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Chamber and committees

Meeting date: Wednesday, February 5, 2020

Meeting of the Parliament 05 February 2020

Agenda: Portfolio Question Time, Transport Strategy, Independent Care Review, Tax and Public Spending, Non-Domestic Rates (Scotland) Bill: Stage 3, Points of Order, Business Motion, Parliamentary Bureau Motions, Decision Time, Cheyne Gang Singing Group


Non-Domestic Rates (Scotland) Bill: Stage 3

The next item of business is a stage 3 debate on motion S5M-20705, in the name of Kate Forbes, on the Non-Domestic Rates (Scotland) Bill.

Before I invite Kate Forbes to open the debate, I call Derek Mackay to signify Crown consent to the bill.

For the purposes of rule 9.11 of the standing orders, I advise the Parliament that Her Majesty, having been informed of the purport of the Non-Domestic Rates (Scotland) Bill, has consented to place her prerogative and interests, in so far as they are affected by the bill, at the disposal of the Parliament for the purposes of the bill.

Thank you, Mr Mackay.

I call Kate Forbes to speak to and move the motion, for up to seven minutes and no longer, please.


I am pleased to open the stage 3 debate on the Non-Domestic Rates (Scotland) Bill. I start with a number of thank yous, first to the Local Government and Communities Committee and the Delegated Powers and Law Reform Committee for their detailed scrutiny of the bill. I had the pleasure of meeting Ken Barclay for the first time yesterday, and I thank him, too, for his contribution to the review that led us to the bill.

The Barclay review was established a number of years ago with a very specific remit:

“To make recommendations that seek to enhance and reform the non-domestic rates ... system in Scotland to better support business growth and long term investment and reflect changing marketplaces”.

The need for reform was widely recognised across the chamber. Only two weeks ago, Mr Fraser, on behalf of the Conservatives, wrote in a national newspaper:

“It is our view that the current system of rates is ... in need of comprehensive reform.”

I will say this only once: wise words indeed. The bill was introduced to support growth, improve the administration of the system and increase fairness for ratepayers. It is fair to say that, after a bumpy few weeks, it now does just that.

The bill has been built on collaboration and consultation. I thank the individuals on the Barclay implementation advisory group and its associated sub-groups who have freely devoted their time to the development of its provisions. I also thank members of the business community, as well as officials in councils and assessors’ offices across the country, who have worked to produce a bill that will not only deliver the word and the spirit of the Barclay review but work on the ground operationally.

Finally, I thank the Convention of Scottish Local Authorities for its recognition that non-domestic rates are too important to be considered in isolation from wider fiscal framework arrangements and treated like a plaything or a negotiating tactic. I look forward to working closely with COSLA on the fiscal framework, which will proceed at pace.

The bill, which is the first on non-domestic rates to come before the Scottish Parliament, was introduced to deliver the 30 recommendations of the Barclay review. Derek Mackay is to be commended for the speed with which he moved to implement the recommendations that could be implemented without the need for primary legislation. I have been pleased to progress work on the bill, which seeks to support growth, improve administration of the system and increase fairness. We have just had a debate on the budget and the need for economic growth. I point out that the bill’s aims are integrally linked to the economic performance of our businesses.

The Scottish Government has accepted the majority of the review’s recommendations and, as I have said, where possible, it has moved quickly to implement them. The best examples are the business growth accelerator, which is the only relief of its kind in the United Kingdom, and nursery relief, which supports our expansion of nursery and childcare provision. Until yesterday’s stage 3 proceedings, both of those initiatives were under serious threat of abolition.

The bill delivers on the Barclay review recommendations that required primary legislation. The provision that is probably of most importance involves the move to a three-year revaluation cycle to minimise the risks of the volatility that the adoption of a one-year tone date should reduce. It will ensure that rateable values are more closely aligned with real market rents and has been widely welcomed across the board by the business community.

The bill also gives new powers to assessors, local authorities and ministers to improve the administration of the system and to tackle tax avoidance, which I think that every member in the chamber would support.

Perhaps the most critical reforms that the bill delivers are those to the appeals system, which are intended to reduce reliance on the formal system and speed up access to justice in relation to properties that are involved in appeals. Throughout the bill’s progress through the Parliament, I have consistently said that if we did not get the appeals right, the rest of the reforms would be redundant. Our systematic reforms will benefit around 255,000 non-domestic properties in Scotland, 90 per cent of which already benefit from the application of a lower poundage in Scotland than they would attract if situated elsewhere in the UK, and also from the most generous package of reliefs available anywhere on these islands.

