Transitional Arrangements: Scotland", gives some percentages on transitional relief. I recommend that the committee consider the paper, as it talks about relief of 10 per cent, 7.5 per cent, 5 per cent, up to 15 per cent, 30 per cent and 35 per cent. No one has understood the system of percentages for relief for businesses; it is not directing the benefit to small businesses. We are in the process of simplifying a complicated system—we might not make it perfect, but it will be far better than what we have now.
You have an advantage on us, as we do not have that paper.
Would that mean that someone with a valuation of £4,999 would pay £1,200, while someone with a valuation of £5,001 would pay £1,800? You should not say that they could appeal, as their appeal might fail. It is a disincentive for companies to grow, if an extra few pounds in valuation means that they will have a whopping great increase in the rates that they pay.
We are trying to benefit small businesses. There are issues concerning the threshold; in that case, whether a business qualifies for the 50 per cent relief. However, as John Sharp says, people have the right of appeal. If we direct the benefit to those companies and they are increasing their profits, they are gaining more money to pay the bills. No scheme will be perfect, but 47 per cent of small businesses in Scotland will get relief. However, there are businesses in the high streets of Glasgow or Edinburgh that are paying £50,000 on their rents. If businesses want to be on the Royal Mile and pay £50,000, that is entirely up to them. The new Sock Shop in Waverley station will pay a £25,000 rental for that small property.
In the Scottish National party's manifesto, we set aside £90 million in rates relief out of the block grant, so I am fascinated to see that it could be done for just over half that sum. That would have left a bit of loose change.
As I said in the letter that we sent to Jack McConnell, one of the key considerations is fairness to all business rate payers. Considering the economic conditions, we do not want to put an increased burden on medium-sized and larger companies. The Scottish Executive might in the end want to make that decision. We believe that we need to be fair to all business rate payers and bring in the issue of affordability, and that paying the £46 million direct is the best option.
This follows on from Colin's point. Do you accept that the burden has to go somewhere?
Yes.
You say that the burden should fall on the block grant and that you do not want the burden to fall on bigger businesses. What element of the block grant do you think should be cut? What part of the block grant would go to help small businesses? Or would you prefer increased taxation?
We prefer increased taxation, but helping small businesses at this level can lead to increases in turnover and profit, increased jobs and an increased tax share. Trying to foster economic growth will cost the Scottish Executive in the early years. It will pay dividends in the next five or 10 years if we encourage existing small businesses to grow, and if we encourage small business start-ups. We will not see the benefit in the next two or three years, but we should start looking more at the long term in creating more jobs and businesses, because that will increase the amount of tax payable to the Exchequer.
Some small businesses are landlords. Do you want to see rents connected to revaluation? Those who are landlords would want to see a connection between revaluation of rents and the rates that they pay.
Many small businesses are owner-occupiers, such as small family-run newsagents. No one can argue with an assessor's valuation, so the right of appeal cannot produce the result that those ratepayers want. If a shop has a rateable value of £4,500, any reduction that could be negotiated would be minimal, although the rates burden is large in relation to the cost. At the other end of the scale, there are the Hyundais of this world, which have rates valuations of hundreds of thousands of pounds. Negotiation could result in a saving of £50,000 to them.
I would like to declare an interest on two points. First, I was responsible for taking the Government to the European Court of Human Rights because of a rates disparity. I have had a keen interest in rates since then. I also own a business, and this debate might affect the amount of rates that I pay, although I have a feeling that the effect will be adverse. The business is spread throughout Scotland.
In the last two revaluations, the Scottish Office decided that small businesses with a rateable value of less than £10,000 should get a certain percentage of relief. That £10,000 defined the difference between small and large businesses. This year, the figure will be £12,000.
When we set off, we knew that a threshold of £10,000 had been proposed for transitional relief. A problem arises because of the number of properties that would fall into that category. The statistics were not easy to come by because, historically, a lot of the assessors' records have not been kept on CD-ROM, which is the best way of getting information for such an exercise. The records are mainly on paper or on microfiche. That may change before the revaluation exercise and data may become more easily available, but we had to start somewhere and we needed something that was credible and did not result in high costs for other ratepayers. That is why we started at £5,000 and then went up to £7,500.
I commend the Federation of Small Businesses on the work that has gone into these substantial and useful proposals. The SNP is keen that there should be a workable scheme to help small businesses in Scotland deal with the discrimination that is mentioned in the FSB's opening remarks. Small businesses pay perhaps five to 10 times as much in rates as do larger businesses. If the Executive comes up with no scheme to help small business, but does come up with a scheme for transitional relief, would that level of discrimination against small business be affected in any way?
It would not be affected. We would still have it. Members of the committee may not have seen the consultation paper that we received this morning. In paragraph 5.1, the Executive quotes figures that show that there is a disproportionate burden on small businesses. In paragraph 5.6, it admits:
We have not yet seen that paper, but that seems to demonstrate that the Government accepts that bigger businesses pay proportionately less in business rates than small businesses. We must find out how to remedy that.
I would love to think that it would not. The problem with calculating and understanding a rates demand with transitional relief is that there are complications when there is any kind of banding. In a revaluation year, the final date for settlement of appeals will usually be some three years later. That means that calculations go back three years through transitional relief and banding down.
First, I am concerned that, yet again, we do not have a paper to study, which would have been useful.
No. The idea exists already in domestic rating, and there is council tax banding. The issue is simply one of administration and of clarifying the rates demand, which could be done. Mr Gibson made the point, which I take on board, that if you have a threshold scheme with 50 per cent and then 25 per cent relief, the answer may be to have a slicing arrangement—as there is with income tax. That would certainly ensure equality: at a threshold, or just over a threshold, there would not be an increase in payments.
I would like to go back to the point that Michael McMahon raised about the means of funding your proposals. You have suggested two options: one in which there is a differential rate for larger businesses; another in which the Scottish Executive provides the funds directly. How did you balance your thoughts in coming to the conclusion that the Scottish Executive should fund the proposal?
We are saying that if small businesses are growing, increasing their turnover and profits, and taking on more staff, there will be more income for the Exchequer from taxes. That income will come from the businesses and from the people who work for them, through personal taxation. That is a long-term issue that should be considered. As John Sharp said, the scheme that we have designed is fairly simple and delivers direct benefit. We had discussions on the issue of larger companies. As the Scottish Executive paper says, they can afford to pay these bills.
