Chamber and committees

The latest published data shows that the total estimated projected unitary charge of payments for 74 private finance initiative contracts across the public sector in Scotland, from 2025-26 onwards, is approximately £12.9 billion. We are committed to ensuring that PFI contractual obligations are delivered and that contracts are as affordable as they can be. That is why we asked the Scottish Futures Trust to support public bodies in optimising value for money for those contracts.

Across the public purse, the toxic legacy of Labour’s PFI contracts continues to impact on the Scottish Government’s broader spending power, even to this day. The Scottish Futures Trust has expanded contract management capacity and has established a dedicated PFI expiry service to look at consistent support to public bodies as contracts move towards their expiry. We are also working closely with authorities to reduce the risk of avoidable costs, and PFI hand-backs that have been completed to date have been delivered smoothly and within the parameters that we would have expected.

We need to look at stronger governance in that regard, and earlier planning, but I very much recognise the challenge. The member will be aware that I am having to deal with some of the consequences that, many years later, stem from those contracts.

The Scottish Government has provided funding to Scotland’s councils to deliver on the roll-out of free breakfast clubs in primary schools throughout Scotland from August 2027. That commitment will be delivered flexibly to meet the needs of children, families and communities across the country.

In 2026-27, £15 million has been provided to local councils to expand and enhance breakfast club provision. From 2027-28, that will be followed by the provision of an additional £44 million annually to deliver that national offer. Allocation letters confirming individual local authority allocations were issued on 31 August.

I have to confess that, in my time as a teacher, I do not recall ever being issued with 23 pencils per year. It might be an equation that Mr Kirkwood is acquainted with, but it is not one that I ever engaged with as a teacher.

The broader point about sustainable funding for our universities is important. That is why, last year, in my discussions with the then Cabinet Secretary for Finance and Local Government, I was able to secure an uplift for our universities, with the investment for financial year 2026-27 exceeding £1.4 billion, which includes a combined increase of more than £55 million in resource and capital funding from the Scottish Funding Council.

We will take forward further engagement with the Cabinet Secretary for Education, Culture and Gaelic and the Scottish Funding Council in relation to the allocation for our university sector this year.

I thank Mr Ruskell for his interest in the topic. I am aware of the protests outside, and he will also recognise that, as a fellow Fife MSP, I am very aware of the strength of feeling on these issues. However, I should put it on the record that the ministerial code prevents ministers from being involved in decision making around planning. It is really important to record that.

Since Parliament previously discussed the subject, a number of actions have been taken forward by the Minister for Public Finance, as I set out in my original response. Planning authorities are now required to notify ministers of new data centre applications within seven days, and the new direction will support that strategic monitoring of the pipeline.

Finally, the important part of Mr Ruskell’s overall question is that the Government is actively considering the potential for future planning guidance. We will keep Parliament, including Mr Ruskell, updated accordingly.

The Minister for Public Finance issued a planning direction on 17 August to support the strategic monitoring of hyperscale artificial intelligence data centre planning applications. The direction requires planning authorities to now notify Scottish ministers of all new data centre applications exceeding 50MW of power capacity within seven days of validation. That also applies to applications that are already in the planning system. The Scottish Government is giving active consideration to the potential for planning guidance and will keep the Parliament informed accordingly.

I very much recognise the point that Kate Campbell is making. There is a level of complexity here, because most universities receive charity relief, and we currently have no plans to change that. However, many charities undertake some sort of commercial activity, and it can be challenging to distinguish between commercial and non-commercial use. I very much welcome views on the topic as part of our stakeholder engagement for the review of rates, and I will be happy to discuss Ms Campbell’s proposal with her in more detail in the coming weeks.

Delivering increased economic growth will be at the very heart of this Government’s agenda in the next five years. We want to ensure that Scotland is full of vibrant communities where it is easy to start and grow a business, where the ambition and creativity of Scottish society are embraced and where the Government acts to create the right conditions to attract the inward investment that is needed.