As legislators, we have a duty to deliver legislation that improves outcomes for stakeholders. We take that duty seriously. In a Parliament of minorities, no legislation will deliver everything that we want, so it comes down to a question of priorities. I think that we have heard that view being expressed quite starkly, particularly from the Scottish Conservatives. It is unfortunate that avoiding a level playing field between independent schools and local authority schools appears to have become so totemic to them in the bill process that 125 affected properties were considered to be of greater priority than the other 255,000 non-domestic properties.

The decision whether to support the bill comes down to the simple question whether members believe that the rates system needs reform. The Scottish Government’s view is that the reforms that the Barclay review proposed struck the right balance between ambition and pragmatism. However, most of them could not be implemented mid-revaluation, and we simply cannot wait until 2027 to do so. The majority of them have been universally welcomed by ratepayers and administrators alike. We need more regular revaluations; we need a reformed appeals process; we need greater powers to tackle rates avoidance; and councils and assessors need the tools to do their jobs more efficiently and effectively. Surely we can all agree on that, and that is the prize that is on offer. The bill delivers on the cross-party agreement on rates system reform and I encourage everyone in the chamber to support these critical reforms.

I move,

That the Parliament agrees that the Non-Domestic Rates (Scotland) Bill be passed.


I will make some concluding remarks on the Non-Domestic Rates (Scotland) Bill. The bill will implement the findings of the Barclay review of non-domestic rates, many of which were welcome.

The move from a five-year to a three-year revaluation cycle has been supported by the business community, as have proposals for a business accelerator, which will create an incentive for businesses to expand and will help to remove the existing disincentive for speculative development by landlords. If it works, it will stimulate growth and investment and assist economic growth. Some of the technical changes in the bill, such as making it easier to collect information from ratepayers and improving transparency, will also be welcome.

The bill does not of course implement all the findings of the Barclay review. It was hamstrung from the start by being told it had to be revenue neutral and therefore had to look for means of raising money to balance out the new reliefs being granted. Ken Barclay and his colleagues found two targets from which to raise extra money—local authority arm’s-length external organisations and independent schools.

The recommendation to end the tax relief for ALEOs proved to be highly controversial, with local authorities across the country complaining, rightly, that it would mean a negative impact on their budgets and/or an increase in charges at the likes of local leisure centres and swimming pools. Fortunately, following vigorous opposition from the Scottish Conservatives against the swim tax, the Scottish Government decided to U-turn, and it backed down on the proposal.

Regrettably, the Scottish Government did not back down in relation to the other measure that is intended to raise additional funds—namely a change to the tax treatment of independent schools. Yesterday, we set out some of the arguments why we feel that that is the wrong move. As the Office of the Scottish Charity Regulator has made clear, a number of independent schools are in a marginal financial position. For example, I can think of five independent schools in Perth and Kinross that have closed in the past two decades—schools such as Rannoch, Croftinloan and Butterstone, all of which not only provided education but were important parts of local economies.

The money spent on independent schools supports jobs in what are often rural areas, directly in terms of teaching and non-teaching staff in schools but also in terms of the broader spend in local economies. In the local economy of a town such as Crieff, in which there are a number of local independent schools, shops, hospitality businesses and tradespeople’s livelihoods depend on the existence of those schools and the spend from the school and the staff who work there.

The same would apply to a town such as Dollar in Clackmannanshire, where the major local employer is Dollar academy. Taxing those schools more will have a negative economic impact. That is not to suggest that a school the size of Dollar academy is necessarily going to close because of the bill, but there are smaller independent schools, including small Christian schools as we heard yesterday, that may find themselves in that category.

Murdo Fraser has now mentioned Dollar for the second time today. Has he spoken to the rector of Dollar academy on this issue?

Liz Smith has engaged with Dollar academy and many of the parents in Dollar on the issue and they share many of our concerns. There is a concern about this.

What we have not heard from the Scottish Government, or from the minister yesterday, is any attempt to defend or justify the policy. I suspect that what really lies behind it is that it is an easy sector to attack. It has few political friends. This all has the unhealthy stench of the politics of envy. That is the reason why, with regret, we cannot support the bill despite agreeing with a lot of what it contains.

