Chamber and committees

As I said in my opening remarks, we are committed to greater accountability and transparency in the non-domestic rates system. I recognise that that is of interest to MSPs and businesses across Scotland. Ahead of the 2026 revaluation, we will explore ways in which requirements can be expanded to allow for a larger share of properties to be on the valuation roll.

However, it was sensible in the first instance to focus on properties that are valued using the comparative method of valuation, because of the aforementioned commercial sensitivities that would come into play with the other methods of valuation.

Thank you, convener, and I thank the committee for the opportunity to give evidence on a second piece of NDR legislation today.

The Scottish Government is keen to ensure that non-domestic property valuations are better understood by ratepayers. The draft instrument that we are considering increases accountability in the non-domestic rates system ahead of the 2023 revaluation.

The Barclay review of non-domestic rates called for assessors to provide more information to property owners and occupiers when making rateable value calculations. The Barclay implementation appeals sub-group, which is an expert group that was set up to inform and advise Scottish ministers in respect of NDR reforms to the appeals system, specifically recommended that assessors should provide, alongside property valuations, the addresses of let properties, the rental evidence on which was used to inform the calculation of the basic rate to be applied to the property.

It proposed that four categories of property be covered in the first instance—standard shops, offices, warehouses and workshops—and that the list be expanded in the future.

We consulted on a draft instrument that sought to require that assessors provide that information in draft and final valuation notices in respect of revaluation. On one hand, some responses called for the proposed information-sharing requirements on the assessor to be expanded to more property types, or to more valuation methodologies. On the other hand, some raised a concern that, if the requirements were expanded, confidential and commercially sensitive information such as trading accounts or lease details could potentially be provided to third parties.

We considered that concern and, as a result, this draft instrument goes beyond the appeals sub-group’s recommendation. It requires that, for 32 categories of property that are valued using the comparative method and a basic valuation rate, the assessor must provide the addresses of comparable properties used to calculate that rate and state where that information can be accessed. Requiring that a list of addresses be produced only where two or more properties have been used for comparison for the valuation will avoid the risk that commercially sensitive information can be worked out indirectly.

I believe that our response to the consultation demonstrates our commitment to greater accountability in the rates system while ensuring that our reforms do not place an unrealistic burden on assessors. I hope that members will welcome that, given the points that the committee raised about assessor workload in its stage 1 report on the Non-Domestic Rates (Coronavirus) (Scotland) Bill.

We remain committed to greater accountability in the rates system and will explore how to expand on the information-sharing requirements in advance of the 2026 revaluation.

The draft instrument also contributes to modernising the NDR system by allowing for draft valuation notices to be sent electronically where that has been requested by the owner or occupier and has been agreed in writing between the assessor and owner or occupier.

I hope that members will support the draft instrument.

You flag up one of the challenges around how we can move from idea to implementation. At this stage, we want to see what is happening at a UK level. We need to have a sense of what the larger tax landscape will be like before we can proceed. If we do not, we could work up a proposal only to find it superseded by something that is implemented from Westminster, and I do not think that that would be a good use of resources.

If the UK Government decides not to legislate on or make progress in this area, we can decide how to take things forward. Consideration of an online sales tax is referenced in the framework; it is one of our manifesto commitments; it is a shared principle between the Scottish Government and the Scottish Green Party; and it is something that we want to be fully explored. However, as I said, we have to wait and see what the UK Government is going to do.

Absence of evidence is not evidence of absence. It goes back to the point about data: the challenge is having the data to evidence the impact. We know that there is support for the small business bonus scheme—for example, from the Federation of Small Businesses. Many of the small businesses that benefited from it value it. However, I take your point—

I take your point around the need for more robust data rather than what could be characterised as opinion or anecdotal evidence. That is why the report’s key recommendation around the need to enhance the amount of data that we have is an important one. It will allow us to be more effective in shaping policy, whether that is around specific reliefs or future consideration of more fundamental reforms. However, the key issue is data.

In my experience in engaging with businesses as a minister, and as a constituency representative for the past six years, the scheme is very much valued by those businesses. I apologise if I am misquoting, but I think that the FSB described it as a lifeline for many.

It is important that we consider carefully what the Fraser of Allander Institute has outlined in the report—that is why we are going to establish a short-life working group to consider it in more detail.

As I made reference to earlier, there is not necessarily a direct correlation between the rateable value of a business’s premises and its overall economic performance. That is a key point, and that is part of it.

However, I do not want to respond prematurely before having given this my full consideration. As I said at the outset, we are establishing a short-life working group and, as I said in response to a parliamentary question last week, I will of course be happy to update Parliament in due course, once we have had an opportunity to fully consider the report.

I will just reiterate what I have said previously: we very much value the report; it is an important contribution. I think that all the points that have been raised are pertinent.

Do you want to add anything, Alex?

The remit will be consistent with the agreement with the Scottish Green Party, as I outlined.

I will bring you back from income tax levels to general economic performance, which is captured by the national strategy for economic transformation—NSET—and the evidence paper that is provided with it. Those are fair points, so I will take them away and reflect on them.

I am conscious of the point that I made earlier about the need for the framework to remain a concise, high-level document. As I interpret it, what you are driving at is that the strategic objective for stable revenues needs to be unpacked to some degree in order to highlight those points.

—and are forecast to grow year on year. That ultimately comes down to the different make-up of the economy in other parts of the UK. I think that we are all familiar with the impact that the concentration of financial services in London and the south-east has on inflating earnings overall elsewhere in the UK, and the challenges that that creates. It is important that we look at what are the drivers of earnings and economic performance, and we are setting out our vision for that in the national strategy. Equally, though, we cannot lose sight of the impact on the block grant adjustment and the need for that process to be considered as part of the fiscal framework review.

I take the point around economic performance and the need to maximise opportunities and prosperity in Scotland, and that is what we are setting out through the national strategy for economic transformation. However, we cannot lose sight of the block grant adjustment aspect as well, and we have to bear in mind that income tax revenues are forecast to continue growing in Scotland.

That is not determined yet. We have an agreement that is in the shared programme with the Scottish Green Party. We are at an early stage in how we will develop the process, but we are going to be working at pace.

Any remit must be consistent with what is in the policy programme, so it will cover the resourcing of local government, including council tax. It will be for the citizens assembly to consider what issues it wants to explore within that remit. As I said, I do not want to prejudge its work.