A key part of making intensified economic growth a reality will be getting the right framework for non-domestic rates, because we know that businesses all across Scotland are struggling. As is the case with family finances, businesses are having to respond to inflation and are struggling with energy bills, increased staffing costs, food prices and VAT. In that context, it is important to remember that this Government has already taken action to help to alleviate the pressures that our businesses currently face. This year’s rates relief package is worth close to £1 billion, and we know that that is helping to provide relief to tens of thousands of businesses all over Scotland. They also continue to welcome support such as the small business bonus and targeted retail, hospitality and leisure relief. We responded directly to calls from the self-catering sector for a dedicated transitional relief, which the Association of Scotland’s Self-Caterers has welcomed.

However, it is important that all Governments listen and that we continue to focus our efforts on alleviating the pressures that our businesses face. That is why I am pleased today to set out our plans for reform of the non-domestic rates system in Scotland.

Our current system is built on many strengths. Earlier this year, 1 April marked the first three-yearly revaluation in Scotland and the start of the second revaluation cycle based on rental values one year earlier. This year’s Scottish budget reduced all three tax rates during this financial year in order to ensure a broadly revenue-neutral revaluation cycle in real terms—one that is redistributive and not tax raising. Alongside those tax rate reductions, the budget delivered the largest relief package in cash terms since devolution, excluding the temporary support that we provided during the pandemic.

We do not want to lose the positive elements of the existing system. Nonetheless, I know that there are real concerns about the accountability of assessors and the consistency and transparency of valuations. Many ratepayers have found the rates system and property valuations to be complex and uncertain, and we are also seeing delays in accurate bills being issued. We know that businesses are already dealing with the fallout from international conflicts alongside the on-going damage of Brexit, which has been compounded by the UK Government’s increase in employer national insurance contributions. That is why we committed to working with the business community to strengthen our rates system and accountability.

I turn to the ratepayer experience. To ensure clarity, we will deliver change in how the non-domestic rates billing system works. It is an unfortunate consequence of our current fiscal arrangements that our tax decisions are confirmed only in the Scottish budget, which follows the United Kingdom budget. That leaves an incredibly tight period of time in which the Scottish Government is expected to set our budget. Notwithstanding that, however, it is unacceptable that delays in software updates have prevented ratepayers from receiving accurate bills ahead of the financial year, with bills often arriving only late into the summer months. Such delays create unnecessary challenges for businesses, making it harder to plan ahead and manage cash flow.

That is why we will take two actions in that space. We will provide improved self-service information for ratepayers to assess their likely liabilities through our online rates calculator. Alongside that, we will work with the Convention of Scottish Local Authorities and the Improvement Service to ensure that the non-domestic rates billing system works as it should. Specifically, I want to reach agreement, working with local government, on an NDR billing system that will deliver accurate bills on time, all the time.

In relation to accountability, I will address three matters: the short-term issues arising from the revaluation; improvements to the appeals process; and consideration of more significant structural change to our current model.

First, this Government has heard clearly the concerns about apparent anomalies in the 2026 revaluation. A number of examples have been raised with ministers. Although an appeals system to consider such cases through the Scottish tribunals exists, we want to be sure that there is not a systemic issue of inconsistent valuations. We are mindful that, due to the one-year tone date—something that England has thus far considered unworkable—assessors are producing draft valuations in less than eight months. I therefore announce today that the Government will establish an independent panel to undertake a rapid review of the outcomes of the 2026 revaluation. Specifically, it will be tasked with examining and reporting to ministers, within three months of its appointment, on allegedly anomalous valuations and their overall impact. Ministers will ask the panel to make recommendations on how those might be addressed.

Secondly, alongside that immediate review, we must ensure that business owners who consider their rates to be inaccurate have access to timely recourse. The appeals system is intended to allow ratepayers to request changes to a property valuation from the assessor in the first instance, with the possibility of appeal to the independent First-tier Tribunal for Scotland. It is important that the judiciary is independent in how it organises its work, but I commit today to examining how the Government can support increasing the capacity of the local tax chamber to support that process.