There is a broader point in relation to rates. Although the Barclay review recommendations are generally positive, our concern is that they do not go far enough. There is a serious debate to be had about the future of the rating system more generally. What we have seen in recent years are a number of sticking-plaster solutions being introduced to deal with complaints from businesses about rates increases from revaluations, such as the reliefs that have been brought in for the hospitality sector and for offices in the north-east of Scotland. Moving from a five-year to a three-year cycle will improve matters, but it will not eradicate the problem entirely.

There is also a serious question as to whether a property-based tax is still relevant, particularly as it relates to a sector such as retail, in an environment in which retail is increasingly under pressure from online traders. There is simply no level playing field between online retail and the sector that has to support high street premises. Therefore, it is our view that a more fundamental look at the whole rating system is required, as is being proposed by the Government south of the border. I know that that view is widely supported in the business community, and I hope that the Scottish Government will undertake such an exercise in the future.

No discussion on rates would be complete without a mention of the large business supplement, which in Scotland is currently set at a rate that is nearly double that south of the border. More than 5,000 retail premises in Scotland pay the LBS and, cumulatively, they contribute more than £14 million annually. The higher rate in Scotland puts those businesses at a competitive disadvantage to businesses in the rest of the UK. The LBS is a measure that is long overdue for being dealt with and—who knows?—maybe the Cabinet Secretary for Finance, Economy and Fair Work will have some good news for us on that in tomorrow’s budget.

Although there is much in the bill that we support, because of the tax raid on independent schools, which will damage local economies and which seems to be motivated purely by the politics of envy, I regret that we will not be able to support it at decision time.


I begin by thanking everyone who has contributed to the debate on the bill, whether in yesterday’s proceedings or in any of the discussions that we have had over the past few months, from the stage 1 process to today’s stage 3 debate. I thank the national and trade organisations and the local groups and individual constituents who got in touch with us. I also thank the staff in the Scottish Government and our Parliament clerks, who helped members of the Local Government and Communities Committee and other members to ensure that our amendments were crafted in such a way as to deliver what we intended, and that we were able to have informed debates on what is a hugely important issue.

Finally, I thank the minister for her constructive approach to the debate and for being prepared to work with us—even when she did not agree with us, she was prepared to make sure that our amendments were crafted correctly.

The minister and Murdo Fraser have highlighted the changes that the bill will introduce. I will highlight a couple of important issues that were raised and dealt with at stage 2, but which have not yet been mentioned. I was very glad that colleagues supported my amendment to increase the amount of time that businesses have to provide notification of a change in circumstances from 21 to 42 days, reflecting the pressures and challenges that small businesses in particular face in meeting such a tight deadline. It was important to act on that, and the action that we took at stage 2 was followed up by Graham Simpson’s stage 3 amendment on the matter.

The second issue that I want to raise is that of phoenixing, which I put on the agenda through a probing amendment. Phoenixing occurs when companies still operate from a premises or address but reinvent themselves, perhaps through the use of shell companies, to evade their responsibility to pay tax for the local services that they use. The discussion that we had on that subject was very constructive and we secured a commitment from the Scottish Government to work with the Convention of Scottish Local Authorities and the Institute of Revenues Rating and Valuation to create regulations on the issue. It was a difficult subject to address at stage 2 of a bill, but I have received a commitment that work will be done on the matter, which we hope will be finished by the end of the calendar year, and I very much welcome that.

Broadly, yesterday’s stage 3 proceedings were constructive, even though we disagree on many issues. It clarified the work that has gone into simplifying a very complex system of taxation and ensuring that there is a greater level of transparency, for which there is support from across the Parliament. I look forward to seeing how the changes that we have made to the bill—and, in particular, the work on the fiscal framework and the wider movement to financially empower and fund our local authorities—will be progressed. We should not forget that our local authorities are at the heart of the bill, because the money that is raised through non-domestic rates goes to them, and the provision of local services is crucial to all our communities, as anyone who listened to the previous debate will know.

One issue that was central to yesterday’s debate and that was picked up by me and Graham Simpson was the important role of Opposition parties in testing the boundaries of legislation through our principle discussions at stage 1 and the detailed discussions at stage 2. That was the case in relation to future proofing the bill, as my amendment on low-carbon energy that was agreed to yesterday does; to testing; to debates on key issues being opened up more broadly; and, critically, to how legislation will work in practice.