I do not know how soon you expect a decision on this. It is unfortunate that we must address two issues. The first is revaluation, which is imminent; the second—which I would like to happen—is the reduction in rates, which is of benefit to business. No decision on that will be reached until after next April. My concern is that if we pursue revaluation and the reduction in rates at the same time, revaluation will throw up some anomalies, particularly under your scheme.
The figures that were issued today by the Scottish Executive show that the effective revaluation will be about 13 per cent. That suggests that the uniform business rate will be reduced by 13 per cent, which is not significant compared with a ratepayer with a static rateable value. If the transitional relief proposal is that a ratepayer whose value decreases should not benefit, but should subsidise a ratepayer whose rateable value has risen—I am not in favour of that—the benefit will not be reaped by the small business whose rateable value has decreased unless a scheme such as this is implemented.
I acknowledge what you are saying. I am one of the lucky ones: I saw the paper that you are talking about today. It talks of an average increase of 13 per cent. Some increases will be below that and some will be far above it. Under your scheme, some people will benefit who should not, and others who should benefit will not.
I think that any property that has a rateable value of £7,500 or less—particularly if that value is £5,000 or less—must be a poor type of property. If a pub, hotel, guest house or shop has a rateable value of £5,000, it must be pretty small. It will not be occupied by a branch of the Woolwich or a Thorntons sweetie shop. It will not be a public limited company; it will be a small business indeed. I do not think that the effective revaluation will push many more businesses in that direction.
You said that the figure for some properties will remain static. If inflation is taken into account, those businesses will already receive a reduction in rates, but you are going to give them more, to penalise the properties whose rateable value exceeds £7,500. Is that what you are saying?
Yes.
We would like to find a viable way in which to help small businesses, if we can. The CBI paper says that there is a risk that landlords would merely put up rents if the rates were reduced. I am not here to help the landlords. Could you comment on whether you think that is a real danger and on how we could avert it?
Where enterprise zones were introduced in Scotland, no rates were payable for several years. Cases have been brought before the valuation appeal courts to urge that, at the end of enterprise zone status, there should be a material change and a down valuation in those properties.
My next question somewhat veers away from what we have been talking about. We have received letters and written reports from other groups. I have a question from one such group that shall remain nameless, although you will probably know which group it is when I read its comment. Although you have already answered the group's concerns about rents, it then suggests:
What that group is basically saying is that big business is better managed than small business, which is a view that I do not agree with at all. Although John Sharp runs a small business, nobody would say that his business was not as well managed as BT Scotland.
Thank you. Before you go, I want to reiterate what Fergus and Donald said. The committee seeks a fair and workable scheme, which is why we have decided to respond to your difficulties. I will say in support of the Scottish Parliament, which gets more bad publicity than good, that it would have taken a long time for this meeting to have happened in Westminster. Although we might not have come up with any answers for you today, we have heard your evidence and have been delighted to ask you questions. In fact, we might ask you to return to clarify some points. You have been very helpful. Thank you very much.
I want to thank the committee for its invitation. I am the president of the of the Scottish Assessors Association, John Cardwell is the vice-president, and Bill Johnston, as the secretary, does all the hard work.
I understand that the association's comments have focused on the submission made by the Federation of Small Businesses. Legitimate points were raised, but I will now raise wider issues.
As members of the general public, we are fully aware of what is going on, but we are constricted by the legislation as to what we can and cannot take into account. The vast majority of properties are valued on the comparative principle: a valuation based on the level of market rents, which we analyse and then apply to come up with the rateable values or net annual values of the properties.
My question is more about the policy issues. I accept that you implement regulations and statutes that are provided for you, but do you recognise the concerns of the small business community about the disparities that exist within the system? Do you think that those need to be addressed by this committee, the Parliament or the Executive?
Their concerns are understood by the Assessors Association, in that we meet many of the business groupings, such as the licensed trade, self caterers and local hoteliers. Our association has a long and proud record of not putting forward any policies of our own, as we could then be seen to be favouring one group of ratepayers over another. As I said in my presentation, we are happy to respond if someone says, "This is a suggestion that this group of ratepayers has brought forward, what do you think of it as a practitioner?" We are perfectly happy to give our tuppenceworth, or shillingsworth, at that time.
In the previous presentation that we had from the FSB, it seemed to be keen to differentiate between multiples and owner-occupiers. In terms of the transitional arrangements, is there any way of getting information from the businesses' annual returns to assist in the evaluation?
The directors or heads of finance services use the assessment roll to compile the bills. That is based on the valuation roll, which shows proprietor, tenant and occupier. The ratepayer is the person who is lifted from the valuation roll for the use of the head of finance. Obviously, in any system a flag could be attached to those premises that are owner occupied, but when we gather information on behalf of the heads of finance, which we do regularly, we record only the names of the proprietor, the tenant or the occupier.
You were talking about your ability to follow up statistically what is happening with the revaluations. Is there no way of categorising businesses as either urban, city centre businesses or rural, village ones?
I am sure that there could be a system for defining a city centre shop. However, if we decided that Princes Street and George Street were principal shopping streets, there would be dispute about whether Shandwick Place was a principal or a secondary shopping street. What we are saying is that any scheme based on a definition—even based on specifying where the line should be drawn—would be simple to implement. However, if we leave any room for dubiety about where the line runs, we will end up in an argument.
I want to pursue roughly the same line of questioning as Michael McMahon. If the committee wanted to help struggling small businesses, would you advise us to adopt clear-cut definitions? You used the term definitions rather than descriptions, so that, as Michael was saying, a chemist shop might be included but not a petrol station. Alternatively, given your concern about businesses appealing to be placed below the step, do you suggest that we introduce a more tapered scheme that would take into account ability to pay as well as the size of the business? Do you want to recommend one or other of those systems?
John Sharp said that he would exclude advertising hoardings. In an effort to assist John with his analysis, the assessors from the five areas have tried to compile their statistics to fit in with his definition of, for example, commercial public houses. However, we would prefer to have a definition of which properties were excluded, based either on the identity of the ratepayer or on the category of use of the property. In the interface between council tax and the non-domestic valuation roll, there are many regulations that define, for example, bed-and-breakfast accommodation. Parliamentary draftsmen are quite adept at providing us with workable definitions.
