Supporting Business
I raise with the cabinet secretary the particular situation regarding areas such as Byres Road and Great Western Road in Glasgow. Those are relatively high-rated areas where the small business relief is of no use to people and where small shops face considerable difficulties because of the rise in rates resulting from the revaluation. Will the cabinet secretary have a close look at that situation?
I am happy to do that. However, if Mr Brown’s constituents have concerns about the valuations, he should advise them to make the necessary appeals against them. That is the key thing for them to do.
If, in this debate, the Liberal Democrats had called for transitional relief, their motion might have made more sense. I will explain why. By its nature, transitional relief must be cost neutral. Under transitional relief—which is available in England but not in Wales, and which was made available in Scotland following the 2005 revaluation—businesses that gain most from the revaluation give up those gains to offset the rates bill rises for those whose bills go up the most.
Perhaps Asda would not benefit under today’s Liberal Democrat scheme, but that scheme is, of course, different from what we had two weeks ago. Under today’s scheme, the Government should cap Tesco’s rates rise, but everyone who is better off should benefit. How would that be paid for? Was not it Vince Cable who said:
“you simply can't propose cutting tax revenue unless you spell out exactly how you are going to pay for it”?
There are two very minor flaws in the Lib Dem motion. First, the Lib Dems have no idea how much their plan would cost, so they cannot be sure that the Barnett consequentials that are mentioned in their motion would cover it. Secondly, they spent yesterday afternoon fawning over the Government on the extra spending on housing, green initiatives and further education, seemingly not having noticed that the source of the largesse was the self-same consequentials that Mr Purvis wants to spend again today. Other than there being no idea about how much the plans would cost or about how they could be funded, they are as financially robust as anything else that we have heard about from the Liberal Democrats. [Interruption.]
Will the member take an intervention?
I am winding up.
The Lib Dem proposals would put up business rates by 69 per cent in Aberdeenshire, 110 per cent in East Dunbartonshire, 96 per cent in the Scottish Borders and 190 per cent in East Renfrewshire. If the Liberal Democrats believe that that is supporting businesses, let us hope that they never decide to oppose them.
I move amendment S3M-6140.2, to leave out from first “notes” to end and insert:
“recognises that some businesses have seen significant increases in their pre-appeal valuations as a result of revaluation and encourages those businesses to appeal their valuation where appropriate; welcomes the fact that the policy of the previous Scottish administration to levy a higher rate poundage than in England has been abandoned; welcomes the reductions in small business rates from 2008, delivered despite the opposition of some in the Parliament; does not believe that small businesses should see their rates bill increase to cross-subsidise the public sector or very large commercial organisations such as the major supermarkets; believes that any further reductions in business rate liabilities should be targeted by extending the small business rates relief and the rural rate relief scheme, and calls on the Scottish Government to assess the scope within the projected business rate income for this and future financial years to finance such an extension and to report to the Parliament the results of that assessment.”
09:38
We come to the open debate. I ask members to stick tightly to four minutes, please.
09:43
The first and most important thing that any of us can do to support small businesses during this recession is to be honest with them. So, for the Liberal Democrats to try to pretend that the Scottish Government is somehow in receipt of increased funding, when everyone knows that, in fact, we face the first real-terms budget cut in the history of devolution, does not in any way suggest that they are interested in supporting small businesses.
The Scottish Government, on the other hand, can and should be proud of its support for businesses of all shapes and sizes right across the country. More than 200,000 businesses in Scotland may be eligible for support under the small business bonus scheme, which has increased and expanded since it was introduced. Plenty of businesses in the South of Scotland region, which I represent, have felt the benefit of it. When I first consulted local businesses in the region about the impact of the scheme back in 2008, one local artist, whose studio had benefited from the relief, even felt moved to refer to the First Minister as the “blessed Alex Salmond” because of the difference that it had made.
Will the member give way?
I am always happy to take part in debates in this Parliament that have supporting business as their theme. However, I am not sure why the Scottish Government has allowed a situation to arise in which it very clearly is not supporting business. As Jeremy Purvis’s motion states, some hospitality and tourism, auction mart and petrol station businesses are seeing crippling increases in rates. That is even more puzzling, given that the SNP has been so swift to boast of reducing the business rate for small businesses, as Mr Swinney does in his amendment. One has to ask whether it is a cock-up or yet another example of the SNP Government talking up its support for business but letting it down by its action or, indeed, inaction.
I will give another example of the SNP Government’s support for business not living up to the rhetoric. Members will know that my constituency of Linlithgow includes the town of Bathgate. I was very proud when, after a great deal of hard work by local business people and a successful ballot, Bathgate became the first business improvement district in Scotland. That resulted in local businesses paying a levy, which was then match funded by local government and used to make improvements to the town’s environment. The improvements were designed to benefit all the businesses and were based on the businesses’ own choices. In establishing the business improvement district, Enterprising Bathgate had received a lot of support from the previous Labour-Lib Dem Scottish Executive. It was optimistic about receiving on-going support from the Scottish Government when Mr Swinney decided to visit to see what was being done. To his credit, Mr Swinney did acknowledge the progress that he saw in businesses, particularly retail establishments that had suffered from the presence of major retail developments in towns nearby.
Although other towns such as Inverness and Kirkcaldy have also become business improvement districts, the Scottish Government has not built on the initiative as might have been expected. When, after pressure from Labour following last year’s budget, the Scottish Government established the town centre regeneration fund, unbelievably, Bathgate’s bid to the fund was not successful. I and, more important, the hard-working business people of Bathgate could not understand.
Bathgate was successful in the second phase, although I have to say to the cabinet secretary that giving businesses four months to spend the money is not ideal. At the behest of the Scottish Government, Enterprising Bathgate is working up a scheme to make Bathgate the first wi-fi town in Scotland. I do not profess to understand the minutiae of the plan, but I recognise how such a scheme will help and support business. Far from being the sort of businesses that ask for subsidies or rate cuts, businesses in Bathgate have made a financial contribution to delivering common improvements that will benefit them all.
What has been the response and the support from the Scottish Government for that? Not the most enthusiastic. Because of the deal that the Government did with the Conservatives on this year’s budget, it contains no town centre regeneration fund. I am sure that Aileen Campbell will be telling the people of the South of Scotland that. I am pleased to point out to members that Labour’s general election manifesto includes a clear commitment to fund town centre regeneration.
I return to the issue of non-domestic rates.
Will the member give way?
I have only 15 seconds left.
I was surprised to read in the briefing from the auction marts that the Scottish Government has turned its back on a transitional relief scheme, which has left Scottish auction marts at a disadvantage compared with those in England. I do not understand the SNP Government’s business strategy. Do the SNP ministers have one? Let us hope that today’s debate will make them think again about how they can and should be supporting Scottish business.
09:56
There is a dark cloud coming over Scottish businesses, and I am not talking about the one coming from Iceland—it is the lack of a transitional rate relief scheme for our businesses and the huge hike in rates. It is not just we who are talking about the damage that will be done to businesses and employment; small business owners themselves are calling for a rate relief scheme.
