Business Rating Revaluation
The first item is the inquiry into business rating revaluation. I would be interested to hear members' comments on the options for consideration that I have laid out at the end of the briefing paper.
In paragraph 6.1 on complexity, the paper says:
"There is disagreement about whether or not the burden of rates on small business is excessive".
I did not think that there was any such disagreement. I thought that even the organisations representing bigger enterprises agreed that the burden on small businesses was excessive, and that that was the view of everyone who presented evidence to us. There may be disagreement about how to alter the situation, but the statement in 6.1 is erroneous.
Does anyone agree or disagree with that?
I want to develop Kenny Gibson's point further. I have read the evidence in the Official Report and can say that there is general agreement from every witness. For instance, Bill Howat of the Scottish Executive development department said:
"we accept that there is evidence of the extent to which the larger proportion of costs impacts on small businesses."—[Official Report, Local Government Committee, 2 November 1999; c 221.]
I will not bore you with what other witnesses said; basically, it is the same throughout the report. I agree totally with Kenny Gibson. I thought that there was general agreement within the committee, which was implicit in the way in which we structured questions, that small businesses were getting the rough end of the stick on this. That statement needs to be altered.
The statement is a comment on evidence, rather than the opinion of the committee. Perhaps you should look at what the Confederation of British Industry said.
The CBI says the same thing. The difference between the CBI and other witnesses was that, although it understood that there was a problem, it saw no great need to do anything about it. In its submission, it suggested that there were ways to help small businesses other than through the rates burden.
I do not think that paragraph 6.1 is so inaccurate. There was a degree of disagreement about different issues. It is true that the organisations representing small businesses were arguing for a scheme, but there was no agreement about the form of scheme. In response to a question that I asked, one organisation—I think that it was the Scottish Retail Consortium—said that the best way forward was the Executive's idea of getting through the rates revaluation this winter and examining small business rates in the window of opportunity that the Executive suggested may exist after the revaluation. There was no common position, so the paragraph is a fair summary.
Thank you again, convener, for your invitation and warm welcome. Like Mr Paterson, I spent some time going through the evidence, and would like to talk about it. Like my colleagues, I do not believe that the statement in paragraph 6.1, quoted by Kenny Gibson, is correct in the light of the evidence that we received.
John Downie of the Federation of Small Businesses said:
"small businesses pay 10 times more in business rates than larger businesses . . . As a percentage of overheads, small businesses pay 13.7 per cent in business rates, compared with 3 per cent for large companies."—[Official Report, Local Government Committee, 2 November 1999; c 194.]
It is significant that even the Scottish Executive admitted that business rates were higher for smaller business than for larger businesses, as did the Forum of Private Business. Bill Howat of the Scottish Executive development department said:
"we accept that there is evidence of the extent to which the larger proportion of costs impacts on small businesses."—[Official Report, Local Government Committee, 2 November 1999; c 221.]
Patrick Browne of the Scottish Retail Consortium said:
"We agree that business rates could well form a larger percentage of costs for small businesses than they do for large businesses."—[Official Report, Local Government Committee, 10 November 1999; c 278.]
The CBI also admitted clearly that small businesses have a higher burden. Iain McMillan said:
"There is evidence to support the view that small businesses that have a lower rateable value have a higher rate burden, proportionally. We would not dispute that."—[Official Report, Local Government Committee, 2 November 1999; c 229.]
He did not give any suggestion on how that problem might be dealt with.
We should bear in mind the fact that, although the Scottish Assessors Association is quoted in the briefing paper, it made it plain that it was not its province to talk about policy matters. From my reading of the evidence—admittedly late last night—I could find no statement from any witness that justified the paper's statement that there is disagreement on whether there is an excessive burden of rates on small business.
The paper is perhaps incomplete in another respect. Paragraph 6.3 says:
"Although the Executive has provided details of its transitional relief scheme, the full impact of the revaluation will not be known until details of the rate poundage are announced at a later date, probably after April 2000."
We heard evidence from the assessors that, in order to calculate the poundage, one must know the rateable values following 1 April to work out the yield from the increased rateable value. However, the assessors supplied clear evidence of the average level of increase, which is 13 per cent. If that is applied to the aggregate cumulo-rateable values in Scotland, it takes only a simple mathematical calculation to work out the new poundage. That was indicated in the assessors' evidence. Therefore, even if the committee does not have precise information about the poundage, the Executive will have, which means that any consideration of the matter should not be delayed. I am sorry if I have taken a long time to explain that, but it is a useful point to raise at this stage in the discussion.