I asked whether there should be a tapered scheme that would avoid the need for a step and might take account of ability to pay as well as the size of the business.
On that point, John Sharp had a dig at the chartered accountants, some of whom may or may not be around this table. We are only poor chartered surveyors. One would need a form of accounting procedure that determined ability to pay.
Given your expertise, would it be possible for you to make a calculation based on out-of-town developments? Many people are concerned about the amount of energy that is used and the pollution that is produced by people getting to out-of-town developments.
Contrary to what John Sharp said, assessors live in the 20th century and we use methods other than pen and paper, although not all of us have super-duper computer systems—we are all funded by local government—and we do calculations with pen and paper at the end.
The valuation system will reflect the effect that an out-of-town shopping centre will have on local shopping. The problem can affect urban areas as well as rural ones. Small shops in cities have suffered when supermarkets open and rents do not drop. That will be reflected in the next revaluation. A supermarket on the edge of a town can have a substantial effect on the levels of value in the town. The levels of value will adjust to reflect market conditions.
Superstores earn big bucks and small stores do not. I would like a political decision to be taken to shift the rates burden to the out-of-town operations. Could you provide me with relevant information?
The purpose of a revaluation is to change the burden of rates. If the system operates properly, the burden will fall on the more successful businesses because they are the ones that pay higher rents. Out-of-town shopping centres probably pay higher rents than businesses in the town centre.
I was encouraged to hear that the degree of sophistication of the valuation roll administered by the estimable assessors is such that a slightly more complicated scheme than the scheme that the Federation of Small Businesses told us about today could be coped with. The FSB recommended a scheme whereby there would be 50 per cent relief up to a rateable value of £5,000 and 25 per cent relief from £5,000 to £7,500.
I would imagine that that is the case. I am not a computer expert but, if the scheme were based on the rates payment, I am sure that the heads of finance would ask for hundreds of thousands of pounds for new computer systems to handle it. Computers can be shown to do virtually anything, if there is a will to have something done.
And your second objection would not apply?
Our experience with the council tax suggests that we would still get plenty of appeals at the boundaries.
The alternative to a relief system would be that instructions would be given to you as to how the valuation process should be conducted. Could you confirm, for the record, that, under the Local Government Finance Act 1988, the First Minister, in succession to the Secretary of State for Scotland, has powers to instruct you as to how to carry out your task if, for example, it were felt that the rateable values of supermarkets were too low and those of hotels or licensed premises were too high?
The First Minister's powers are wide-ranging. He can prescribe the way in which we arrive at the valuations and the difference between net annual value and rateable value, as has happened in the past with petro-chemicals.
What do you think is the impact on rates of the 50 per cent subsidy that is given to empty properties? Do you think that that has the effect of artificially keeping rate levels high? To what extent does the policy impact on businesses that do not have empty properties?
From the assessors' point of view the empty rates have become a nuisance. When the property was vacant, people were loth to lodge a valuation appeal. When the property became occupied, the new tenant had a right of appeal. Now that the owners have a liability, they pursue appeals on rates on empty properties.
Are you saying that landlords do not keep rents artificially high in order to secure loans, for example? The 50 per cent relief on such properties impacts on other businesses because the money that is not being gained from those properties being used has to be raised from other businesses.
I do not quite understand the question.
If a property is half-empty, only, say, £5 is raised from it instead of £10 and the other £5 has to be raised from the other businesses. I was asking about what impact the fact that properties lie empty has on other businesses.
I am not aware of that being a problem. If anything, the opposite would happen: the landlord would be keen to cut his losses and accept a lower rent to have his property occupied.
My understanding was that the problem that I was talking about was an issue in Edinburgh. I am reassured by your suggestion that it is not a problem.
I am not aware of it being a problem.
I know that this might be seen as breaking the party line but I think that there are problems. Consider a small shop in a tertiary shopping street. It might become obvious that, due to a change in shopping patterns, that shop will never trade again. Many shops in the street might be in the same position. Obviously, assessors have to consider the rental value. The owner is liable for 50 per cent of the rates on the property, and must continue to pay. It is very difficult to see how the owner could gain any income from the property. That matter needs some thought.
Other people are arguing for 100 per cent relief, based on your argument.
Yes. In the case of small shops, the bigger problem is when an owner is liable for rates on a property from which they cannot possibly derive an income.
Is the quinquennial nature of the revaluations sacrosanct? Would a cycle of six or seven years have a detrimental effect on businesses? Are your data on the percentage of appeals accurate enough to know whether there would be a difference if the cycle were changed?
As a practitioner, I would not recommend extending the cycle beyond five years. The normal rent review pattern in Scottish leases is five years. Before the 1990 revaluation in England and Wales—we had one at the same time—there had not been a revaluation for 17 years and there were huge changes all over.
I think that Mr Chisholm said that he expected something like 64 per cent would appeal.
65 per cent.
How much of an impact does that have on your staff resources? Is that what you work on?
Dealing with revaluation appeals ties up the staff for about three years.
Does that mean that, if we changed to a three-year review, the three years of appeals would be dealt with during the three-year period of the revaluation? Surely an extension would help that.
It would help in terms of managing resources, but the effects of the revaluation would be much more dramatic.
Swings and roundabouts.
Following on from the answer to a previous question and from the CBI statement, would it be sensible for us to suggest that the First Minister use his powers to instruct your staff that out-of-town shopping centres should be rated more highly, but that the sort of shops that Mr Cardwell described should be rated very low? We should try to tilt the playing field in that way rather than having a level playing field with rebates.
I would prefer to have a pure valuation roll, based on market evidence and our assessment of that evidence. If there is scope to provide assistance, that should be done through the rating system rather than through the valuation process.
It would create great practical difficulties to make such a change to the valuation system. There are different levels of effects and the First Minister would have to make a decision on every shopping centre and street. It would be very difficult. A rebate scheme would be preferable.
I have a point to pursue and it may be a parochial one. My understanding is that in some areas of Edinburgh where the local shops have suffered in the way that Mr Cardwell described, the rents have stayed up and market forces do not work. Charity shops get blamed for that, probably incorrectly. In your experience, does the market work, so that when a shopping centre is in decline the rents go down?