Let us hear some of the facts that the Liberal Democrats have discovered in the South of Scotland. Newton St Boswells mart in the Borders will face an increase of 140 per cent in rates, meaning that more than £44,000 extra must be found this year. Craig Wilsons mart in Ayr faces a 38 per cent increase, equal to an extra £17,000. For a hotel in Irvine, the increase is £31,000; for a hotel in Troon, it is £33,000; for a pub in Longniddry, it is £17,000; for a pub in Dumfries, it is £16,000; and for the New Lanark Mill hotel, it is nearly £10,000. The position applies not just to auction marts and hotels, but to every kind of business. Two high street shops in Ayr face an increase of £6,000 in rates each year, and such rises are unbearable for very small businesses.
I have the details of well over 50 businesses whose owners are worried. Many of them cannot absorb the cost of increased rates. The owner of a medium-sized hotel in Galloway says that he will have to find £400 of cuts per month to pay for the rise. He says that he will try to appeal, but he has been told that it is unlikely that he will be successful. He has said:
“I will have to look at redundancies ... I will now be less likely to invest in my business”.
That is not a good prospect if we want a flourishing economy. He goes on to say:
“Yes, the SNP Government should have consulted on a transitional rate relief scheme, and yes, the steep rise should have been phased in ... this introduction of such a hike in rate bills will have a damaging effect on this business”.
Those are not my words, but those of a hotelier in the South of Scotland.
Two hotels in the region, one in North Berwick, which employs more than 20 people, and another in Dumfries, which employs more than 40 people, are now withdrawing investment and will have to let staff go. Did they know about the rate rise? No—because there was no consultation.
The Tories should wake up to what is happening in the Ayr constituency that they hold—for now. The two high street shops there that I mentioned earlier will have to find an extra £500 a month, and their owners found out about the rise only by word of mouth. One of the shop owners said:
“I am now deciding whether or not to close my business which would mean a loss of jobs of 3 local people and also that of myself”.
That is not just tragic; it is criminal of the Government, supported—bizarrely—by the Tories.
Will the member take an intervention?
No—if Robert Brown is going to apologise, I ask him to do so in his own speech.
I will tell you. Their response was to refuse to support those measures. In true Lib Dem fashion—and along with their former coalition colleagues—they fingered their abstention buttons. Rather bizarrely, Labour members abstained from the motion that they had just successfully amended. They left it to the SNP and the Conservatives to recognise the needs of small businesses and place the reform on the statute book. Today, the Lib Dems have the nerve to portray themselves as the defenders of business.
Let us be clear about what is happening with the business rate revaluation. As Aileen Campbell so cogently explained, it is being carried out by members of the Scottish Assessors Association, a body that is, rightly, totally independent of Government. It is estimated that about 60 per cent of Scottish businesses will actually be better off as a result of revaluation. Broadly speaking, the sectors that are to gain most from revaluation are small and medium-sized businesses such as shops, pubs, offices and industrial property. It is true that some premises will be worse off, perhaps because turnover has increased or a petrol station now has a supermarket attached.
As I have said, the decisions have been made by an independent assessor, and they are open to appeal. I hear that the Scottish Assessors Association is presently conducting a dialogue with filling station owners on the methodology involved.
No one likes rates and taxes, but they have to be levied. It is important that they are levied fairly, and that is what the system achieves. It might not be perfect, but it is difficult to think of a better way.
It is instructive to consider the reaction of business leaders to business rate revaluation, and not just those who have been quoted already. Let us take Andy Willox of the Federation of Small Businesses in Scotland. On 10 February he said:
“By continuing its work to develop a fairer rates system, the Scottish Government and the Finance Secretary have shown insight and are leading the rest of the UK.”
On 5 February, John Drummond of the Scottish Grocers Federation said:
“this will secure the future of small shops which is good news for communities across Scotland.”
The motion calls for business rate increases to be capped
“at 12.5%, or 5% for small businesses”
without detriment to other businesses, as would be incurred under a traditional relief scheme—which Jim Hume has just been discussing. However, the money is simply not there. If we accept, as the business leaders whom I have just mentioned do, that regular business rate revaluation is fair and desirable, it is questionable whether direct intervention to distort the result of that revaluation is an appropriate mechanism for supporting businesses.
The Government has expanded further the small business bonus scheme to include more businesses. That is planned, proportional help, which is welcomed by businesses more warmly than electoral gimmicks of the kind that are contained in the Liberal Democrats’ sorry motion.
10:04
The Liberals should be congratulated on bringing this important debate to the chamber. The issue under scrutiny is whether the Government was right to reject a transitional relief scheme, the consequence of which is that there is no cap whatever on the additional sums that many businesses, particularly in the hospitality industry, might be expected to pay. In England, a business has the certainty that it will face a hike of no more than 12.5 per cent in any one year. However, in Scotland, the hike could be 50, 60, 70, 80 or 90 per cent; indeed, there is no limit at all.
The Government’s case against a transitional scheme, which it has helpfully laid out this morning, appears to be founded on two bases: first, that we have a low poundage in Scotland; and secondly, that moving to a transitional scheme would involve some cross-subsidy. I will deal with those two issues in the time available.
What matters to businesses is not the low poundage rate but the bill that they have to pay. I draw the chamber’s attention to the fact that last year the Scottish Government was the first ever in Scotland’s history to collect more than £2 billion from Scottish businesses. No other Administration has ever taken that amount of rates income. We should recall that that additional 5 per cent—more than double the rate of inflation—was taken from Scottish businesses at a time when they were coping with recession and a 5 per cent fall over the previous two years in the country’s national income. In taking the highest yield in cash ever—as I have said, more than double the rate of inflation—this Government certainly had some headroom to cushion the blow for the worst affected businesses if it had wished to do so.
John Swinney’s second defence this morning for why he is not prepared to consider any sort of transitional scheme—and I concur with other members that there is more than one variety of such scheme—was that he is against the principle of cross-subsidy. Frankly, I find that extraordinary. After all, his own small business bonus scheme is founded partly on a poundage supplement on all businesses, which involves cross-subsidising businesses large and small. I simply note that under this Government the cross-subsidy involved in its own small business rate relief scheme has doubled from 0.3p to 0.7p. It seems that the principle of cross-subsidy is sometimes accepted and sometimes not.
As other members have pointed out, the SNP’s rhetoric of being local champions will ring a little hollow for every tourism business that knows that it has absolutely no protection whatever and that the playing field in Scotland is now tilted against us. The situation is entirely of the Government’s making, and it should think again on the matter.
A more fundamental point is that, beyond the election rhetoric, this episode tells Scotland something about the increasingly imperious style of government that we are being subjected to in this country. This Government claimed that it would listen. Instead, it has been reduced to withholding data from SPICe, failing to consult the business community at all about this very big choice and failing to bring the issue to the Parliament. Whatever side of the debate people end up on, that is what they will remember as they reflect on this episode.
10:09
Just one example.