Thirdly, ministers have listened to the concerns about the valuation system, and I commit today to a general review of the assessor function. The review will ensure that assessors’ independence in valuation is maintained, but it will also seek to ensure that there is confidence in the system for all. Over the summer, we will begin engaging with stakeholders to develop options for reform to the structure of assessors and establish how those options could deliver improvements in accountability and transparency. I intend to explore further the potential role for a national assessor and the option of placing the Scottish Assessors Association on a statutory footing, with reporting obligations to Parliament. Such changes would require full system redesign and legislation, but I acknowledge that assurance is needed now, which is exactly why I have committed to an independent rapid review of the 2026 revaluation.

The Government is providing a package of relief, which, I remind members, is forecast to be worth more than £870 million in 2026-27. That includes the business growth accelerator and fresh start reliefs, which are the most generous schemes of their type across the United Kingdom.

However, I am mindful of concerns that capital investments can translate directly into increased rates liabilities, which can act as a disincentive to growth. Similarly, cliff edges in relief eligibility can encourage the turnover of properties or constrain expansion. We have heard that concern in the campaign led by The Courier and others, which calls for an expansion in eligibility for fresh start relief. We have already committed to a comprehensive review of non-domestic rates, which will examine the impacts and configuration of our reliefs. However, recognising the benefit to businesses of having certainty on rates and reliefs for the duration of the three-year valuation period, we have provided that certainty on some of our most significant reliefs over the next three years. As a result, our comprehensive review will start this summer, in order for any fundamental changes to be in place for the next round of revaluation.

Alongside that comprehensive review, we will identify early changes that can be made at the next Scottish budget to enhance and better target our existing package. The final decisions on such changes will be confirmed at the Scottish budget, but I can announce today that, from 1 April 2027, vape shops will be excluded from eligibility for relief.

I place on record my thanks to The Courier, The Press and Journal and the Sunday Post for their campaigning to support Scotland’s businesses. Campaigning journalism can deliver real results, and those publications should be commended for their role in that.

The Government was returned to office with a strong mandate from the people of Scotland. We must all reflect that that includes Scottish businesses, which recognise the support that the Government has been able to put in place during extraordinarily challenging times for our businesses. In returning to office, ministers are mindful of the need for greater action and impetus, to acknowledge the ongoing economic uncertainty of our times.

The Government has committed to a comprehensive review of non-domestic rates to support our businesses across the country. In addition, I have confirmed today that we will act to deliver increased transparency, accountability and clarity. On billing, we will improve access to self-service information, and we will work with local government on a billing system that works on time, first time. We will establish an independent panel to undertake a rapid review of revaluation, and we will ensure that the appeals process has the capacity to deliver timely outcomes. The assessor function will be reviewed, with options being developed over the summer. Of course, we will continue to enhance incentives for investment.

Our comprehensive review will consider fundamental changes but, in the short term, the Government will respond positively and openly to constructive ideas. Crucially, we will work in partnership with business to drive the inclusive economic growth that our nation requires in order to meet the challenges of our time.

Perhaps it was a bit too much to expect some positivity about these announcements from Mr Hoy. However, I hope that he recognises that the Government has significantly adapted our position on support for businesses in relation to some of the outputs that I have set out today. For example, the independent panel is going to provide a rapid review of the 2026 revaluation, in relation to which I understand—and very much recognise—that there have been issues. The Government has heard that challenge from businesses and we have already engaged with them directly. The Minister for Public Finance will engage with them again tomorrow. Throughout the summer recess period, we will engage with businesses on how we can improve that approach. Of course, the independent panel will report directly to ministers.

I extend to Mr Hoy the same invitation that I extended to Mr Greer. If Mr Hoy wants to come forward with some more ambitious proposals ahead of the budget, my door is open—

I thank Alyn Smith for his welcoming of this work, in particular his mention of the rapid review and the revaluations, which I know have caused concern to a number of businesses—not all businesses, but a number of businesses. It is important that we learn from those instances and that those anomalous valuations are considered. We will receive further advice from the independent panel to that end.

The Gill review is continuing to give confirmation to that end, but the member will be aware that BJ Gill, the chair of the review, was appointed Solicitor General. I congratulate him on that appointment, but he has tendered his resignation as chair of the review, and arrangements will be made as soon as possible to appoint his successor. It is really important that the new chair of the review has the expertise and grasp of the legal framework that applies to valuation for rating and objectivity. We expect the review to complete as previously intimated to Parliament.