The revaluation shall take place from April. From the first figures for Edinburgh that I have seen it is clear that some shopping streets have decreased in value. One of the problems is the time that it takes for rent changes to work their way through the system. Changes are not instantaneous, and I suspect that in some cases occupiers of tertiary shopping streets are not as well advised as other occupiers, and they pay rents that are too high for too long. In the fullness of time, the market should have an effect.
The Forum of Private Business in Scotland produced a paper on this matter. Did you receive it and, if you did, do you have any comments to make?
We have not received that paper. Indeed, we only received the paper "Removing the Business Rate Burden" by the Federation of Small Businesses while we were in the waiting room this afternoon.
I see. It would be unfair of me to ask you to respond to the document. Could you give us a written submission if we give you a copy of the document?
Yes.
Convener, would it be in order to raise a general point? I understand that there are two representatives of the Forum of Private Business here today. I have received a detailed paper from the forum, which proposes an alternative method for providing help to small businesses. I hope that I am not stepping on any procedural toes, but given that they are here today and that they have well-thought-through proposals, I would like to hear their evidence. Would that be possible?
We are about to take a comfort break, and then we are having another two submissions, so we have a full meeting. My feeling is that the meeting is full, but I do not want to cut people out. We have the option of hearing from the forum next week, but we can discuss that in the housekeeping part of this meeting.
My understanding is that a presentation would take only five or 10 minutes.
You are giving me arguments, but we have a full meeting today. There will be time next week to hear from them.
It is likely that I will need to leave before the end of today's submissions as I have constituency business this evening. I would appreciate it if we could take the submission from the Forum of Private Business next week, but I understand that other members may not agree.
I do not know if the representatives are free next week. Would it be possible to circulate their submission beforehand and ask the assessors and others to comment on it by next week? We could then have a short meeting with the Forum of Private Business in the light of any comments.
I would be happy with that. I have read the submission from the Forum of Private Business, and I appreciate the fact that its representatives are here today, but a meeting with them is not on the agenda. It is difficult to change an agenda because of the standing orders.
I agree. If we are to deal with the Forum of Private Business next week, could we also deal with Mr McConnell's paper?
We will discuss that when we deal with our housekeeping. I want to deal with one matter at a time. It has been asked if we can hear from the Forum of Private Business today. I am not saying that we will never hear from it; I am saying that it might be more appropriate to hear from it next week. By that time, the assessors will have the submission, and they may wish to give us some written comments. We would then all have a better chance to consider the submission. I appreciate what you are saying, Fergus, but we have a full agenda today.
Meeting next week also might be more suitable for the forum's representatives, because they may not have prepared to give evidence today.
Are we agreed that the Forum of Private Business should attend next week?
We should check that Mr Anderson and Mr Dowds are available next week.
We have been asked to give a submission to the Enterprise and Lifelong Learning Committee on 10 November. Does this committee meet at the same time?
Yes. You would have to move between the meetings. We will deal with this housekeeping business later.
Since I will not be here at the end of the meeting, I will raise a housekeeping matter now. I was asked whether we have invited the Scottish Retail Consortium to attend. Would it be possible to hear from the consortium next week?
I think that we are seeing the consortium. We will sort out dates and times later. If there are no more questions for the assessors, I thank them for coming. We have landed you in it again, as you will be receiving a paper from the Forum of Private Business. It would be helpful if you could give us written comments.
Do you wish us to attend next week?
We will get back to you on that, because I like to tackle such issues at the end of the meeting. We will either ask you back or ask for a written submission.
Meeting suspended.
On resuming—
I welcome Bill Howat, Pete Hancock and Duncan Gray of the Scottish Executive development department, who will give a short presentation before we ask questions.
Thank you for the opportunity to address the committee today. Our presentation will be fairly short. We circulated copies of our six slides and of the consultation document on transitional relief that we published last week. Does everyone have those copies?
Good.
When did you say that the consultation document was published?
I think it was dated 28 October.
Thank you. I shall take that up elsewhere.
It would have been helpful to receive this earlier with the papers that other organisations managed to circulate, especially as it is a long paper.
I said I would take the matter up elsewhere. It is enough that I have said that. If you were a member of the committee, you would know that.
Thank you, convener. I recognise that there are some issues to be decided about what gets circulated to whom. We are still settling on that.
Are there any questions?
I have a question for you, convener. Are we asking questions today on the slides, on the paper that was circulated earlier and on the paper that was circulated today, or just on the first two?
Probably only on the first two. Members can ask questions on the presentation and have already been able to read the first paper. However, as Fergus has rightly pointed out, the other paper arrived rather late. We will examine that later as a housekeeping matter and perhaps add the second paper to the agenda for the next meeting. I do not expect members to read something quickly and be prepared to ask questions on it.
I thank the gentlemen from the Scottish Executive for their presentation, which I found extremely helpful. The SNP has been campaigning for about a decade and a half for the Labour party to take on board the case for justice for small businesses. Judging by today's announcement that the minister is considering whether to consult on the matter, I am delighted that, at long last, it seems to have accepted that principle. I note that the slide says that he is considering whether to consult—not considering whether to consider it—but I shall leave that issue for another time.
Thank you for your comments. I refer you to bullet point 2 in the briefing paper that we circulated, in which we accept that there is evidence of the extent to which the larger proportion of costs impacts on small businesses. The fact that transitional relief, and relief for small businesses, has been given in the past is evidence of the fact that, in Government, there is a recognition of the problem.
One point that concerns me is the timetable. In your presentation, you stated that the poundage and various other matters, such as transitional relief, must be decided in the next month or so. I raised the issue of revaluation many times in the parliamentary business bulletin back in June. Why did the Executive leave it such a long time before it decided whether to consult? In particular, when did the consultation with business, to which you referred just a minute ago, actually begin?
I am happy to deal with that, but I want to know to which consultation you refer. We have consulted on many issues. The issue that we are currently consulting on is the possibility of transitional relief. We are engaged in widespread consultation with the prescribed industries; we have previously consulted on the decapitalisation rate. A range of consultation has been conducted on quite technical matters.