I engaged in a number of discussions with the business community on revaluation. I have had correspondence from the business community. Representations have been made to the Government and my officials are taking those discussions forward. The Government has taken its decisions. We have introduced as part of this independent valuation process a package of support to business in Scotland that in 2010-11 will be worth more than £700 million. That makes my point about the extent to which the Opposition parties have today been prepared to argue that no one will be better off as a result of the business rates revaluation.
Businesses are liable for the business rates that are set in the valuation as of 1 April. Once an appeal has been heard, if there is any adjustment to the valuation it will be backdated to 1 April. Any appropriate charge of interest will also be paid to the affected ratepayer. Obviously, the independent appeals process will seek to resolve any appeals as expeditiously as possible.
Bills will be offset by the reduced poundage rate that we have set and the extensive package of reliefs that we have put in place. For 2010-11, we have the lowest ever national rate poundage in Scotland.
From a sedentary position, Mr Smith says that that is irrelevant—Mr Smith is talking complete rubbish, as usual. The rate poundage is absolutely fundamental to the calculation of business rates for which individuals are liable. Had we set a rate poundage using the approach that the previous Administration used for the 2005 revaluation, it would have been much higher. The lower rate is worth well over £200 million in benefits to the business community in 2010-11 alone, and every ratepayer in Scotland will benefit from that lower rate poundage.
Overall, the package of reliefs that is now available is worth more than £2.4 billion over the next five years. In 2010-11, we will be the first country in the United Kingdom to offer a dedicated renewable energy relief scheme that will offer discounts of up to 100 per cent. A key element of our relief package is the uplift and expansion of our small business bonus scheme. On 24 March, as part of the UK budget, the Chancellor of the Exchequer announced new help for small businesses south of the border. However, businesses here will still be better off by up to £3,050 this year. Not a single recipient of our small business bonus scheme would be better off under the chancellor’s proposals, which will, in any case, not come into force until October at the earliest, subject to UK legislation.
I accept that there is a right of appeal for businesses that are affected by huge increases in their rates bills. However, can the cabinet secretary tell us how long it is likely to take a business to appeal its rates and what rates bill it will have to pay in the interim, while it awaits the outcome of that appeal?
Will the cabinet secretary give way?
I have given way generously and have a lot of ground to cover. We considered carefully—
Is there only one possible—
If Mr Purvis gives me the opportunity to marshal my arguments, I might give way to him in a second. Perhaps if he had disciplined his other colleagues to allow me to make progress I would have been able to cover more ground.
We considered carefully whether to have a further transitional relief scheme in Scotland in 2010. We took into account the benefit to Scottish businesses of setting a lower rate poundage, which is not available to businesses south of the border, and the levels of relief in Scotland, which are significantly more generous than those south of the border. We also looked at the impact on businesses in individual sectors. The majority of businesses in Scotland have seen their business rates bills fall this year by, on average, double the amount by which bills have fallen in England, where savings were cut to fund transitional relief. Had we introduced a similar transitional relief scheme to that which was introduced in England, many businesses here would have lost out. The small and medium-sized business sector would have ended up subsidising the public sector and some key large industries by almost £75 million. That is what Mr Purvis must explain to those to whom he argues that we should support a transitional relief scheme.
For the record, can the cabinet secretary make it clear whether only one possible transitional relief scheme is available to the Government and why the Government did not consult the business community on the options last autumn, as we asked it to do?
I ask Mr Purvis to write to me or e-mail me on that subject and I will look into it.
09:33
I congratulate the Lib Dems on bringing to Parliament a debate on supporting business. That is entirely appropriate, as the departure of the Liberal Democrats from government in Scotland has been a great support to business—and, indeed, to every other sector of Scottish society. [Interruption.] We remember their record of imposing higher business rates in Scotland than existed in the rest of the UK and of opposing small business rates reductions when they were turfed out of office. They are now changing their minds on a seemingly daily basis on what should happen about the revaluation. [Interruption.]
Mr Brownlee has calculated Tesco’s and Asda’s rates increases, as I have done. Will he confirm that the Tesco increase, which includes the car park underneath, is 13 per cent and that it would gain by 0.5 per cent by what has been proposed, and that the Asda increase is 12 per cent and that it would not gain at all under any transitional scheme? As he has been looking at the figures, will he confirm what the nearest hotels’ rates increases are?
No, I will not. I want to make progress.
In our amendment, we say that the Government should examine the scope to extend business rates relief within the existing yield outturns and focus on extending the existing small business and rural rate relief schemes. That would help petrol stations, hotels and post offices. Those are better solutions. They would provide real benefits within the existing business rates regime, and would not rely on additional funding from non-existent sources or increasing bills elsewhere.
All the nonsense that we have heard from the Lib Dems would have been bad enough, but there is also the stuff in yesterday’s Lib Dem manifesto about giving control over business rates to local councils. What would that do to local councils and to business rates?
On Friday morning, Aberdeen and Grampian Chamber of Commerce will hold a business breakfast in Aberdeen to give local businesses the chance to grill candidates from the main parties who are standing in the general election. Although the matter is clearly not reserved, the Scottish National Party’s decision to drive through rates revaluation with no transitional relief and no cap on annual increases is certain to be high on many people’s agendas, not least because it stands in sharp contrast to the approach that has been taken by the Labour Government at Westminster. The Tories’ decision to back the SNP is also certain to be of interest.
Four weeks ago, I opened for Labour in the tourism debate by highlighting the impact of the tax hike on businesses in the Scottish hospitality sector. In my constituency, for example, it seems that every single hospitality business—large and small—is being hammered. The rates bill for the Carmelite hotel has gone up from just over £33,000 to just over £66,000, which is a big hit for a small business. Copthorne hotel Aberdeen is facing a 40 per cent rates increase. Skene House (Aberdeen) Ltd, which provides hotel suites and serviced accommodation across the city, faces a valuation that is up 99 per cent. Its payable rates are up by more than 70 per cent, or nearly £100,000 a year.
When we debated tourism last month, I mentioned my meeting with Aberdeen City and Shire Hotels Association. Hotels were the first to react, but the impact goes much further. For example, the Charles Michie chemist shop on Union Street in Aberdeen is facing a rates increase of more than 18 per cent. Other local businesses that are engaged in all manner of trades—even in the motor trade, which is hard hit by the recession—face such increases.
A rising tide of anger has spread far beyond the hotel sector. Aberdeen and Grampian Chamber of Commerce has surveyed its members and is currently analysing the results of that survey. I am certain that ministers will hear from it about the deep concerns that many of its members have expressed, and I have no doubt that other chambers of commerce in other parts of Scotland will express the same concerns—unless, of course, ministers want to tell me that Aberdeen and the north-east are uniquely hard hit by the increase in business rates. I listened carefully to what John Swinney said, but he should think carefully before he brushes off those concerns by claiming that most businesses are better off. That answer will not satisfy the many businesses in Aberdeen city, Aberdeenshire and throughout Scotland that face huge increases in their rates bills for the current year.