I will use the example of student accommodation, which was highlighted in the Barclay report but not included in the legislation. As I said yesterday, my stage 2 amendment was concerned with tackling the issue, which is particularly visible in our cities and which crosses ministerial portfolios, including those on finance, housing and education. The amendment was agreed to and included in the bill with cross-party support, and I undertook consultation with key stakeholders. Due to the size of the issue, its cross-cutting nature and the chance of unintended consequences hitting students who already face high rents, I was persuaded, having consulted stakeholders and with support from across the chamber, that including the provision in the bill was not the best way of tackling the issue. However, we were able to raise concerns about the debt that students—graduates, in particular—face.

Research that has been done by the National Union of Students and Unipol highlights that some university institutions provide good student accommodation and that such models are more cost effective, because there is provision for students with special needs, adaptable accommodation and quiet blocks are provided, students with families are supported and there are annual rent discussions. We need to learn from best practice. The mayor of London has introduced new planning requirements that ensure that universities provide affordable student housing. That issue has been raised in Edinburgh, particularly in the context of our new local plan.

You must come to a close, please.

In Ireland, the link has been made between rent pressure zones and affordable student accommodation.

All politicians in this chamber have the job of listening to our constituents; that is not just the job of Opposition parties. We need to test and push legislation at every stage of the process to ensure that it works for everyone. I believe that we have done that collectively and successfully with this bill.


I, too, thank all those who have engaged in the process and who have supported the process in Parliament.

I noted at stage 1—indeed, the minister mentioned this in her opening remarks—that this is the first time that the Scottish Parliament has considered primary legislation on non-domestic rates. That is very telling, because it demonstrates how little interest there has been in Parliament in local tax and how much power the Local Government Finance Act 1992 gave to the Secretary of State for Scotland—now, to the Scottish ministers—in relation to setting the detailed design of the system through secondary legislation.

In September 2013, Derek Mackay—who was here a minute ago—the then Minister for Local Government and Planning, said that the Scottish Government would

“conduct a thorough and comprehensive review of the whole business rates system”

by 2017, which would deliver

“a fairer, simpler and more efficient business rates system.”

That review never took place. Instead, we had the Barclay review, which asked only one question:

“How would you redesign the business rates system to better support business and incentivise investment?”

That was not an inappropriate question to ask, but many other questions should have been asked, too. That narrow focus raises some fundamental points about how we develop policy and legislation.

For example, yesterday, we heard major questions about who sets the tax rate and about the treatment of privately owned student residences. Concerns have been raised about the manner in which section 10 came into being—not as a consequence of any review of charitable relief but as a means by which to raise some revenue to pay for the tax cuts that the Barclay review was focused on.

Too often, the Government, for whatever reason, feels the need to outsource policy development to so-called independent reviews. Instead of reaching out to the public or other politicians with a discussion paper or a consultation in order to gather views on the possible scope of legislation—in this case, we were dealing with primary legislation on non-domestic rates for the first time—it asks others to do the thinking. In the case of the Barclay review, such thinking was framed by an incredibly narrow remit.

We have bills to implement any reforms that are needed, but, not surprisingly, MSPs have their own ideas about the reform of non-domestic rates. We have to work within the confines of the stage 2 process to develop our ideas. The Non-Domestic Rates (Scotland) Bill was the first time that any member has had the chance to do something, because there has never been the opportunity up until now.

In her opening remarks, the minister talked about the past few weeks being “bumpy” and about aspects of the process being used as a “plaything”. I call it democracy, and I think that we should improve the system.

Since stage 2, I have had meetings and conference calls with many business groups. Although we disagree on many issues, it was something of a surprise to hear that they agreed with me that the comprehensive review that was promised back in 2013 is still needed. I pointed out that it was bit late for that, but there we are.

I will conclude by saying something about my attempt to repatriate rate setting to councils. That was not agreed to, but I am sure that it will happen. Yesterday, I quoted comments made by the constitutional steering group—which drafted the standing orders for the Parliament—in its 20th anniversary report:

“The Scottish Constitutional Convention recommended that the Scotland Act should commit the Scottish Parliament to securing and maintaining a strong and effective system of local government, embodying the principle of subsidiarity ... What we have seen instead with successive governments is a tightening of central control over local budgets and spending priorities. Our view is that the benefits of bringing decision-making back to Edinburgh in 1999 should flow through to proper empowerment of local communities through their local representative bodies.”

As I highlighted at stage 1, the removal of that tax base from the control of its historical owners—local government—is, in our view, a violation of international law. Article 9 of the Council of Europe’s European Charter of Local Self-Government provides legal protection. Article 9.3 states:

“Part at least of the financial resources of local authorities shall derive from local taxes and charges of which, within the limits of statute, they have the power to determine the rate.”

