Chamber and committees

Any provisions that have retrospective effect must be given careful consideration. Our approach to tax is informed by our tax framework, which we published alongside the budget. That gives the best overview of how we will seek to proceed. Part of that is to have continuous engagement and dialogue. Our approach is also underpinned by the Adam Smith principles.

That informs our approach to taxation. As for any unknown unknowns and future hypotheticals, I do not want to speculate, other than to say that decisions about taxation policy are informed by and will be consistent with what we have set out in the tax framework.

What we are doing, ultimately, is clarifying an existing provision in the 2020 act. The previous order sought to clarify what that provision meant in practice; what we are doing with this legislation is, effectively, what we could not do through subordinate legislation alone, which is to put the date back a year. It is important to note that the date that the legislation refers to—2 April 2020—is the date when the power in the 2020 act came into force. Of course, there was also an opportunity during the passage of the 2020 act to consider its policy intentions. The order and the bill are designed to provide greater clarity and certainty, which I assume is something that would be welcomed.

The question of resource helped to inform the decision that I referred to in my opening statement on the extension of the disposal deadline through the legislation that will be introduced shortly. That will provide opportunity for appellants to consider the progress of this bill through Parliament and decide whether it should inform their future decisions. It also helps to address the issue of pressures faced by assessors.

We are taking that approach in the subordinate legislation that we will introduce to allow more time for appellants and users of the system to consider their position in the light of how Parliament progresses the bill. Obviously, that has the knock-on effect of helping to support assessors and free up resource.

I recognise that we have a tone date in two weeks’ time and that there is a revaluation process under way. I take your point regarding assessors’ resource and capacity, which is why I took the opportunity to inform the committee of the legislation that will be introduced. As I said, there are two aspects to the approach, one of which will be supporting assessors’ capacity management.

That is a fair question, Mr Griffin. Of course, we have to recognise the independence of assessors and valuation appeal committees and, ultimately, how they choose to manage their workload and proceed is a matter for independent assessors.

Where we have sought to help is by extending the deadline by one year so that there is no longer a statutory requirement for disposal by the end of this year. As I said in my opening statement, given that 105 days’ notice is required for citation, a deadline of 31 December 2022 would mean that a case would need to be referred to the Lands Tribunal for Scotland by the end of June. The deadline might be 31 December, but we are only three and a half months away from the end of June, which creates more immediate and proximate pressure.

By extending the deadline we have increased capacity and space, so to speak, for assessors. However, the way that they manage their workload and how valuation appeal committees operate are matters for them as independent bodies. As a minister, I do not think that it would be appropriate for me to say anything that could be misconstrued as commentary on how those bodies carry out their functions independently.

I know that that point was conveyed in written evidence to the committee. Although I recognise the concerns about that, the key point of setting the date to 2 April is to be consistent with what was in the 2020 act.

The point I have sought to make in my responses to all of the questions that I have answered this morning is that this legislation is about providing clarity and certainty. That is why it is very important that this bill aligns with the 2 April 2020 date that was in the 2020 act. Although I recognise that there are concerns, the reasoning and rationale behind setting the date at 2 April are very important, and that is why that date is in the bill that is before us today.

As I attempted to convey when I was before the committee last November, we sought to clarify the definition of

“a material change of circumstances”

in the Non-Domestic Rates (Scotland) Act 2020, and the bill seeks to further clarify what we mean by that term. That is the bill’s primary driver: it provides that clarity and certainty for the users of the non-domestic rates system.

Of course, public finances are a consideration, too, and the bill’s financial memorandum illustrates particular scenarios and the potential impact on those finances. Were that impact to materialise, it would have to be factored into how we manage our budget, year in and year out. The key point that I come back to is that, fundamentally, there is uncertainty about the outcome of appeals on the basis of a material change of circumstances, their duration and any potential impact on ratepayers or the public finances.

Effectively, the reasons that I gave for introducing the Valuation and Rating (Coronavirus) (Scotland) Order 2021 back in November apply to the bill. I am conscious that, at stage 1, we consider the general principles of legislation. When the order that was before the Parliament in November was agreed, there was recognition of the general principle of the need to clarify and provide certainty around material changes in circumstances as being clearly delineated, local and specific, and recognition of the fact that broader considerations with regard to the general economy were best captured through revaluation. As a result, we changed the revaluation process from a five-year to a three-year cycle and put in place a tone date that precedes revaluation by a single year to ensure that revaluation means that rateable values and net annual values are more reflective of the market at the time that they are introduced.

I hope that that helps to clarify the intent behind the bill.

The draft instrument is purely technical. It is intended to assist councillors in administering business growth accelerator relief.

BGA relief, which is unique in the United Kingdom, provides 100 per cent relief on new properties for 12 months after they are first occupied and 100 per cent relief for 12 months on property improvements. In order to facilitate the identification of eligible properties by councils, the Non-Domestic Rates (Scotland) Act 2020 requires that the assessor put a mark on the valuation roll to flag new and improved properties.

We keep all our reliefs under review. In response to stakeholder feedback, BGA relief has been expanded a number of times since the Non-Domestic Rates (Scotland) Act 2020 was passed. The draft instrument that we are discussing merely takes that into account and aligns the definition of new and improved properties in the act with the properties that may be eligible for BGA relief from 1 April 2022. That will enable local authorities to distinguish the properties that are eligible for the relief.

The regulations specifically clarify that property improvements include a concurrent change of use in the property and improvements associated with the installation of certain plant and machinery, including the installation of solar cells or solar panels.

Business growth accelerator relief is a flagship relief that has been praised by the business community. It was even highlighted in response to the UK Government’s recent review as a policy that should be replicated in England. I note for the committee’s benefit that the UK Government has chosen to replicate it with a relief only for property improvements from 2023. Business growth accelerator relief in Scotland has been available not only for property improvements but for new builds since 2018.

I hope that members will support the regulations.

As you will be aware, a number of factors, one of which is the pandemic, are impacting on the availability of materials. Price is one implication of that, but issues with the availability and sourcing of materials due to supply chain and logistical challenges have inhibited the deployment of the money. We are committed to constructing 110,000 houses over the next 10 years as part of the Bute house agreement and consistent with our ambitions in “Housing to 2040”. We are absolutely committed to delivering the resource necessary to realise those ambitions but, as I think the committee will understand, our capacity to build houses—and, subsequently, to spend money on building houses—is constrained by the availability of materials. Of course, that challenge is not unique to Scotland or, indeed, the UK; it is global.

We will monitor the position very carefully. As I said last week in the chamber—echoing the First Minister’s comments in the local government finance order debate—we are ready and willing to play our part in Scotland. In the broader context of the crisis in Ukraine, we have been clear about what we would like the UK Government to do with regard to waiving visas and maximising the number of people coming to the UK. Should the UK Government make any funding available to support that effort, we will of course deploy it to maximum effect to support people coming to Scotland.

That is a fair and reasonable question. With this not-so-brief guide to the spring budget revision, we have tried to provide as much context and information as possible, and as you have correctly identified, we reflect the respective practices of the Treasury and the Scottish Government. As for the potential for a more unified approach, we are happy to reflect on that.

Scott, is there any technical commentary that you would want to make?