It has been said that every other Scottish Administration has offered transitional relief to businesses. The Labour Government at Westminster has set a 12.5 per cent cap on rates increases this year and will phase in increases over five years. If ministers had formally consulted on the issue, as they ought to have done, they would have been told that transitional arrangements are exactly what businesses want.
The Tory amendment says that transitional relief should not be a priority for the Scottish Government. Like Mr Swinney, the Tories say that businesses that are hit by the tax hike should
“appeal their valuation where appropriate”,
as if somehow it is all about miscalculations by the assessors who conduct individual evaluations. That is not the issue at all, of course. Businesses can and should appeal if they have grounds to do so, but lodging an appeal against a revaluation does not allow a business to go on paying the old rate, and appeals are not at all likely to reverse the upward revaluation of large groups of businesses in regions of the country. Appeals would be the right way to go if we were talking about one or two small businesses being harder hit than their peers and competitors, but we are talking about whole groups of businesses, large and small, in whole sectors of the economy and whole regions of Scotland. The appeals route will not reverse the impact on those groups of businesses. It is not the revaluation that is fundamentally flawed; the issue is the lack of transitional support.
Ministers need to listen to what business say. For example, they should listen to what is said at the Aberdeen and Grampian Chamber of Commerce hustings meeting in Aberdeen on Friday morning. I know that Alex Johnstone will be present at that and that he will listen closely to what is said. I hope that SNP members will also listen.
Ministers should think again. They should put transitional arrangements in place now before businesses go under and jobs are lost.
Unfortunately, two pretty dreadful speeches—from the cabinet secretary and Derek Brownlee—have been made in the debate so far. They did nothing to place the facts on the table.
Let us be frank. I challenged the cabinet secretary on the issue of appeals and on what the impact would be on businesses today. Would they have to continue to pay their bills? Lewis Macdonald rightly said that they would, but many businesses will be unable to pay their bills. Being able to appeal and perhaps being able to get money back with interest in a few years’ time will be of no comfort to businesses that will have to shed jobs today or even go under. They will be out of business before the result of the appeal comes through. That will do them no good whatsoever; it will be too little, too late.
The point that I am making—Mr Brownlee would know this if he had any understanding of how businesses’ cash flows work—is that anyone who faces a huge increase in their bill will suffer. A transitional scheme would allow the transition to work its way through, so that, by the time that the appeal came through, the full bill would not yet be being paid. Businesses would benefit from an appeal in a way that they might not benefit otherwise, because they might already be out of business.
We are not talking about a piffling amount. Hotel businesses in my constituency tell me that they would have to increase their turnover by £300,000 just to meet the increase in business rates. A small electrical appliances company in my constituency tells me that it will have to sell more than 100 more washing machines a year—that is two more machines a week—just to meet the increase in the bill. It is simply impossible to do that. Redundancies will be the result. In my constituency, small shops, which the cabinet secretary keeps telling me are being protected by the scheme, are facing increases of up to 62 per cent in their rates bills. Those businesses will suffer, but this Government is doing nothing about it.
Of course, there are alternative transitional schemes. The one to which the cabinet secretary referred, which is the traditional one, whereby those who gain most help those who lose most, is only one approach. The schemes do not have to be self-funded; the Government can put money in. We have suggested that the consequentials from Westminster’s small business rate relief scheme could be used for that purpose.
I have only a short time left, so I will not give way. I am coming on to attack the Conservatives for their hypocrisy in a moment.
The point is that the Government would not even consult. It would not even ask businesses what the way forward was. It would not put the information into the public domain. It still refuses to do so and will, no doubt, continue to refuse to do so after the election. It is impossible to have a proper debate on the issue, because the Government refuses to put the information out there and to consult.
The Conservatives have shown bare-faced cheek in coming to the chamber with their amendment, which bears little resemblance to the reality of history, at the same time as they are issuing leaflets in constituencies throughout Scotland that say:
“The Conservatives believe that the new rates valuation brought in under this SNP Government is unfair ... The SNP can do nothing about fuel taxes at Westminster but they can do something about rates in Scotland because they are in Government—why don’t they?”
The SNP does nothing because the Conservatives support it every time we try to make it do something about rates. The SNP does not do anything, because the Conservatives do not let it do anything, or do not make it do anything along with us. I say to the Conservatives, come on—work with us and make this SNP Government do something about a transitional scheme, which will mean fair business taxation for local businesses and will save jobs. But oh, no; the Conservatives will vote with the SNP Government today to block any attempt by this Opposition party, which I hope will be supported by the Labour Party, to make the Government see sense and bring in a transitional relief scheme, which will benefit businesses throughout Scotland.
09:47
You must close, please.
You must close, please.
It is why our Parliament needs the full powers of independence to get Scotland out of the Downing Street downturn.
09:52
First, I make a declaration of interests. The small self-catering property of which I am joint owner, and which is recorded in my register of interests, is in receipt of business rate relief under the small business bonus scheme.
Before us today is a motion of startling hypocrisy, even by traditional Lib Dem standards. The debate is entitled “Supporting Businesses”, yet where were the Liberal Democrats when, in the 2008 budget, John Swinney announced the most generous support for Scottish small businesses since this Parliament was created? What was their response when the cabinet secretary announced not only that the small business bonus scheme was to be introduced, as promised, but that its full implementation was to be advanced? What was their response to the suggestion that up to 120,000 small business premises would pay no business rates at all, and that a further 30,000 would benefit from reductions of between 25 per cent and 50 per cent? I will tell you.
Not at this stage. I also point out that no Liberal Democrat has taken any of my interventions today.
There is a more fundamental issue that we need to consider. Anyone who wants their proposals to be taken seriously needs to cost them. We have heard no suggestion from the Liberal Democrats of what this scheme would cost. On the other hand, the cabinet secretary mentioned a figure of £195 million. I have not seen that in writing, but I note that no one from the Liberal Democrats has challenged it or put forward another figure.
Let us look even closer at the proposal. According to their motion, the Liberal Democrats propose to fund the scheme from the budget’s Barnett consequentials, which, as we heard yesterday, amount to £70 million in cash terms. When the cabinet secretary outlined how that money would be spent, the Liberal Democrat speaker’s to a man welcomed all the funding. Iain Smith, for example, said:
“Additional capital expenditure is welcome, and I hope that it will help to promote new jobs.”—[Official Report, 14 April 2010; c 25254.]
Perhaps Mr Smith will tell us which of the expenditure announced yesterday he wants to claw back to fund his transitional relief scheme. Ross Finnie said:
“The cabinet secretary has made some sensible decisions. Our construction industry, which faces difficulties, will undoubtedly be helped by the additional sums ... put into the affordable housing budget.”—[Official Report, 14 April 2010; c 25252.]
Finally, Jeremy Purvis, who opened for the Liberal Democrats this morning, said in relation to yesterday’s announcement:
“The cabinet secretary made a strong case on that.”—[Official Report, 14 April 2010; c 25233.]