Perhaps this is just semantics, but I listened carefully to Fergus as he quoted comments made by some witnesses and the word "excessive" did not appear in any of them. However, the word "disproportionate" was mentioned, which is a separate matter. We generally agreed that there was a disproportionate—not excessive—burden on small businesses. Therefore, the statement in paragraph 6.1 is reasonably accurate. There was probably broad agreement that smaller businesses paid a larger proportion of rates in relation to their income than larger companies, which is not to say that the burden was excessive.
I hope that I am not complicating matters further, but I have tried to remember how I felt at the end of the previous meeting. Reading through the document, I thought that I had come out of the consultation with four main ideas. First, the review of the system seemed to be difficult in the revaluation round, which represents a dramatic change to the system. Secondly, a more fundamental change in the system was needed in the long term. Thirdly, we agreed generally that small businesses need more support. Last, witnesses seemed to agree that the threshold approach had implications for bodies such as the Scottish Assessors Association. I thought that we felt about the same at the end of our previous meeting.
What is the status of the paper? If it is the author's view, that is fine; however, if it is some kind of holy writ for which we will be held to account at the last judgment, perhaps we should take a different view.
It is a briefing paper that sets out ideas that have been raised and suggestions on the way forward. I know what you are doing and I am letting you all do it, but I will sort it out afterwards.
That is helpful. I want to follow the path that Sylvia suggested. Everyone was enthusiastic about a transitional relief scheme, which we should endorse. Accepting Michael McMahon's point about semantics, we should agree that small businesses face an undue problem, about which we should do something after the revaluation when all the new values are known. The second group of witnesses from the Forum of Private Business, with their slightly more complicated proposals involving national insurance, had a much better scheme than the Federation of Small Businesses, which however did us a great service by alerting us to the issue. As the assessors said, the federation's scheme had considerable flaws.
The discussion seems to hinge on whether the word "excessive" was used and how the word is interpreted. Although I am not by nature, inclination or tradition someone who rewrites minutes or reports, we could delete the text of paragraph 6.1 from "There is disagreement" to "and even" and substitute: "It was generally agreed that the burden of business rates was disproportionately high for small businesses." Perhaps that would make other members feel comfortable.
I do not want to be too indulgent, convener, as you have been very fair. However, paragraph 3 of the paper, on the terms of reference, says:
"The terms of reference of the Inquiry were agreed by the committee at its 7th meeting. The key issue to be explored by the Inquiry was balance of the burden of business rates between small and large businesses. The key objective was to provide an early opportunity for the arguments in favour of, and against any changes in the system to be aired and scrutinised, prior to the revaluation."
At our previous meeting, Patrick Browne from the Scottish Retail Consortium said:
"The figures suggest that rates are a more significant cost to a small to medium retailer than they are to other types of business."
Later on, Mike Flecknoe of the same organisation said:
"We agree that business rates could well form a larger percentage of costs for small businesses than they do for large businesses".—[Official Report, Local Government Committee, 10 November 1999; c 277-78]
I think that those statements implicitly address Michael McMahon's point.
I do not think so.
With all due respect, and in light of Colin Campbell's comments, any changes to that paragraph should take those comments into account. If that were to happen, I would need to ask the committee to consider changes to the recommendation in paragraph 8 of the paper, because even witnesses who were hostile to a scheme that would benefit small businesses suggested that there was added pressure on such businesses.
Do you want to change the options for consideration or the recommendation? We should remember that this is a briefing paper.
I appreciate that, but I have an awful feeling that the briefing paper might become something more substantial.
That will not happen. The options for consideration make it clear that the briefing paper cannot become anything other than what it is. I am very open to changes to the options for consideration, but perhaps we should come back to that. I have allowed members to spend quite a long time on a briefing paper. Johann Lamont wants to speak, as does Bristow Muldoon; unless Keith Harding or Jamie Stone want to speak, I have allowed everybody in. After Johann and Bristow have spoken, we will discuss the options for consideration. If you want to add to those options, I am more than open to listening to what you have to say. We have to come to a decision today about how we move forward.
I want to return to whether the burden is excessive. At no stage did we discuss whether the rates that we take from businesses are excessive. If we were to discuss that, we would have to involve a far broader group of people, including those who might benefit from the business rate that was being raised. A clear, consistent theme has been that rates are seen as a disproportionate burden on small businesses. Rates are a bigger issue for small businesses when it comes to planning, because they account for such a huge proportion of costs. For some small businesses, rates are higher than wage bills.
Even in relation to solutions, the emphasis did not seem to focus entirely on dealing with disproportionate business rates. Significant discussion took place on the definition of a small business; such a definition, of course, would create a position from which to make decisions. Some witnesses also emphasised the importance of transitional relief. The briefing paper reflects that, as do our options for consideration.