One of the good things about this committee has been its businesslike attitude. It is regrettable that Fergus Ewing has tried to turn the meeting into a party political broadcast.
We have not worked that through in any detail at all, for the reasons that I have outlined. Duncan Gray and his team are collating the statistics, which will give us a clearer idea of the actual spread across the country and of what the impact would be. The more thresholds that are introduced under any of the systems, whether for rating relief purposes or for anything else, the more points exist on which people have an incentive to appeal. Anything that increases the rate of appeal will have a short-term effect—it will create uncertainty—and a long-term effect, with ever more difficulties for local authorities and for the Executive in managing the local government finance settlement. We always have to make a calculation at this time of year of how much non-domestic rate income will come into the pool before the money is distributed.
The objective of the poundage setting and the financial calculations that we are making in the lead-up to the revaluation is for the total amount of non-domestic rate income not to change following the revaluation—the overall implication for local authority finance is that it will not change.
There was some detail in the FSB's presentation about the change in the threshold. The focus of the FSB's argument may have been too narrow; the implications are far wider than has been indicated. Would that be a fair comment?
Are you talking about the paper presentation or about the presentation that you heard today? I did not hear today's presentation, so I am somewhat at a disadvantage.
I meant the paper one.
We would like to look at the impact across the whole system of the proposals in the FSB's paper. There are implications for the way in which councils manage the local government finance settlement for our assessors and for the courts and the Lands Tribunal for Scotland. All the implications of any proposed scheme would have to be examined.
Facing the formidable front row of assessors, I am reminded that I should declare an interest—my brother is a senior partner in a firm of chartered surveyors and I assume that from time to time he haggles with those gentlemen about people's valuations.
We can supply that information for you.
Thank you.
You will be aware of the survey that has been undertaken by the Forum of Private Business. It indicated that 87 per cent of small businesses think that rating reform is the most important issue that the Scottish Parliament can consider. Following the revaluation exercise, will the Executive be undertaking long-term investigations into possible alternatives to the rating system?
That is clearly a question for the minister—if Jack McConnell were to come to this committee, he would say that he would like to get revaluation out of the way with minimum turbulence. He does not want to cause any disruption to business confidence and performance if he can avoid it. Having said that, he has indicated that, in the longer term, he would be willing to consider changes and different ways of doing things.
Is two years your definition of long term?
No. That is an unfortunate interpretation. I was suggesting that there would be a window of opportunity.
Have your economic development colleagues in the Scottish Executive formed the view that rates are an important issue in terms of encouraging small businesses? In your view, has the Non-Domestic Rating (Rural Areas and Rateable Value Limits) (Scotland) Order 1997, which gives relief to specific rural establishments, caused problems or has it been helpful?
That is an interesting question. I need hardly explain that the order was introduced because ministers took the view that there were particular problems in rural areas that needed to be addressed. As an official, I can say that the scheme seems to have worked very well and has been favourably received in most rural areas
That is true.
As I said in reply to Mr Gibson, if we were considering a major revaluation of non-domestic rates in Scotland after April 2000, we would learn lessons from that scheme.
Turbulence is a new in-word—it is a bad thing, I gather. It is always helpful in politics to know whether one is for or against a thing—we are to be against turbulence.
Yes.
Explain why.
I am sorry. I felt that I should give a non-civil service answer for a change.
If people are still under transitional relief when the new lot of rates comes in, the existing system for avoiding turbulence is not good. We should think out a better system to help to reduce turbulence.
That is a valid point. It is interesting that, on this occasion, the uplift is only about 13 per cent, which is significantly below what it was five years ago, so it seems that unwinding—that is the technical term—transitional relief in the next quinquennium will be much more feasible.
I apologise for missing your presentation—I was dealing with some urgent constituency business. I also apologise if you have covered this point. The Federation of Small Businesses submission suggests two ways in which its proposals could be funded. One is that the Scottish Executive could find funds elsewhere in its programme. I do not want you to respond to that, as I know that the Scottish Executive does not favour that option. What is the Scottish Executive's view on the other option, which is to raise rates for larger businesses by, for example, 3.5 per cent on average?
I start by saying that I do not mind Mr Muldoon missing a presentation for constituency business because I am one of his constituents. It is good to know that he is earning his corn.
I do not know why, but when someone from the Executive comes to give evidence, I always think that they get off easily. I thank you for your comments, which have been helpful. Like Fergus, I am delighted that the minister is at least considering consultation on the rate-relief scheme. Our deliberations will be part of that consultation. It will be interesting to hear what comes out of the consultation.
Meeting suspended.
On resuming—
I thank the witnesses for coming in early and enabling us to make up some time. I know that you have come straight from another meeting, so I apologise if you rushed up the stairs and were hounded by Craig Harper to come straight into this committee.
Thank you. I am the director of CBI Scotland, which means that I am the professional head of the organisation. Allan Hogarth is head of media and public affairs for CBI Scotland. We are pleased to have been asked to give evidence to the committee.
Thank you.
Can you confirm that you had sight of the Scottish Executive's paper at the weekend?
You talked about the inherent flaws and hurdles in the banding system. Do you think that a tapering or sliding scale might overcome those difficulties?
Let me answer your last question first. Whether or not any cut in small firms' rates is financed from the Scottish block is not relevant to the arguments that I made. My argument was that the scheme, rather than the financing of the scheme, was flawed. I am not here to say that I object to the scheme because larger and medium-sized firms would have to pay for it. What I have done is draw attention to the inherent flaws in the scheme. I hope that that clarifies things
You made a point about the hurdles that were an inherent flaw in the banding system, and I suggested that a sliding scale of rates might be an acceptable solution. How does that grab you?
How do you see that working in practice?
We have a sliding scale for things such as national insurance payments, which are worked out with tables. I assume that it would be possible to have an equivalent system for rates. That would overcome the band flaws.
So a sliding scale would operate rather like the tax system? Every business would get the benefit of the lower band and then move up through the banding system.
Or something akin to that.
That would work much better. National insurance and the income tax system work like that. National insurance used not to work like that, and, because it operated on a banding system, it created the poverty trap. Our concern is that the proposal would create a corporate poverty trap.