Yesterday, the Liberal Democrats accepted all the funding from the Barnett consequentials and the ways in which it would be spent. Today, however, they come to the chamber trying to pretend that they want to spend the money on their transitional rate relief scheme. The money can be spent only once—and it was spent yesterday. Although the Liberal Democrats welcomed every item of expenditure that was announced, they are trying to pretend today that it can be claimed again.
Just to add more measure to the strength of Mr Purvis’s argument, the Liberal Democrats yesterday also called for additional spending. Mr Purvis himself wanted more money for the Glasgow airport rail link; Ross Finnie wanted more money for Scottish Enterprise and Highlands and Islands Enterprise; and Iain Smith wanted more money for Scottish Development International and VisitScotland. The Liberal Democrat motion is an absolute shambles, and we will not be supporting it.
10:13
The debate has been characterised by arguments from the Liberal Democrats and the Labour Party that are based on the parts of the debate that create a negative proposition and by an unwillingness to contemplate any of the positive aspects. That was best exemplified by Mary Mulligan, who argued—not on the issue of business rates—that Bathgate had been singled out for harsh treatment by the town centre regeneration fund, only to reveal that, in the second round of funding, Bathgate was successful. If there ever was a contribution of completely churlish proportion, it was Mary Mulligan’s this morning—but it had many rivals.
Dr McKee made a cogent speech—
No wonder the Liberal Democrats are laughing. I do not think they enjoyed Dr McKee’s speech one little bit because he argued that the Liberal Democrats have been completely hypocritical about support for the business community and the measures that I have taken as finance secretary over the past three years.
The cabinet secretary talks about hypocrisy. Is he aware that Lauriston nursery in my constituency faces a 150 per cent increase in its rates bills? The nursery’s owner, who is in the public gallery, built a brand new, green, nursery, which was recently visited by the First Minister. It is a crippling increase.
Good morning. The first item of business is a debate on motion S3M-6140, in the name of Jeremy Purvis, on supporting business.
09:15
That is irrelevant.
Yesterday, I asked the Cabinet Secretary for Finance and Sustainable Growth whether there should be a limit on tax increases on businesses at this time. He refused to answer the question, which was interesting, if only because it confirmed that the Scottish Government is aware that many businesses in Scotland have received tax increases of more than 100 or 150 per cent during the past week.
I start by making a point about which I hope that there is no disagreement among members. The revaluation of business rates is a necessary part of the rating system. There are debates about the rating system, but revaluation is necessary. It is an independent process, and as a result of every revaluation some businesses benefit and some lose out.
Members can also agree that every revaluation since 1985 has been accompanied by a transitional relief scheme. There are many options for such schemes, which come in many different versions. Every argument against a transitional scheme that the Conservatives and the Scottish National Party will make in the debate will have applied in every revaluation since 1985. In 1985, 1990, 1995, 2000 and 2005, the Conservatives—whether they were in government or in opposition—and the SNP supported a transitional relief scheme. In addition, they supported the discussions with the business community about transitional relief that took place in advance. We must question why the Conservatives are now in total agreement with the SNP in Parliament in being against a transitional relief scheme.
It is helpful when members of other parties publish their speeches the day before a debate. Mr Brownlee did exactly that, for the Conservatives. He has chosen to attack the Liberal Democrats rather than attack the horrendously high tax increases that will happen without transitional support. The operators of the many local businesses, hotels and petrol stations to whom I have spoken in recent weeks will make their minds up from today’s debate and the votes at 5 o’clock.
I agreed with what Mr Brownlee said in Parliament last year, when he asked the cabinet secretary:
“On the vexed issue of transitional relief for business rates, will he ensure that whatever his decision, he will minimise the distortion in the business community?”—[Official Report, 26 November 2009; c 21564.]
Hotels, petrol stations, auction marts and other businesses think that the tax increases of more than 100 per cent that they have received represent a distortion. I agree. Auction marts made their views clear yesterday, when they told us that they are operating at an economic disadvantage compared with their counterparts in England. In written evidence to the Economy, Energy and Tourism Committee, for the committee’s budget consideration, the Scottish Retail Consortium said:
“Transitional relief will be essential to retail’s recovery from the recession, which is also a pre-requisite to its role in acting as an engine of wider economic recovery.”
Let us consider the SNP and Conservatives’ arguments against any transitional support to limit the increases. They say that retail would be worse off, but the Scottish Retail Consortium disagrees—I know who I support. The Conservatives said in a press release yesterday that small businesses would
“have their rates increased to subsidise the public sector and large supermarkets”.
That is factually wrong in many regards.
There are a number of transitional scheme options. Three weeks ago, we said to the Government that it was not too late to consult the business community urgently on the options. The precedent for such consultation was set clearly in 2005. All business groupings are aware that there are a number of transitional scheme options. That is why the Confederation of British Industry’s budget submission to the Parliament called for a consultation on a transitional scheme. Businesses in the small business bonus scheme would not be affected by a transitional scheme. The 24-hour Asda store in Galashiels in my constituency, which is one of the biggest supermarkets—if not the biggest—in the south of Scotland, and whose rates bill will increase by 12 per cent this year, would not be involved in any transitional scheme anyway. However, because of the revaluation, a small hotel nearby has found that its bill lifts it out of 100 per cent relief for small businesses. The hotel will be asked to pay a bill of £11,000, in one go, from now, and without any transitional support at all. What business tax increase in one go would be fair? That is the point.
There is a precedent, which was set as recently as June last year by the Government, when it said that a 5 per cent increase in bills would hurt business. Then, the Government said:
“On 1st April 2009 most non-domestic (business) rate bills in Scotland increased by 5%. In response to the difficulties facing businesses as a result of the economic crisis, the Scottish Government and all 32 Scottish local authorities have implemented a new business rates deferral scheme for 2009-10 to minimise the impact of this increase, help cash flow and provide a ‘much-needed boost’ for the Scottish economy.”
If preventing businesses from having a 5 per cent increase was the right thing to do for all businesses, regardless of their size, is it not right to help the businesses that Government knows are facing increases of more than 100 per cent in their bills in one go? If a 5 per cent increase was crippling businesses last year, what on earth will a 100 per cent increase do to businesses this year? That has nothing to do with pitting small businesses against big ones; it is simply a recognition that key local businesses, such as hotels, which are critical to the success of economic recovery in Scotland, are facing crippling tax increases.
People will see through John Lamont, who told the Berwickshire News and East Lothian Herald that there should be transitional relief for petrol stations but will vote in Parliament against transitional relief. They will see through John Scott, who told The Press and Journal that there should be transitional relief for auction marts but will vote in Parliament against such relief. I know that Derek Brownlee will spend all his speech attacking me and the Liberal Democrats. I am sure that he will promote the leaflet that the Conservatives have issued throughout Scotland, which says:
“The SNP keep pumping out false promises ... Under an SNP Government petrol station owners have seen their business rates go up significantly, leading to higher prices at the pumps ... The SNP can do nothing about fuel taxes at Westminster but they can do something about rates in Scotland because they are in Government—why don’t they?”
Why do they not, indeed? Perhaps because the Conservatives will vote against transitional relief.