Donald Gorrie was right to say that the committee should send a clear message that transitional relief is extremely important and that supporting small business is a complex matter, partly because of the need for a clear definition. However, it is clear that small business—however we define it—has a disproportionate concern about rating. It would be helpful if the committee focused on those two points.
Bristow?
I will pass at the moment.
Okay. I repeat that we are dealing with a briefing paper. I agree with what Donald Gorrie said—I left our previous meeting thinking that we agreed on a transitional scheme and that we needed to look at the business rate for small businesses.
The next step is to consider how we do that; the briefing paper contains three suggestions. A further option might be to introduce an independent adviser, if we feel that the matter is complex enough to warrant that. As I said, I am open to suggestions if anyone wants to add to those options. Our inquiry was good, but we must decide what to do next and I think that members will agree that we are all coming from the same place. No one is saying, "No. They are paying a fair business rate. End of story." There is an agreement that the rating burden on small business is disproportionate.
Does anyone want to add to the three options in the briefing paper? I would be prepared to add the option of having an adviser, if members think that that would be appropriate. Eugene can tell us what the adviser would do.
Eugene Windsor (Committee Clerk):
To some extent, that would depend on the brief that the adviser was given. Typically, the adviser would examine all the evidence that has been received so far, evaluate it and advise the committee. The adviser might suggest other evidence that the committee might want to take as a further development.
I would support the appointment of an adviser; I think that we probably all would. I am minded to go with the second option:
"Take no further action at this stage, but return to the issue when the full impact of the forthcoming revaluation can be assessed."
I would look for wider issues such as a business's turnover to be taken into account, as opposed to the rental value, which rates are based on at the moment.
An issue that plagues many rural areas is small retail businesses in town centres versus a big supermarket on the outskirts. That has social implications in terms of elderly people and others who do not have transport and cannot get to shops. Perhaps I am driving at increased discretionary powers for councils to vary the rate burden, much as they can do with rural filling stations. An adviser could get his or her teeth into detailed work such as that and report back to us.
I recommend that we go with the second option, but expand it to set a timetable for a full, detailed review next year. It would be appropriate for us to allow the rates revaluation to settle down, then to update the evidence that we have received on the basis of that revaluation and to consider the whole issue.
A number of complex, sometimes contradictory, issues have been raised in the evidence that has been presented to us and it would be impractical to progress the matter further in the middle of a rating revaluation. However, the subject deserves a proper airing after the revaluation is complete. I am not sure that we need to appoint an adviser in the meantime.
We have consensus that there is a problem that needs to be addressed and that doing that effectively and fairly is not an easy task.
I agree that there is not much point in having a discussion about whether the burden is disproportionate or excessive. As Sylvia Jackson said, we are agreed that the burden is unfair, or undue. If that is a fair expression of the consensus, it seems logical to encapsulate that agreed conclusion—with reference to the evidence behind it—in an interim report.
I agree with the suggestion from Jamie Stone and the convener that an adviser should look further at the technical aspects. The issue is one of timing. Do we postpone further consideration until some future date, in particular until after revaluation? If we do, it will be extremely difficult for the Executive to introduce a scheme to address the problem that we all agree has been identified. That point of view is based on a number of practical concerns and is not intended as a party political point.
The unfair burden faced by businesses has been identified in the evidence as being endemic to the system, because of the way in which rateable values are calculated. If that is the case, and I believe that the evidence supports that conclusion, the problem exists now and will exist after the revaluation. An interim report could express the lowest common denominator—that we all agree that a problem exists that needs to be addressed—and could perhaps state, for the record, the two solutions with which we have been presented. The interim report could also go a step further and invite the Executive to consider the matter urgently, so that the Executive could use its greater firepower—in terms of staff and resources—to address the problem before the rates revaluation rather than after it.
If the problem were left until after the revaluation, imagine how difficult it would be, politically, to introduce the complication of a further relief scheme after the turbulence—a word that featured in the evidence—engendered by any revaluation. It is inevitable that there would be further losers—who would squeal very loudly—under that new scheme.
As I said, politically, it would be difficult to introduce an effective scheme shortly after a revaluation. We should take forward the approach of inviting the Executive to grapple with the problems and produce a workable scheme, which would be introduced with the transitional relief scheme that is being considered. I fear strongly—and not in a party political way—that this subject will be shelved if we step back from that approach. It will gather dust and perhaps, for understandable reasons, nothing much will happen until 2005.
I disagree with that. I will argue for the middle option, which is that we do nothing at this stage. It was important, convener, that you included the view of the Scottish Assessors Association. I was struck by the fact that, in its deliberations, it had no axe to grind. It considered the matter with inside knowledge and no particular reason to go one way or another. It suggested that we do nothing at the moment and consider the issue after revaluation.