Today, they do not. We do not believe that the removal of that tax base from the control of its historical owners can be allowed to persist, because it violates international law. We cannot support the bill, but neither will we stand in its way. The Greens will abstain on the motion at decision time.

I call Willie Rennie for up to four minutes.


I get the point.

Andy Wightman’s speech was typical of his approach to the bill, which he has brought to life. I hope not to embarrass him too much with praise, but I genuinely think that he enlightened the debate and challenged us all. He challenged many of us on our localism credentials and the bill is better for that; certainly, the debate was better for it. It was a great disappointment to me that we did not follow through with the localisation of non-domestic rates. That would have empowered local authorities in the way that Andy Wightman described. His speech this afternoon was typical of his contribution to the discussion more generally.

I also praise Kate Forbes for the way in which she has approached the matter. She is always polite and respectful, even when it is clear that she strongly disagrees with every word that we are saying. An example of that was the way in which she adeptly avoided getting into the pit with the Conservatives yesterday over the independent schools debate. I would have preferred it if she had engaged a bit more in the debate, rather than hiding behind the Barclay review, but it was, nevertheless, an example of her polite and respectful way of dealing with the bill. I also praise the committees, the clerks and the officials for their contributions.

The bill should have gone much further. Substantial reform of local government is desperately needed, and needed now. If anybody is a plaything, local authorities are the plaything of central Government, in that they are given responsibilities but not the freedom to do things in a way that would work in their communities. Local authorities should live up to the responsibilities of the promises that they make, just as the Parliament and the Government should live up to their responsibilities and the decisions that they make. We should give local authorities the power to raise the majority of the money that they spend, just as this Parliament has the powers to do the same.

Will the member take an intervention?

Not just now.

When you control the purse strings, you control your destiny. The sooner that we in Parliament learn that, the stronger our communities will be as a result.

The Liberal Democrats are unable to support the bill. At some point, we have to make a stand over bills that just tinker with the system rather than deliver the radical change that we want. The bill has made a mistake on the principle behind the independent schools issue. Of course there are arguments about the merits of independent schools—I do not wish to get into that—but I worry about us interfering with the operation of OSCR, which should be able to make the judgment as to whether an organisation is a charity or not. That should be the criterion on which we should view all charities. We are creating two tiers of charities, which is regrettable, and I think that, secretly, the minister probably believes that too.

We need bigger reforms. We are taking part in cross-party local government finance reform discussions on council tax reform, and I hope that the Government will make substantial proposals for that so that we can agree a constructive way forward. We have suggested a land value taxation system, which could be used right across local government finance. That will be our contribution to that debate.

However, a commitment is being made today on the fiscal framework for councils, and I hope that it is not another false dawn. Councils have been promised reforms repeatedly, as Andy Wightman pointed out earlier, and they have not been delivered. I hope, therefore, that something positive comes out of the bill, but I am not optimistic.

We now move to the open debate, in which speeches must be absolutely no more than four minutes long. I warn members that if they go over their time, it will disadvantage members who come nearer the end of the debate.


In my role as convener of the Local Government and Communities Committee, I thank our clerks, the team at the Scottish Parliament information centre, the Government and the many people and organisations that provided us with evidence. I also thank my fellow committee members. I remind members that the committee was working to a pretty strict remit, and what came out was well worth the work that we put in. I enjoyed convening the committee throughout the bill’s legislative stages, so I am delighted to be given the opportunity to take part in today’s proceedings.

During the committee’s scrutiny of and discussion on the bill, there were some inevitable points of disagreement. I will mention them briefly. Relief for private schools was one—Murdo Fraser has just spent an inordinate amount of time discussing that—and Andy Wightman’s amendment on the devolution of business rates was another. The arguments on those two areas got a good airing yesterday, so I will not go over them again today.

Those two issues may have been the most contentious, but, lest we forget, in its stage 1 report, the committee unanimously endorsed the general principles of the bill. We welcomed it as an important staging post on the journey to modernisation of the system that began when Kenneth Barclay and his colleagues were appointed in summer 2016 with a wide remit to

“seek to enhance and reform non-domestic rates”.

To have reached the point where, it appears, we are about to pass a bill some of whose provisions will come into force in April is an impressive show of momentum, and credit is due to the Barclay review and the Scottish Government for their work.