The British Hospitality Association, chambers of commerce—from the Borders to north-east Scotland—the CBI, the Scottish Retail Consortium, business organisations and individual businesses to whom I have spoken this week all know that the increases cannot be sustainable. I spoke to the people who run a key local hotel in a rural part of my constituency on Monday, who said that the 66 per cent increase in their bill will be crippling and will have an effect on jobs.
By all means let the Conservatives and the SNP attack us. Let them say that businesses can appeal, without explaining the grounds for appeal. Let them try to ignore the genuine concern about the issue. They may do all those things and defend the unacceptable; we will not do so.
I move,
That the Parliament notes the crippling increases in non-domestic rates bills in Scotland, particularly in hospitality, tourism, auction mart and petrol station businesses; further notes the increases in the Scottish Budget resulting from the 2010 UK Budget, and calls on the Scottish Government to cap 2010-11 business rates increases at 12.5%, or 5% for small businesses, while allowing those who gain under the revaluation to see the benefits immediately.
09:24
Let me make it clear that on 10 February I announced the outcome of the 2010 business rate revaluation and an accompanying package of measures, to ensure that business in Scotland can remain competitive. As a result of that package, the support that we will provide to businesses in Scotland in 2010-11 is worth more than £700 million.
Let me explain why I think that the package that is in place is fair to and appropriate for the business community in Scotland. First, as Mr Purvis said, individual valuations of properties are carried out independently of Government by the Scottish assessors, as has been the case throughout the business rates regime. Ratepayers may challenge those valuations through an independent appeals system, but I acknowledge that there are concerns in certain cases about the levels of valuation that have been set. In those circumstances, I encourage people who are concerned about the business rates valuation assessment that has been made by the assessors to take the necessary steps to appeal those valuations.
I engage in a great deal of dialogue—as do my officials, on my behalf—with the business community on such questions. We have had a range of discussions and I have listened to a range of views from the business community on transitional relief, and we have come to our conclusion on the subject in the light of that.
Mr Purvis’s question—whether there is only one type of transitional relief scheme—brings me to one of the key points that I want to make about the Liberal Democrat motion. As I have said, by its nature, transitional relief should be cost neutral—that is the objective of any transitional relief scheme. What the Liberal Democrats propose is not a transitional relief scheme. The motion tries to get round the problem of cross-subsidy, but at a substantial cost to the Scottish budget. The cost of funding a 12.5 per cent cap without doing so by taking savings from people who have gained from the business rates revaluation could amount to £195 million in 2010-11 alone. Parliament must address the question of why on earth we are again presented with such uncosted propositions by the Liberal Democrats.
A difficult set of decisions must be made regarding business rates revaluation. The independent valuations have been undertaken and I encourage individuals to appeal against them if they are concerned about them. I ask Parliament to remember that the Government has provided £700 million of support for the business community through reliefs and support in the current financial year alone, which reflects our determination to ensure that the business community in Scotland remains competitive in every respect.
I move amendment S3M-6140.1, to leave out from “crippling” to end and insert:
“measures that the Scottish Government has put in place to support Scottish businesses as part of its economic recovery plan, including setting the lowest business rate poundage ever, saving businesses well over £200 million in 2010-11 alone, and putting in place a package of relief measures worth around an additional £2.4 billion over the next five years, including a new renewable relief scheme and extending the small business bonus scheme, which means that half of all businesses will receive a discounted bill this year and well over a quarter of businesses properties will pay no rates at all; recognises that the merits of a transitional relief scheme are outweighed by the disadvantages, and recognises that the measures that have been put in place, taken together, represent the most generous package of business rates support available in the United Kingdom.”
On a point of order, Presiding Officer. Can you give members of the Opposition parties some support regarding how the Scottish Parliament information centre is treated? On a number of occasions, requests have been made to SPICe for information on the costings of the subjects of Government statements. The Government previously said that there would be a £70 million bill for small businesses under a transitional relief scheme, but it is now saying that the bill would be £195 million. Yesterday, SPICe was told by Government officials that information that they had would be released only in due course. That was consistent with the answer to a freedom of information request that I made, when the Government used a public interest test and said that the information would be published within three months, yet information has just been revealed by the cabinet secretary that officials refused to give to SPICe yesterday. What protection are you able to provide to SPICe when it cannot get information from the Government that the Government then releases the day after?
Order. We have had enough sedentary comments from the Conservatives and the Liberal Democrats for the time being.
Only a few weeks ago, Mr Purvis praised the transitional relief operations in Wales and warned of dire consequences if Scotland did not follow suit. The minor detail that Wales has no transitional relief scheme did not trouble Mr Purvis. Nevertheless, as he has said today, there are winners and losers from the transitional relief scheme.
Let me give members an example. There is a large Tesco store in Galashiels, which is in Mr Purvis’s constituency. He will know it well: it is where Christine Grahame holds her surgeries. I am sure that that is enough in itself to send him across the road to Asda. That Tesco store has seen its valuation rise from £1.2 million to £1.7 million, and the Asda store across the road has seen its valuation rise from £1.1 million to £1.5 million. Last month, the Lib Dems, who spent yesterday wittering on about fair taxes, demanded that Tesco’s rates rise be phased in and that every small business that sees its rates bill fall pay extra tax to fund that. Therefore, hundreds of small businesses in the Borders would pay more to help Tesco, which made a profit of £3.1 billion last year. That is what the Lib Dems call fair taxation. However, today, there is a different policy.
Order. I am sorry to single out Mr Tavish Scott, but we have had a persistent running commentary from him since the beginning of the debate. I would be grateful if that ceased.
At least Mr Scott is consistent about something.
Some businesses will face rates increases as a result of revaluation. Those increases would have been much higher if the thresholds for small business reliefs had not been increased and parity with England’s poundage rate had not been insisted on.
On a point of order, Presiding Officer. In the past, you have been keen to chastise some of us for talking about issues that have nothing to do with the Parliament. What Mr Brownlee is on about has nothing to do with the Parliament.
That is not a point of order. Mr Brownlee is speaking to the motion. You should wind up now, please, Mr Brownlee.
The owner of that nursery is perfectly entitled to appeal. Mr Tolson should be prepared to knock on the doors of all the businesses in Dunfermline West that would see their business rates rise as a consequence of a transitional relief scheme. The Liberal Democrats are simply playing games with the business community of Scotland; they are suggesting that it is possible to temper the increases in business rates for some companies without any pain for others. That is a piece of utter parliamentary hypocrisy—hypocrisy that we have seen in spades from the Liberal Democrats in the debate. To compound that, Iain Smith and Mr Purvis’s motion suggest that the Liberal Democrats’ proposals could have been paid for from the consequentials from the United Kingdom budget. The Liberal Democrats have been demanding that we take forward affordable housing projects. Indeed, the Labour Party has been at the front of the queue demanding that we increase affordable housing expenditure. I delivered that yesterday, but if I heard Mr Macdonald correctly he will vote for a proposal from the Liberal Democrats that will take money away from affordable housing and give it to a business rates revaluation scheme. It is utter hypocrisy.