It would certainly cost a lot more than £46.5 million, as that figure applies only to small businesses. The scheme that you are proposing would benefit all businesses, so it would be quite expensive.
The first sentence of the third paragraph of the section entitled, "CBI Scotland's Preliminary Position", reads:
Our decisions to undertake research are driven by the weight of members' opinions. There is a view that the rates system, like other elements of the tax system, is not perfect. The CBI does not think that the existing system is so imperfect as to justify undertaking the research that Mr Gibson suggests. It is not for organisations such as the CBI to undertake such research, but for those who want to challenge the existing system. Although we do not think that the system is perfect, it is reasonably satisfactory.
If an organisation represents larger firms, I imagine that it would prefer the existing system.
We represent 26,500 firms, many of which are trade associations that represent, for example, small firms of plumbers or electricians. It is wrong to suggest that we represent only large firms.
Have you any empirical evidence that suggests that there is an optimum level of rates that could be imposed that would benefit large and small businesses?
We have not carried out that research for the reasons that Iain McMillan outlined. The members of CBI Scotland have not called for that to be done. A lot more could be done to improve growth in small firms, such as providing capital allowances and giving tax credits for research and development. Small firms can develop and become medium-sized firms. That is an avenue that should be looked at more closely.
If that is the case, why did a recent survey by the Forum of Private Business indicate that rates reform was the No 1 issue for 87 per cent of its members? The CBI seems to think that rates are not an issue and that they are not a burden.
You would have to address that question to the Forum of Private Business. Our members have not raised the issue with us.
What proportion of its membership does CBI Scotland define as small businesses? I am very interested in what you say about rates relief. Would that be an active disincentive to expansion, and to what extent does the CBI think people make those kinds of straightforward calculations and decisions when they think about moving things on?
There are a number of questions there.
I am aware of that.
I will try to deal with each of them.
I wondered whether help might also be targeted at people who made plans on the basis that they would receive rates relief.
The Government is just about to appoint a chief executive of the Small Business Service, which will obviously provide other support for small businesses. The Prime Minister gave more details of that initiative in his speech to the CBI conference today.
We will have to examine the whole system of taxation if we want to find a way of relieving small firms of this highish charge. Although one way to do that might be through a sliding scale of allowances and rates, that measure would be expensive to implement. It was suggested recently that firms could pay tax on their profits, or there could be a scheme related to employers' national insurance contributions.
The same sort of arguments were advanced in favour of the window tax some time ago. None of us wants to do anything that would harm small businesses. I am interested in your argument that there would be a poverty trap. How would a graduated scheme in which—for the sake of argument—a rateable value below £5,000 receives 50 per cent relief, below £5,500 receives 45 per cent relief and below £6,000 receives 40 per cent and so on, discourage firms from growing? The increased rates would be relatively small. Surely it is better to encourage businesses to grow and then they will be able to pay the increased rates.
I think that I tackled that in Mr Campbell's question, but let me cover both points. If there was a taper, and the scheme operated by way of allowances, such problems would not occur. I have seen a proposal whereby firms with a rateable value of less than £5,000 pay 50 per cent of their established rates. If a firm wanted to move to premises that had a rateable value of £6,000, it would not qualify for that 50 per cent reduction.
What I am suggesting is that the business would qualify for 40 per cent and that the difference would not be a big inhibition.
Forty per cent of what? Is that a 40 per cent reduction in the rates?
Yes.
If it was a 40 per cent reduction in the rates, a business would pay 60 per cent of the rates that it would normally pay. That would mean that if it moved to larger premises than those with a £5,000 rateable value, it would immediately have to pay the difference between a 40 per cent reduction and no reduction at all. That would be a large increase.
Yes, if the business moved into premises the size of Marks and Spencer. Presumably, in a tapered scheme in which any increase in the rates was gradual, the firm would grow gradually. I cannot understand the poverty trap argument.
It depends on how many bands the scheme has and the slope at which they are graduated. It might work, but we would need to see what was proposed in order to assess that.
Would all firms be eligible for your suggested scheme?
We are trying to explore a sensible system. In your view there are flaws in the schemes that are being suggested. I am unimpressed by that, but I would like to be fair, and understand why you think that they are flaws.
In your proposal, would all businesses be eligible for allowances or just small businesses that reach a certain level?
My example relates to small businesses; at a certain point—for example £10,000—the relief would run out. Under Mr McMillan's argument, a small business with a rateable value of £4,500 that is doing so well that it moves to other premises with a rateable value of more than £10,000, would not get any relief. I would have thought that a business that was doing so well that it could afford to pay the increase, would not say, "Gosh, if I am going to have to pay more rates, I am not going to expand my business." Persuade me that it would say that.
In the enterprise zones for similar schemes, experience has shown that landlords increased the rent to fill the gap. Market forces have made such areas more attractive places to be based, which has led to rent increases. It is not quite as easy as saying, "Let us reduce the rates and that will reduce the burden for small firms."
You have raised the important issue of increased rents. We asked the assessors about that. They took a slightly different view, although they conceded that your example of enterprise zones was correct.
We believe that there is a serious risk that that could happen, and we cite the evidence of the enterprise zones. We do not yet have that system of rates in this country, so there is no proof. At some point the committee will have to make a judgment about that, but we have given our view based on logic and precedent.
The logic that I have heard seems to be that you accept that small businesses have a higher burden of business rates than larger businesses do, but that you do not think that anything should be done about it. It seems unusual that the CBI should send a message to small businesses saying, "High tax is good for you."
To be fair, not many of our members are landlords. Experience has shown us that rents increase as sites become more attractive for businesses. That is not a hypothesis; it is reality.
Let us consider Scotland. From my experience working in property, I know that a lot of the properties in which small businesses are based are owned. Your argument does not apply to them because the small business is the owner of the property. A larger proportion of small business occupies properties on long leases. Your argument does not apply to them either.
It might affect them if they are selling.
Your argument could apply only to the relatively small proportion of properties for which the existing tenure expires and there are negotiations about a new lease, or to leases of new hereditaments. You assume that market forces will somehow rub out any small gain that small businesses might make. What evidence do you have for that extraordinary proposition?
It has happened with rate relief schemes that have been tried in enterprise zones. It is easy to produce a scheme without evidence to back it up, but there is evidence that that has happened in enterprise zones across the UK.