I said that it appears that we are going to pass the bill, but the three previous speakers sounded as though they had searched through the bill to see whether they could find something that they disagreed with so that, although they seemed to support a lot of it, they could decide not to vote for it. That is disappointing.

A staging post is not a destination. The committee noted that much of the bill was a framework, with some crucial detail still to be sorted out. In the two or three minutes that I have left, I will focus on areas where the committee would agree, I think, that the momentum should be kept up.

The bill will speed up the revaluation cycle from five to three years, and everyone has welcomed that. It means more work for assessors at a time when the profession told us that recruitment and retention were becoming a bit of a problem. The Government pointed out that it has already provided welcome additional resources to the tune of £2.5 million this financial year in anticipation of the Barclay reforms. Assessors themselves accept that it is not just about money; in the longer term, the role needs to be made more visible and attractive to graduates and school leavers. Giving assessors more power to carry out their core role, as the bill does, should also help.

Everyone agrees that there are too many appeals against revaluation, and that they clog up the system. The bill puts in place ambitious reforms to the appeal system that will improve decisions and build trust in the system. It is widely accepted that we will have succeeded only if that brings the numbers down and, overall, provides finality on rates bills sooner.

In our stage 1 report, we noted three areas where changes could be made. The first is more digitalisation and a move to a more online system, and I am pleased to note that the Government appears to agree. The second is increased transparency and better communication between assessors and ratepayers. The committee heard from some ratepayers that much of the current process seems to be wrapped in mystery.

The third area is fees for appeals. The aim is not to create a new income stream, but simply to hit a pause button and make ratepayers stop and think about whether an appeal is worth the time and money. The numbers alone indicate that there is a problem, with appeals appearing to be almost an everyday part of the process.

Non-domestic rates might not get many people excited but, with hand on heart, I can say that the bill is one of the most diverse and interesting that the committee has considered during my time as convener. It has led us down interesting by-ways to golf clubs, bandstands and lace factories, among others.

Crucial challenges lie ahead, not least of which is reform of the small business bonus scheme, which the committee hopes will keep the system’s better features but eliminate its cliff edges and perverse incentives.

I hope that the bill becomes an act tonight. The committee looks forward to renewing our engagement with the non-domestic rates system in the future.


I am pleased to take part in tonight’s stage 3 debate on the Non-Domestic Rates (Scotland) Bill. As my colleague Murdo Fraser has outlined, the Scottish Conservatives are not able to support it.

As a member of the Local Government and Communities Committee, I thank all those who gave evidence and briefings and who supported the committee during the bill’s passage.

For some time, the Scottish Conservatives have been calling for a comprehensive review of the Scottish rates regime. In recent years, rates revaluations have had a negative impact on Scottish businesses, particularly in the north-east, and Derek Mackay announced a package of relief measures worth £40 million to address that issue only after pressure from the Scottish Conservatives. However, the bill does not go far enough in addressing the more fundamental problems with the current rates regime.

One of the Barclay review’s main recommendations was to halve the large business supplement to bring it into line with the rate set in England. That will not be immediately implemented through the bill, and the Scottish Government has gone only as far as committing to implement it when it is affordable. That means that larger Scottish businesses will remain at a competitive disadvantage to their counterparts south of the border.

Although we supported a stage 2 amendment to allow localism to be debated, local authorities—through COSLA—and the business community raised concerns about the proposed approach. As a party, we are committed to devolving more powers to local authorities, and more flexibility and control over businesses rates. However, it is clear that we need to take a holistic approach to considering such devolved decision making, rather than the piecemeal approach that would have resulted from what was proposed.

One of the most concerning measures in the bill is the removal of charitable rates relief from independent schools, which is currently afforded to the private education sector. I pay tribute to my colleague Liz Smith MSP, who worked tirelessly on that issue with the sector.

Private schools teach about 4 per cent of all pupils in Scotland. Many of them struggle to meet their day-to-day running costs, and the bill could necessitate fee increases, cuts to bursaries or even closures. In turn, that will mean that more pupils will need to be educated in the state sector, leading to a burden on the taxpayer that will be greater than any increase in income from business rates.

As I mentioned yesterday, my region of Mid Scotland and Fife has many schools that fall into that category, including Dollar academy in Clackmannanshire, and Glenalmond college, Kilgraston school, Strathallan school and Morrison’s academy in Perthshire. All those schools could be jeopardised by the change in policy. The schools not only benefit the pupils who attend, but have a positive impact on their communities. They all have close links with state schools in their local areas and provide them with encouragement and support, and indirect and direct employment by the schools has an impact on the business community.