When John Swinney has calmed down a little, will he tell us what consultation he carried out with representatives of business organisations before he decided not to have a transitional relief scheme?
If appealing would be of no comfort to businesses, why would it be of any comfort to a business whose rates bill had significantly increased simply to pay that a bit later on? How would that help it?
Will the member give way?
I know that, like me, the South of Scotland member takes a particular interest in Clydesdale. What will she tell businesses such as the Royal Bar in Larkhall, which will face a 238 per cent increase in rates? I could give several more examples.
As others have said, there is the opportunity to appeal in relation to such issues.
Because of the dramatically different economic situation that exists now compared with in 2007, the Scottish Government has uplifted and expanded the small business bonus scheme and rural rate relief so that an additional 3,600 Scottish business properties are eligible for relief.
There has been an independent revaluation of business rates in Scotland. The valuation is carried out by the Scottish Assessors Association, not the Scottish Government or local authorities, and the independent nature of the revaluation is entirely appropriate. Of course, the revaluation takes into account the changing nature and circumstances of businesses and, in particular, takes account of increases in turnover or expansion of the business since the previous valuation.
Even after all that, 60 per cent of businesses will be better off as a result of the exercise. That is before different reliefs have been applied or appeals have been processed. The appeals system means that any business that feels that its rates have been increased unfairly or inappropriately has the opportunity to have the decision reviewed. It is, therefore, disingenuous of the Lib Dems to quote rate increases that have not yet been through the full process and finalised.
On top of that, businesses throughout Scotland have felt the benefit of the Scottish Government’s support in other ways. I recently visited William McCafferty Butchers in Forth, in my region, which has received grants from Scottish Enterprise to replace the shop units and refresh the shop entirely. Carluke town centre is benefiting from a £500,000 injection from the town centre regeneration fund. The innovative soft play facility that that money is helping to provide will not only boost the local economy, but will increase footfall to the surrounding shops and local traders. A similar effect can be expected in Biggar, whose corn exchange is also receiving a boost from the Scottish Government fund.
Two weeks ago, I visited Irvine to see the first tranche of small businesses receive their awards from the enterprise development fund, which was established by GlaxoSmithKline to help the local community to adapt to the loss of jobs caused by its restructuring. That is the sort of responsible corporate behaviour that I am sure the Scottish Government is keen to encourage and is another glimmer of hope among the doom and gloom that Opposition parties are attempting to spread.
When the Lib Dems call for the Scottish Government to provide relief on top of the wide range of support that we have heard about in the debate, they do so knowing not only that the Scottish Government’s budget is declining but that their own UK leader has called for savage cuts to public sector spending. If further savage cuts are to be inflicted on Scotland’s budget, that will leave even less money to support not only our small businesses but our schools, hospitals, police system and every other area in which the Lib Dems in Scotland continue to call for increases in spending.
The fact is that the SNP Government is making sometimes difficult but absolutely necessary decisions to use the powers and budgets that it has to help all sectors of our economy get through the downturn and grow stronger as a result.
That will not be achieved by scaremongering and it will certainly not be achieved by savage cuts to our budget. That is why the business community needs SNP champions at all levels of government.
Sorry, but I have only a minute and a bit to go.
The other shop owner says that her expansion plans are now on hold, which is preventing new recruitment. She has said:
“I will not get anywhere appealing ... The rate should have been phased in”.
I return to farming—my old life. I have already mentioned St Boswells mart, which has an extra £44,000 to find, whereas its sister mart in Wooler will face no more than the English maximum rise of 12.5 per cent. We can guess where those who run the mart are considering moving their business. That is from the words of the people concerned, not my words.
We need a show of real support for Scottish businesses from SNP ministers. They are responsible, and they must introduce a transitional scheme. Or will they instead take the arrogant risk of hiding in the safety of the chamber, making damaging decisions for our economy, and then, out in the real world, promoting their saltire whitewash to try to fool the public? The public are not stupid, and the SNP needs more than the clichéed romanticism of “Braveheart” to prop it up. After tonight’s vote, we will see if they are again propped up by their Tory pals.
A transitional rate relief scheme is needed now. Otherwise, there will be no town centre regeneration, but instead an increase in town centre degeneration.
10:00
A look at their time in Administration shows that the Liberal Democrats do not have a happy record of dealing with business. Moreover, they do not have a happy record of discussing taxation issues. Who can forget last year’s proposal to rip £800 million out of the heart of the Scottish budget and slash public services in order to fund their tax cut? They seem to have very short memories in that respect. Most of them were uncomfortable with the proposal at the time, and they are even more uncomfortable with it now.
The transitional scheme that the Liberal Democrats want to bring in would create more losers than winners, and most of the losers would be smaller and medium-sized enterprises while most of the winners would, as Derek Brownlee pointed out earlier, be larger enterprises, the public sector and supermarkets.
Will the member give way?
As Gavin Brown has mentioned, yesterday we debated the local government finance order and the SNP Government’s economic recovery plan. We listened as Mr Swinney again defended his zero council tax increase policy and repeated that the main priority is still sustained economic growth. However, what we have heard this morning will be a sharp reality check for many Scottish businesses with regard to the true meaning of SNP rhetoric—a reality of record rate rises.
Mr Swinney has already managed to fall out with major business organisations over some of his budget decisions and now he is simply rubbing salt into the wounds. Just as business begins to come out of the recession, the SNP hits it with rates increases that are in some cases more than double with no transitional relief scheme to ease the pain.
The First Minister and Mr Swinney have shouted long and loud about fiscal stimulus. What sort of stimulus is it for businesses to land them with rate rises of the kind that we have heard about today? Mr Swinney’s solution is that they can appeal. It will come as no surprise to him to hear that four out of five firms surveyed by the Scottish Chambers of Commerce in Edinburgh alone are set to challenge their new business rates. Dr McKee might also like to note that 79 per cent of its members will appeal their new rate levels, particularly given that some firms are facing rises of more than 100 per cent. As has been mentioned, those increases will still have to be met until the appeals are heard.
Prestonfield House hotel in Edinburgh is one of the hardest hit. Owner James Thomson has been told that his rates bill will double this year. According to Mr Thomson, it means that he will have to find £17,386 for each of the hotel’s 23 rooms and suites every year until the rates are recalculated in 2015. That represents a more than £200,000 a year increase on his previous bill. Mr Thomson is right when he says:
“On the one side, the Scottish Government wants to support tourism and on the other they appear to be penalising those that are successful.”
What kind of economic strategy is that?
Not just hotels are affected. Like other MSPs, I received the briefing from the Institute of Auctioneers and Appraisers in Scotland, which is horrified at the impact that SNP policy is having on its members. As other members have said, the IAAS is asking why the SNP has not done what Labour has done in England and introduced a transitional relief scheme that would have capped any rates increases at 12.5 per cent.
As Mr Purvis noted, the IAAS said:
“We are operating at an economic disadvantage compared to our counterparts in England.”