The danger of having an interim report is that, when we do an assessment post revaluation, we will end up comparing the interim report with the evidence that emerges. There is no value in doing that. The assessors were right to say that, having addressed the issue at this point, we should take a step back and find out what the outcome is before we deliberate again on the impact of the revaluation.
I support Fergus Ewing's point and will add to it.
The revaluation is a mechanical process, which happens every five years. The Executive has stated that the take from the revaluation will be the same as the take before it, plus inflation. The figures will be the same; it is just that the burden will be shared out differently. There will be winners and losers. Inherent in every revaluation that has taken place is the imbalance between big business and small business. The evidence is clear that there is an impact on small businesses.
Like Fergus, I think that as we all know that there is a problem, there is no benefit in delaying an examination of it. Somewhat differently from Fergus, I believe that, if we do not produce a report saying that the Executive needs to address the problem, this revaluation will take place, we will be into the next revaluation and then the next one and the problem will still exist. We have identified a problem and now is the time to say to the Executive that something should be done about it quickly.
On a point of information, convener. Can I take it that, when you said that an adviser should be appointed, you were not suggesting that an adviser should be appointed after the revaluation?
No.
In other words, we can get on with it now. There is not a problem.
I do not think that many people who we heard from were saying that we could do much about this revaluation. They said that it would be silly to try to do something in such a short period.
Having said that, I have some sympathy with certain aspects of what Fergus Ewing said. We have spent a considerable amount of time on this issue and it would seem bad if we did not produce an interim or summary report to put on the table, stating our general feelings at the moment. It is important that we show some concern about the situation; saying that we will return to the issue later is not the best way in which to show that concern. It would be better to timetable this issue for examination as soon as possible and show that we see it as a priority. Obviously, we must balance it with other priorities.
We should have a report and a timetable. I also suggest that we ask Jack McConnell back, so that we can say that we feel that there should be as much support as possible. We know that it will be limited in this revaluation, but we could ask him to tell us whether he has any ideas about how that support could be given. That would show that the committee was genuinely concerned to follow the matter through to the Scottish Executive. We will then have a timetabled in-depth examination, so that we can do something radical next time.
We should submit a report saying that there must be a transitional relief scheme and another scheme to help small businesses. The idea of asking the Executive whether it would do something about this is quite elegant. If it does not, we can continue to work on the issue.
The difficulty is that I am sure that any member of this committee could produce a nice scheme for helping small businesses with their rates. The downside is that the Executive then has to find the £10 million or £20 million, or whatever the sum is, which would leave a hole. The money must come from either bigger businesses or the public purse. That is an issue for the Executive, which is a good argument for handing the matter to it, making it clear that we believe that there should be such a scheme.
If everyone knows that an attempt to reduce the rates burden on small businesses and find the money from elsewhere is on the table, they will not be as upset as they might be that Marks & Sparks or Scottish Life have to pay more rates than they do at the moment. We should make it clear that there should be transitional relief and produce an interim report setting out the arguments advanced so far. We should tell the Executive that we are keen that it should do something to reduce the burden on small businesses and that, if it does not do that, we will examine the issue again.
I agree with Sylvia Jackson and Donald Gorrie, and to some extent with Fergus Ewing. My only concern is the logistics. As a councillor, I know that the revaluation is almost complete and that a rate will have to be declared in March so that the books can be printed and everything can go out. I do not think that the Executive could bring out an alternative scheme within two or three months, especially given the Christmas period.
We cannot leave this matter. We must have an interim report and we must recommend that the Executive considers this issue. I do not think that there is a problem with the sharing of the burden because, if that burden is disproportionate, the implication is that the disproportionate part goes to the bigger payers. We are not looking for alternative money within the budget; we are looking for a distribution among the various ratepayers.
I am worried about the logistics. We must get through the revaluation and I do not think that the Executive can bring in an alternative scheme by next March.
My view is, to a large extent, the same as has been expressed by Sylvia Jackson, Keith Harding and Donald Gorrie.
The interim report is crucial. We must set out our stall. Donald is right to say that we must make it clear that we support transitional relief. We must also make it clear that we are considering what would be the best mechanism for lifting some of the burden from small businesses.
I do not agree with Sylvia and Keith about whether it is possible to deal with this matter in the next two or three months. I am not convinced that we could not do that. I am a great believer in the big bang theory. It might be a lot better to put this together and do it as one exercise rather than say that we will leave it to another date, which, as Fergus Ewing said, could be 2005. I would have to be convinced that there is no possibility of our doing this before March. I am convinced that we can do it. We must set out our stall clearly and have a precise timetable, regardless of whether we decide to examine the issue before or after the revaluation.