You have repeatedly referred to evidence. If you have any evidence, perhaps the committee could receive it from you.
That was not the point that I was making. Your argument is that the changes would apply only to rents and that they would not apply where the heritable property is owned. My point is that when a small businessman wants to sell a property, the value of the heritage could be higher for exactly the same reason as the value of the rental could be higher. I do not accept your counter-argument.
Well, I do know some reasons. However, you are talking about the suggestions that you have made. One of them is that local government should bail out small business, under section 156 of the Local Government etc. (Scotland) Act 1994. In the CBI's opinion, which budget lines should be scrapped to help reduce the unfair burden on small business?
We did not say that. We are not proposing a new act of the Scottish Parliament. This legislation is already on the statute book. Parliament saw fit to bring in that legislation to alleviate hardship, where it arose. We are citing that as only one example of the way in which help could be targeted at small businesses that are in distress.
As the suggested scheme would require £46.5 million from the Scottish Parliament's block grant, it is only fair that MSPs should decide from where in that block grant the money should be taken.
That is undoubtedly true. We have accepted that small businesses have relatively higher business rates. You accept that and have said that that is not of concern to your members. Has there been any consultation with your members on the proposition that there should be a scheme to help small businesses with their rates? If not, are you proposing to implement such a scheme?
Indeed we are. The consultation paper appeared only at the end of last week, so it is a little soon to have consulted our members on our response to that consultation. There are two separate issues: the special help that is to be given to small firms within the parameters of the revaluation, and a longer-term change to the smaller firms rating regime that might help them over time.
I want to share my experience with the committee. When the money is needed, the bank does not give it. I remember when I set up my own business. The cost of rates that was inflicted on my business—and I use the word inflicted meaningfully—put me under pressure. Things have moved on considerably. I own a business that has more than 50 employees, and—although I should say this quietly—the rates are no longer a consideration, due to the size of the business. Have you surveyed your members to determine how many are paying 25 or 30 per cent of their perceived profit on rates?
There was certainly no intention to adopt the tone of, "I'm all right, Jack." The paper does not say that, and that was not our intention. Although that is how you interpreted it, that is not the way in which we wanted you to interpret it. I explained, earlier, that small firms make up a large part of our membership and that we care very much about their fortunes. Their fortunes must be improved on the basis of sound analysis, not conjecture. Although we accept the analysis of the high proportion of turnover and profit that is taken in the form of rates, we do not know why that happens.
Perhaps it is a question of turnover. If a businessman is on his ownsome, the take is that much smaller so the burden is that much greater. The fundamental question that I want to put to you is do you care about small businesses? Is there a problem in Scotland that must be addressed? Quite simply, if, after our deliberations, the burden on a business is reduced, say from 25 to 12.5 per cent, will that have any material effect?
With respect, convener, I thought I had answered that question. We do care about small firms. I have said so several times during this discussion. A large proportion of our members are small firms. However, we must act on the basis of the concerns that are relayed to us. I repeat; we have made proposals to the chancellor about the changes that he could make to the fiscal environment to help small firms. I do not accept for one minute that we do not have a kindly attitude to small firms or that we are not in the business of helping them.
On your point about CBI Scotland's role in assisting large and small businesses, the Minister for Enterprise and Lifelong Learning set up a manufacturing strategy group four or five weeks ago, a sub-group of which will examine all the factors that affect the business environment for large and small businesses across Scotland. The sub-group includes us, the Federation of Small Businesses and other representatives of the Scottish business community. By December, it will publish its report on ideas for improving the business environment across Scotland. The report should provide some constructive solutions.
What about my final question on whether a reduction from 25 per cent to 12.5 per cent will have any material effect on a business?
It is easy to produce a simplistic figure like that.
Let us say 20 per cent then, to make it easier for you.
Any reduction in cost to business would be good news and would improve business performance, but other questions must be addressed, such as how sustainable such improvement would be, what other effects they would have, such as rent rises, and who would pick up the tab—other businesses or Scottish taxpayers.
You mentioned the need to make a judgment. I have made a judgment based on some of the things that you have said, which may be unfair. I want therefore to give you an opportunity to correct me. My point picks up on Donald Gorrie's comments and on what Gil Paterson has just said. You talk about poverty. Indeed, the only thing you have not said about poverty is, "Let them eat cake." For us to make a judgment on your presentation, you need to convince us far more of why the status quo should remain.
We have described the characteristics of the scheme, but that is a different matter. We have not offered an analysis of those characteristics. As for "Let them eat cake", what you are examining is one element—small businesses' costs—of the business community's costs as a whole. We represent the business community across sectors and sizes. Employment is generated not just in small businesses, but in medium and large businesses. What needs to be done must be based on sound analysis, not on conjecture or sentiment.
But you are not prepared to make that analysis. You want to wait until your members tell you that it is needed. That is what we have tried to get across.
But I am here to represent my members. Who else do you think I represent?
You also told us that you are aware that problems exist but you are not prepared to analyse them. You are not representing your members if they have to wait until their screams are loud enough before you make a judgment. However, you want us to make a judgment on your presentation that the status quo is acceptable.
Well, make that judgment then.
The point we want to get across is that defining the cost to business is not as simple as saying that any scheme that reduces the rates burden on small business will lead to dramatic growth in small firms. The Executive has set itself a target of helping to create around 100,000 small businesses over a 10-year period, or 10,000 a year. Rather than just saying that the scheme would lead to a massive growth in small firms, perhaps the Local Government Committee should speak to the Enterprise and Lifelong Learning Committee about whether the scheme would actually help to reach that target.
The scheme might not bring about dramatic growth, but for some small firms it might mean the difference between surviving or not. I am concerned about your one-dimensional approach to market forces. You argued strongly that a reduction in rates could cause rents to increase, but I did not hear you say that the reverse would be true—that if we put up the rates that could lead to a rent reduction. Will you address that point?
The overall effect is almost impossible to predict. It would depend on whether the cost to medium and large businesses affected their break-even point or their return on investment hurdles. We cannot advise you on that; if we could, we would. I emphasise that if we thought that some of the proposals would work in favour of small businesses, we would support them. However, for the reasons that we have given, we think that the proposals are flawed. That is why we are making our points to the committee.