What kind of SNP economic strategy is that? The huge increases in rates bills for some firms could result in job losses and business collapse.
If that is not enough, the thresholds for business rate relief for small businesses and rural rate relief have been raised. That means that some businesses that previously benefited will no longer qualify for relief, which will hit people who need the most support. Let us not forget that rates bills are based not only on notional rental values but on turnover—specifically turnover as at 1 April 2008, when the world was a significantly different place.
As I mentioned, the appeals system is coming under siege. In Edinburgh, the 19 staff who deal with rating valuations are suffering
“both abusive phone calls and fairly aggressive reactions”
from rate payers. That is not surprising considering the exchanges between the Liberals and the Tories this morning. The chief assessor, Joan Hewton, said:
“The disposal of appeals is proving to be a major burden on the staff, with many more appeals proceeding to formal hearing than in previous years. The cost in terms of staff time, legal costs and staff morale is concerning. It is the volume of appeals and that the litigation will probably continue for some time that is of concern.”
Mr Swinney will no doubt be supported again today by his pals, the Tories. Mr Brownlee says that there should be no help for major supermarkets—no doubt a slap in the face for those captains of industry who he claimed yesterday support Tory economic policy. However, those supermarkets create jobs. The other companies affected by this SNP policy create jobs. A blanket refusal to introduce a transitional relief scheme will cost Scotland jobs. What kind of economic policy is that?
10:17
Will the cabinet secretary take an intervention?
I am drawing my remarks to a close.
The Opposition parties argue that resources can be taken painlessly from businesses that benefit from revaluation and given to others. That is a poor argument to marshal in front of Parliament. I have set out the approach that the Government is taking to ensure that we deliver the support that is required.
I hear Wendy Alexander muttering “£2 billion”.
Mr Swinney, I am afraid that you must conclude there.
10:22
This has been a bad-tempered debate because those of us who want fairness are angry that those who oppose a transitional relief scheme have been more interested in covering up the damage caused to businesses than listening to the real hardship. Business leaders will have watched in dismay as Swinney, Brownlee et al paid more attention to name-calling and cheap electioneering than to the real problems outlined by my colleagues Jim Hume and Iain Smith and Labour members such as Lewis Macdonald. While Wendy Alexander’s analysis was a welcome contribution to the debate, the SNP’s contribution has been dire. Its only solution to the problem is to tell people to appeal. It is wrong for a minister to suggest that appealing is a solution without explaining the grounds of such an appeal.
During the Easter recess, I visited some local businesses that are hit hard by rates revaluation—businesses such as Deans of Huntly and Aberdeen and Northern Marts, which are based locally but are of local and national standing. I have surveyed hotels in my region and have been in contact with the Aberdeen and Grampian Chamber of Commerce. I have found out about some massive hikes in rates.
I have also learned of owners’ and managers’ fears for their businesses in light of the increases. The Liberal Democrats have used their time in the chamber this morning to give those businesses a voice in Parliament. Obviously, any revaluation has winners and losers, but in the past there has been a transitional relief scheme to soften the blow—businesses did not suffer the full force of the rate rise in one go. It is different this time around because the SNP Government has refused to put a transitional relief scheme in place. Businesses throughout Scotland find themselves left alone to deal with huge increases in their bills just when, having perhaps managed to weather the recession so far, they might expect to look for support from the Government.
Gus Stewart, a rating partner at Ryden, summed up the mood:
“It is strange that at a time when transitional relief would probably have been at its most helpful for those seeing significant increases and ratepayers already struggling in the face of a recession, that it has been removed. The Government has publicised the fact that the reduction in the uniform business rate (UBR) will itself cushion the increases, but this is the same uniform business rate as applied in England and it will have a transitional relief scheme. Scottish businesses are once again the poor relations.”
As we have already heard this morning, auction marts across Scotland are facing astronomical business rate increases and Inverurie’s Thainstone mart is the hardest hit of them all. Aberdeen and Northern Marts has seen its business rates soar 70.7 per cent to £248,400.
The president of the IAAS, John Gregor, has said:
“The Scottish Government professes to be a strong supporter of the livestock industry in Scotland. However, by not re-introducing transitional relief, they are letting the industry down and threatening its very existence.”
He went on to say that we cannot allow the livestock industry to suffocate under such charges.
Hotels have been badly hit too. Ivor Finnie, director of EDC hotels in the north-east explained to me that his rates will rise by 45.87 per cent, which represents an increase of £280,000. He said that that was
“an astronomical sum for our business and in the absence of transitional relief in my opinion, a wholly unfair increase.”
Further, Malmaison in Aberdeen, a welcome newcomer to the hotel scene, has been sent a bill for a 66 per cent increase. Agriculture and tourism are vital to Scotland’s economy, yet the Government has refused so far to lend a hand.
Jim Tolson mentioned Lauriston Nursery in Dunfermline that saw its rates rise by 150 per cent and finds itself paying more than Dunfermline Football Club. Mr Salmond was happy to have his photograph taken at the nursery last month; I wonder whether he will now be happy to vote for the introduction of a transitional relief scheme to ease the burden on Ms Crush’s business.
Alex Salmond is always quick to pronounce on economic issues that are the preserve of Westminster, but there has been an uncomfortable silence from him on business rates in Scotland, which are entirely within his power to do something about. In the First Minister’s constituency, Meldrum House hotel faces an increase of 161 per cent; Thainstone mart 71 per cent; Meldrum Motors 94 per cent; Strathburn Hotel 56 per cent; and Dean’s of Huntly 23 per cent. Those massive rises are unfair, yet the First Minister has nothing to say on the topic. The SNP’s latest public relations campaign tries to kid us that electing SNP politicians is akin to electing local champions. The businesses of Gordon do not have a local champion in their local MSP in this matter. Alex Salmond has not been heard articulating the concerns of local businesses in Inverurie, Meldrum or Huntly.
The refrain from the Government that 60 per cent of businesses will be better off is no consolation to the 40 per cent of them who are hardest hit. Jeremy Purvis, our finance spokesperson, warned the Government last year about the difficulties that this revaluation would cause and the Lib Dems have been calling for action for months. The SNP has blithely ignored those calls and turned its back on some of our most important businesses. It is not just me who thinks that; CBI Scotland director, Iain McMillan, recently said:
“We’re not happy that (finance secretary) John Swinney has rejected the business community’s advice. We’re living in times of severe economic restrictions”.
Before the revaluation in 2005, the previous Scottish Government consulted widely and introduced a transitional relief scheme to limit the increases in business rates. In 2010, the UK Government is doing that for English businesses, yet at a time of deep recession the SNP does not think that there is any need for a transitional relief scheme. I say that it is unfair to put Scottish businesses at a competitive disadvantage compared with businesses in England. It is time for the SNP Government to think again. It is not too late to introduce a transitional relief scheme to limit the increase in bills. In the end it comes down to fairness.
The Conservatives and the SNP voted down our first attempt to introduce a transitional relief scheme; today we give them another chance. I know where I stand on this matter.