When you say "we", are you talking about a royal we or do you mean the Executive—
Some of us do not believe in the royal we. [Laughter.]
No, I am referring to this committee. Obviously, we will have to liaise with the Executive—we should let the Executive know our views.
Just to ensure that I have this right, are you suggesting that the final report should be done before March?
I think that we should do it now—it should be done before Christmas.
Thank you—I needed to clarify that point.
It would be rather premature if the committee issued an interim report, because all we have done is conduct a study into one particular area of local business costs. We have not even taken evidence from the Minister for Enterprise and Lifelong Learning on how he wishes to stimulate the small business sector. It would be wrong to issue an interim report on the basis of partial evidence.
The disproportionate burden of rates on small businesses has been mentioned, but some have suggested that we should jump to a conclusion when there is not even consensus about how such a scheme should be funded. For example, should it be funded from other parts of the Scottish block or by larger businesses? We have not addressed those issues properly. We also had the evidence of the representative of Boots, Mike Flecknoe. He said that some of the schemes that are being proposed would benefit some larger businesses. There is no substantive scheme around which there is consensus and it is simplistic to suggest that the system could be altered by March.
In addition, the committee's burden of work over the next few months includes consideration of the ethical standards bill, the Abolition of Feudal Tenure etc (Scotland) Bill, the Abolition of Poindings and Warrant Sales Bill, the power of general competence, evidence from Richard Kerley and our on-going work on McIntosh. It would not be practical for us to take the lead on completing work on this issue between now and March and, quite apart from what the assessors tell us, there is no consensus in the business community. It would be wrong for us to produce an interim report on the basis of partial evidence. The issue deserves to be addressed, but it would not be appropriate for us to jump to conclusions at this stage.
First, we should remember that no one around this table suggested that we should take the money from the Scottish block. That suggestion came from one of the witnesses. We should get that right in the first place.
Traditionally, I am a bit frightened of taking no action. I never think that no action is best in any situation, as momentum is lost. I think that we have—
I am not suggesting that we take no action; I am suggesting that we wait until next year.
You are suggesting that we take no further action at this stage and that we return to the issue later, which amounts to taking no action for three or four months. I do not think that such a hiatus is legitimate in terms of the work in which we are involved, as it comes at two levels. Revaluation is going to take place anyway and we have acquired, to a certain degree, the other overview from the business community on the way ahead. While revaluation will happen at a practical level, we have learned a lot about what the business community thinks it needs and about what it wants to do to address the problems of small businesses.
I see no reason why the operation cannot take place at those two levels. One would be the practical level and the other would be the strategic overview level, which we would provide, where ideas can be bounced about and principles can be laid down. We could come up with principles on which we all agree within the hour—we could then take it from there. I find the option of delaying completely unattractive, Bristow.
People are getting confused. It goes without saying that there was no agreement on any particular scheme, but there was agreement that there is a problem. An interim report would square the circle and I suggest that, after producing that report, we invite Jack McConnell to the meeting to give evidence. If there is someone else from the Executive who should give us evidence, fine. If anyone in the Executive were interested in small business, they would want to give evidence.
We are always cautious about not taking action, but we should be equally cautious about taking action for the sake of it, just to be seen to be doing something. The summary of our deliberations is in the minutes. The balance of positions, which is clear, and the different things that have emerged, can be extracted from them—the fact that we believe that transitional relief is necessary and that there is no happy definition of what a small business is.
I was quite happy with the idea that we pull together those basic points—the fact that there is an issue about costs for small businesses being disproportionate. However, the suggestion now seems to be that the interim report will be more substantial and will have more authority than that. That would take us further than we have gone in our discussions. The unease is being caused by the fact that we do not know whether this is an interim report.
I am happy for us to say that there should be transitional relief and that we have taken evidence that clearly identifies that there is a disproportionate burden on small businesses, but that there is a difficulty with the definition of a small business, which needs further exploration. I am also happy to say that we are keen for the Scottish Executive to pursue transitional relief and work with this committee and others to ensure that revaluation is as painless as possible. I am even happy for us to say that we will come back to the issue at some stage, so that it does not just disappear to be revisited in five or 10 years' time by whoever is still standing on the Local Government Committee. That would not be right either. We need to put some timetable on it.
It would help if we had an adviser working on the matter in the meantime, who could begin to pull things together. I do not want to revisit old ground in three months' time, but nor am I keen to drive this beyond what I thought the committee had generally agreed on. That is what we would be moving towards if we did as Kenny Gibson and Fergus Ewing said.