Gil Paterson mentioned the fact that if a company employs more than 50 people, it is a medium company. Once a company reaches a certain size, rates are not the same issue as they are for small firms.
Yes.
That is why I wondered what effect it would have on margins in large firms. Will you respond to my point about rates? You talked specifically about enterprise zones and how, if rates were reduced, market forces would push up rents. Is the reverse also true?
You would have to select a certain area where that would happen. Are you talking about certain enterprise zones where if the rates were increased, the rents would fall?
No. I am asking, if there were a 3.5 per cent increase in rates for all those businesses with a rateable value higher than £7,500 to compensate for reductions below that value, what the impact would be on rent levels.
Negligible, I imagine.
Okay. Yet you are arguing that it would have a very large effect.
It would for smaller firms, because the percentage gap in the tax break would be much larger for them than it would if it were spread across the rest of the business community. That is the point we made about small firms. If the value of the rates falls, the demand for smaller properties could increase, which would increase their rental values and hence the rateable values or, in some cases, the value of the heritable property.
Surely, if rateable values had such a detrimental effect on large companies, we would be in the same situation? There would obviously be less demand for larger rental properties, in shopping centres, for example.
Yes, but the rates of the larger properties would not be getting pushed up by anything like the percentage of the reduction for smaller properties. Therefore the effect on medium premises would still be much less, because it would be spread over a much wider estate.
Surely that is an argument for rates relief for smaller businesses? You have just said that the burden on larger businesses would be smaller.
No, it is not. That would not overcome the problem of rentals or heritage values of smaller premises rising. How it is funded is a separate question. The effects of the tax break have to be considered separately. They are mutually exclusive.
You have specifically talked about enterprise zones, where rents are reduced to suck in businesses. What would be the effect on rent levels across the rest of Scotland?
We used enterprise zones as a practical example.
Has there been no research on Edinburgh, for example, or on those areas of Scotland that are not within enterprise zones?
No. You were asking us about what would happen if we reduce the rates for small firms, and so we gave an example where that had happened to explain the consequences for rents and the costs of businesses in those areas. It seemed fair to highlight a practical example where that had happened.
Colin Campbell has a very quick question before I sum up.
There is some need for mutual clarification. When you were talking about the band floor and huge increases in rates, I suggested a tapering or sliding scale, such as national insurance has. Later on, I had the feeling that you were specifically addressing national insurance, which was not what I intended. I was suggesting a sliding scale so that there would be a smooth transition as rateable values increased.
I thank the committee members for their questions. I am not going to ask a question, but I would like to make some comments. I am not absolutely sure who you represent, because I came to the meeting with the preconception that it was big business, but you have said that that is not the case. You say that you represent a whole range of businesses, but you have not done an analysis on the issues that Fergus Ewing mentioned. It might have helped if you had come to the meeting with that kind of knowledge. That is something that you should consider. I just want to leave that point with you.
Thank you, convener. We would be very happy to return and meet with the committee again, if necessary.
The committee has some housekeeping matters to attend to. We are running over time and are keeping the clerks behind—I do not know if they get overtime—so I would like to tidy this up quickly.
Do members who are going to be rapporteurs want some kind of format to follow? For the first visit, it would probably be better for you to receive an information pack.
We will obviously expect to get some evidence from the people and groups that we speak to during our visits that backs up your reports.
I do not think that we can do all of that in one morning.
All right. Next week, we will have John Curtice, the Forum of Private Business and the Scottish Retail Consortium. Eugene and I will put our heads together to discuss how we can find time for discussions. There are options for what to do about the information that we have received today.
The person who is coming from the Forum of Private Business has to go to two meetings. Eugene may have to liaise with the Enterprise and Lifelong Learning Committee.
Fergus may want to come back on this as well, so we can liaise.
Convener, it looks as though I will not be able to go to East Lothian Council on 15 November.
Craig, can you deal with this?
I will send round an e-mail.
That means that I will not get it, which is great.
Yes, I agree, but will we still have enough time to scrutinise effectively the ethical standards in public life bill? Do we know when we are likely to be able to have a look at that?
I will come on to that.
Not at all.
I think that it would be helpful to have a briefing.
Can we fit that in?
Yes.
All right. We will do that.
Can you confirm, convener, that there is no meeting on the week starting 29 November? I know that 30 November is a holiday, but is there to be no meeting on 1 December?
That is right.
They are taking things to extremes, are they not?
I am just running the thought past you. I agree that it is absolute madness, it is crazy. However, the issue is serious enough for it to be looked into. I hope that Eugene will come back to us on that.
Is Donald Gorrie going to say a few words?
We decided to put that back to the next meeting because of the time, but Donald and Morag Brown from the Scottish Parliament information centre will speak to us.
On what?
On the great speech that you made at the conference.
The only speech that he can remember is his own.
That is right. [Laughter.]
Convener, can you confirm that the discussion on rates revaluation will be on 10 November?
We will listen to the other two presentations and then consider the time. Professor Curtice is invited too. If there is no time, we will move it on to the next meeting but one.
I have just spoken to Mr Cardwell of the assessors, and the suggestion is—
Yes, he is going to come back as well.
I do not want to prolong things—I know that this has been a long afternoon—but Mr Cardwell suggested to me in a private conversation that it might be useful, given the scheme that you are considering, if the directors of finance had an opportunity to speak about the implementation of such a scheme, especially as we are looking at computer programmes, cost implications and so on.
Do you mean the directors of finance through their group or through Convention of Scottish Local Authorities?
That was a good point from my esteemed colleague and room-mate. Another thing is whether we will have the opportunity to question the Executive again on this matter. A number of organisations appear to have received this paper from the Executive, but we did not. We have therefore not been able to ask the pertinent questions that we would have done if we had had the paper a couple of days ago.
That is a fair point. I will make that clear to the Executive. I have been told by someone at the Executive that we are not on a mailing list that he thought we were on. That will be cleared up. However, this is the second or third time that this has happened, and people from the Executive have appeared and said that they would speak to a particular paper that we have not received. I will take up that issue.
I just happen to have here a few admission forms for the CBI, if anyone would like to join. [Laughter.]
I do not think that there will be any takers.
Meeting closed at 17:28.