The point is that the committee has been in receive mode. We have the power to do things ourselves. Johann is right. We should get an adviser in. That is not a contradiction. An adviser could work away on the creative thinking and new approach that we need to take. The guts of the problem is why should Alldays in X premises pay the same as a tiny, wee greengrocer in the same premises? That is the question that needs to be addressed and where we can make a difference.
In the Education, Culture and Sport Committee, I have been made rapporteur on the issue of rural schools and rural school closures—for my sins. Given time constraints and so on, perhaps a small group of members of the committee could work with the adviser. The rating problem affects bits of Glasgow just as much as a wee town in Caithness. It is about little businesses struggling and sometimes going under.
We cannot form a sub-committee, if that is what you mean, but we can discuss the idea later.
What do we want to say in an interim report? What is its purpose? Would we say that business cannot agree on what it wants to happen, that the committee cannot agree on what it wants to happen, but that we would like the Executive to do something and so we are producing an interim report? I see no value in doing that. I agree with Jamie that if we take on an adviser—
That is a cop-out.
No, it is a compromise.
No. If all we do is pass the buck, it is a cop-out.
Address your comments through the chair please.
We are essentially saying that we cannot agree, that the evidence that we have taken does not suggest an agreement, but that we want the Executive to do something. What is the value in that? If we were to take our time, take the assessors' advice and wait until we have all the evidence so that we get the complete picture, that would be of far more value and substance in encouraging the Executive to do something than a report that says that we cannot agree.
We can hear one more point from Fergus and then we must sum up.
Thank you, convener. I want to respond to Bristow's argument that there is a lack of consensus on various points. If, as I believe, there is consensus that there is an undue burden of business rates on small business, it must follow logically that there is consensus that there is an unfairly low burden on larger business. In other words, if small businesses are getting the raw deal, the larger business must be paying slightly lower business rates than is reasonable.
There is also consensus, as Kenny Gibson said, that the solution is not to throw extra cash at the problem from elsewhere in the block; the scheme must be self-financing. The committee could set out certain desirable principles. I note from the Official Report that Gerry Dowds of the Forum of Private Business set out a number of principles to which I feel I could subscribe and which seemed to express common sense. Other members have indicated that the forum's scheme was to be preferred—Donald Gorrie in particular was of that view.
The principles that Mr Dowds outlined were straightforward.
"First, relief should be targeted on the size of business, taking account of the close relationship between the impact of rates and the size of a business . . . Secondly, size should be measured on current information. Rateable value is dated . . . Thirdly, relief should be aimed at businesses, not premises . . . Fourthly, thresholds should be avoided".
His final point is that the scheme
"must be simple for businesses and local authorities to apply and administer."—[Official Report, Local Government Committee, 10 November 1999; c 293.]
We can all subscribe to those principles.
I want to respond to the question Michael McMahon and Johann Lamont asked about what an interim report would achieve. That begs the question of what the committee's role is. It seems to me that the role of a committee of the Scottish Parliament is not to produce a perfect scheme to draft legislation in a complex area, but rather to identify a problem and the principles that could provide a solution, and to present the Executive with a consensus view setting out those principles. We can do that because we have the consensus to do it.
Finally, we need to do it now. If it is not done now, I believe that it will never happen. As for the practicality, I do not see why, given that it is now November, the Executive could not come up with a workable scheme to be implemented by 1 April. Governments can achieve quite a lot in a short space of time and, although I understand the technical objections of people who have experience of working on councils, this is a matter of policy. I would have thought that the vast resources of the Executive could be deployed to come up with a workable solution—or at least it should make the effort to do that.
My notarial motto is nunc aut nunquam, which I believe means now or never. I have always been a believer in having a stab at something worthwhile now, otherwise it never happens.
I will let Sylvia make a final comment and then I shall sum up.
Apart from the Forum of Private Business, which came up with the threshold approach and gave us a concrete example of a scheme that could be proposed, I do not think that there is anything that we could put in place in that short time scale. Fergus Ewing says that the Scottish Executive has resources available, but it would also be stretched. I agree with his view that we must have a timetable for moving forward. That is important, but his suggestion of bringing in a new scheme by the spring may be rather unrealistic.
As I attempt to sum up this matter, I know why I hesitated before agreeing to chair this committee.
Let us start with the positives. There is consensus on support for a transitional relief scheme. We recognise the need for a review of small business rates and there is no doubt that we see the current scheme as unfair. I agree with Sylvia Jackson's comments; I am not sure we could implement a brand new scheme by March or April of next year.
We have to be clear about what an interim report is. It is a report that is issued halfway through a decision-making process, in which we indicate how far we think we have come and that we are keen for the Executive to pursue the matter in question. I am not absolutely sure of the status of the report, but Sylvia is right to say that we have not reached a final decision on which kind of scheme we think is best. If we appointed an adviser, they would examine the technical aspects of the issue, read all the information and report back to us on what, in their opinion, was being said. The adviser could help with an interim report and with the Executive's response, so they could be with us for some time.
We have a heavy programme, which we will consider later in the meeting, and there are some other matters that we have to attend to. The ethical standards in public life bill has to be dealt with before Christmas, and we will be into the Abolition of Poindings and Warrant Sales Bill immediately after the recess. We are not the lead committee on that bill, but we are holding up its passage because we will not consider it until January. I must take responsibility for moving that forward.
I suggest that in the first instance we appoint an adviser. Are there any objections? There are no objections. I also suggest that we combine recommendations 3 and 4 and that we produce an interim report for the Executive, indicating the stage at which we have arrived. I know that some of you are not happy with that, but if we appoint an adviser and combine recommendations 3 and 4, we will at least be laying down a marker.
However, I do not think that the Executive will be able to come up with a new scheme as quickly as has been suggested, and perhaps it should not. Members will have read the Official Report and will know what the difficulties are. It may, therefore, be sensible to take our time so that we get things right. Do members understand what I am suggesting? Once the adviser has been appointed, the clerk and I will investigate how quickly an interim report can be produced. It would, of course, come before the committee before zipping up to the Executive. Kenny, you look unhappy.
I am unhappy. The committee has been meeting since May. If it was known that it would be difficult to timetable alterations to this rating scheme, we should have dealt with it earlier. We should seek clarification on whether there are time constraints as far as the Executive is concerned.
I notice that the committee has only one meeting scheduled between now and Christmas. I do not think that it would too onerous to schedule another to deal with this issue if the committee wanted to make recommendations to the Executive about a particular scheme. Sylvia said that only one scheme had been proposed, but the Forum of Private Business came up with a different one. I thought that it was a lot better, because it involved tapering rather than thresholds.
It was a long-term scheme.
I do not think that it was a long-term scheme.
Could you speak through the chair, please?
I am sorry. The forum seemed to think that its scheme could be implemented fairly soon. We need clarification on whether it would be practical to do that before March, as that is the key to whether we take it forward. We should seek further advice before saying that we cannot. If that is the case, why have we spent so long considering this issue now when we could have done it two or three months earlier? That would have given us the time that we require.
The approach that the convener has suggested seems sensible. It is not practical in any way, shape or form to have a new scheme in place by March of next year.
The assessors pointed out a number of key problems that they foresaw with the first scheme that was shown to us. The second scheme proposed an interaction between the rating system and the national insurance system. We have not even heard from the UK Government whether that scheme could be implemented. There would have to be quite a lot of working up by the Executive, in discussion with the UK Government and business, before any scheme of that nature could be introduced. I do not see any way in which a scheme could be introduced by March of next year and not cause turmoil in the business sector. It is impractical to proceed on that basis, and that is why I endorse the approach that you are arguing for, convener.
We seem to have moved all of a sudden from recognising that there are complexities and difficulties to being obdurate and not wanting to move forward. There was consensus that the issue is complex. Even defining what a small business is is complex. I am not trying to obstruct movement. I am more than happy that there has been movement. This committee wants there to be movement. I would be concerned and, although I do not have much experience of it, I am sure that small businesses would be concerned, if we rushed towards change on the basis that we want to be seen to be making a change.
The Scottish Executive drove through a new process without consulting in the way that we have done, when there were clear difficulties between groups. The Executive is talking about a significant change to the rating system, yet it will not consult and ensure that that there is consensus in the business community. We ought to move as quickly as is practical. I am not always the most practical of politicians—I am told that we ought to be—but in this instance people who work in business want practical solutions to their problems. They do not want a theoretical commitment. The matter should be moved forward.
We should take seriously what we have heard in evidence: the matter is complex. We should appoint an adviser, set a timetable and monitor it carefully so that we do not come here in three month's time and rehearse the same arguments. There would be grounds for suspicion if in four or five months we said, "Oh well, it is still very difficult and there are practicalities to be dealt with and we cannot push matters too quickly."
We have to set a timetable and try to stick to it, but we should also be honest and recognise that what we have heard on the subject is complex and that no easy consensus will emerge. We should ask the Executive to produce a scheme that meets the approval of the business community.
I would be happy to vote for the scheme put forward by the Forum of Private Business full stop, but committees should progress by agreement and consensus and perhaps other people do not share my views about that scheme.
There is some confusion. The FPB scheme has no impact on the revaluation. The revaluation goes ahead, and each building has its value determined. Everyone is clear about that. The scheme has some impact on how much people pay. There is an issue about how it can best be administered, but any scheme must proceed with proper consultation. Our adviser could be asked to report on the mechanics of putting into effect the FPB scheme, the problems that there might be with it and so on, and—as has been suggested—we could ask the Executive about the time scale of putting into effect a scheme for reducing the penalty of rates on small businesses.
We should keep pushing forward. It may be that we cannot produce a scheme by March, but we are an intensely conservative country—with a small "c"—and I agree with those who feel that if you do not push like hell you do not get anything done. We require a long, steady push rather than one quick heave, but we have to keep pushing.
I agree with Donald. Of all the schemes that were suggested, there was fair agreement that the FPB scheme seemed the best way forward. The only question, as I remember from the debate on it, was how applicable it could be. It was initially thought of as a long-term solution. The forum thought of it as radical change. I agree with Donald Gorrie that we should move with it and see how far we can go. That most likely is not practical, but let us go with it.
Donald Gorrie says that we are confusing things, pulling the two things together when they do not affect each other. Why tie one to the other in the timetable? Why make March, before the revaluation, the end point for ensuring that relief is provided? It is not necessary. It must be done as soon as possible—as soon as there can be consensus and consultation on the complexities. I do not think that all the other groups that we heard had the opportunity to respond to what they had suggested.
I thought there was strong consensus from all groups that the first priority that they wanted the Scottish Executive and this committee to address was the transitional relief. They wanted that to be in place before revaluation. As I have said before, we must move at the pace at which it is necessary to move on the other, in order to get a scheme that works. I am sure that we would not be thanked if we ended up with a scheme with which people were really unhappy, only to ask them for change again and again. We should proceed with speedy caution.
I am going back to what I suggested. I have given you as much time as I think that you needed for it. There is more agreement than disagreement in the committee; that was the feeling with which I left the last meeting. I will not leave today's meeting feeling differently. However, there may be difficulties concerning the way in which we move it forward.
I suggest that we appoint an adviser and that we combine the second and third options—the third option says that we combine those—and have an interim report. The status of that report should be remembered: it is not our final deliberations, but an interim report that lays down a marker to say that we are aware of what is happening, that we need a timetable and that we can set out our own timetable for discussing it. When we come to consider the timetable later on, there will be some changes to it. We can say to the Executive that we are concerned about the matter and that we are taking more advice. However, this is an interim report.
I hope that the final report will come to an obvious conclusion. I am sure that it will. It is moving the issue forward. It is not letting it float away. I would not let it float away anyway. There will be a timetable to it.
I agree that consensus seems to be expanding once again—this time, to produce an interim report—which is excellent news. Could that report contain a clear recommendation that the Executive put in place a scheme that redresses the unfair burden of business rates on smaller businesses? That would encapsulate the recommendation that I made earlier, one that Donald Gorrie supported, as a means of exerting that little bit of pressure that will be necessary to ensure progress in the matter. Could the report contain such a conclusion? I could read you the wording, if you wish.
No. I do not want you to read me the wording. We have not written an interim report. We will get an adviser, I hope, who will examine the possibility. That will be a recommendation from this committee, as all members are agreed that the matter needs to be addressed. How it is addressed is what we are considering.
I am quite happy to agree to the proposal if you feel that an interim report would be of some benefit. However, you have already heard some of the reasons why I did not want to have such a report. As soon as we agree that there will be an interim report, you want it timetabled and want something else added. Then we start to argue about what will go into that interim report. What value is there in doing that? Why not wait until we have all the facts? We have not spoken to the Convention of Scottish Local Authorities or to much of industry that has an interest in this, but we are talking about having an interim report. As soon as we agree to have an interim report, we will talk about what goes into it.
If the adviser tells us that we have to speak to COSLA and consider some of the points that Bristow Muldoon raised, we will do so long before we produce an interim report. We will tighten up the timetable, but the report will be based on what we have heard and wish to hear in the next few weeks.
Is there some agreement about what I plan to do? I know that you do not all support it 100 per cent.
I suggest that we ask the Scottish Executive to advise on the practicalities of implementing an alteration to the scheme before March. There has been a lot of discussion about whether we can do things before 31 March, which is four months away.
I am prepared to write to the minister to ask him that. Are you happy with that?
Yes.
My only reservation is that we want to express concern about small businesses and that we want the Executive to tell us how it is thinking about this issue rather than to come forward with a scheme, as Fergus Ewing said originally.
Kenny Gibson is not asking for that. We will encapsulate in the letter that we are so concerned about the issue that we are appointing an adviser. We will combine the two options. Let us move on. The subject has been given a good airing.
That is fine.
This has been a masterpiece of consensual committee work.
That was the chair and nothing to do with you guys.
I think that there was a wee bit of co-operation.
I would like to thank Eugene Windsor for all the things that he has been whispering in your ear.