Education is a public good that benefits everyone, not just those who are in receipt of it, regardless of whether it is delivered by the state or by the independent sector, or whether parents pay fees directly to schools or indirectly through their taxes.

Time is moving on, so I will conclude. It is important to put on the record that the bill contains several changes to the rates system that we fully endorse and support. Unfortunately, the bill, both as introduced and in its amended form, will not deliver the wholesale review of business rates that we need and want, and it will harm our education sector. It is therefore regrettable and disappointing that we cannot support it at decision time.


I remind members of my entry in the register of members’ interests. I am a member of the Union of Shop, Distributive and Allied Workers and the Federation of Small Businesses. I am also a director of a company with retail interests—and I say that not just because it is my duty to do so as a parliamentarian, but because I rise to speak as a disgruntled shopkeeper.

I will tell members of my history with the non-domestic rates regime. In 2010, when I was running my business, the rateable value of one of my units went from £12,000 to more than £45,000 following revaluation. The appeal, which I had to take to the Lands Tribunal for Scotland, took 18 months. The assessor’s explanation and rationale for the change was that I was no longer using an entrance to the shop and therefore the RV was being applied to another portion. To my mind, there was a flaw in that logic: access between the two parts of the shop had been blocked up in 1972, yet, 30 years later, that was used as the rationale for the increase in my RV.

I tell that story to make the point that, for many small business owners, including small retailers, the non-domestic rates regime is opaque and unintuitive; the increases have been sporadic; and it has been extremely difficult to appeal. The bill is welcome, but it really only addresses those last two points. The three-yearly revaluations will provide consistency and remove the sporadic and large increases that some businesses have experienced. Likewise, the alteration to the appeals system is welcome, as anything that streamlines that process is welcome. However, for many business owners, the system will continue to feel largely arbitrary and unfathomable.

There are three things that still need to be done. First, we need increased transparency, because the methodology by which rateable values are calculated is extremely difficult to understand. I know from looking at my rates bill and the calculations that were made when I was taking forward my appeal that there were plug figures—literally arbitrary numbers—that inflated the value of certain areas. I do not see anything in the bill that will change that.

In my local area, after the most recent revaluation, I surveyed shopkeepers and found that, on average, they had experienced a 10 per cent rise in their rateable values, whereas rents had been largely flat in the same period, which takes me on to the second thing that needs to be done. Fundamentally, the bill fails to examine and reform the assessor system. It is a legacy that largely reflects the regional tier of government, which we no longer have. Much greater oversight and scrutiny is needed of assessors so that their calculations and the work that they do are transparent.

Thirdly, we need the process to be much more streamlined and intuitive and more in line with modern business practice. Unless the bill is backed up with real reform of the processes and technology that are used, businesses will continue to have issues in dealing with the non-domestic rates regime.

The most important point in the debate is that we need a comprehensive review of local government finance and taxation. The points that Andy Wightman and Willie Rennie have made on that today and previously are absolutely right. We must have full fiscal devolution and fiscal responsibility for local government. That cannot happen if we have piecemeal reform of the taxation powers that local authorities have at their disposal. Until we have that comprehensive review, we will continue to have issues with the non-domestic rates regime.


I, too, thank the Local Government and Communities Committee clerks for all their hard work and sound advice as we took forward the bill.

In looking at the bill, one finds it difficult to construe how someone with as keen a mind as my good friend Graham Simpson could be seduced into backing amendment 9 at stage 2. Perhaps he fell victim to the roguish charm of Alexander Stewart or the persuasive arguments of Andy Wightman. Alternatively, perhaps it was to do with Mr Simpson’s get out of jail free card: his point that amendments are sometimes supported at stage 2 to “test the waters”, as he said yesterday. Bless. The band played “Believe it if you like”. Graham Simpson was not swimming yesterday; he was drowning. Like Pinocchio, his nose was growing with every word he spoke.

It was good to see the Tories—no doubt chastened by the barrage of 27 business organisations telling them that, with regard to removal of uniform business rates, they should not be so daft—reverse their position from that at stage 2. I welcome their road-to-Damascus conversion to common sense, which was something that we did not see from the Greens, who I understand did not even publish the results of their consultation from last September. Labour members, too, U-turned on the issue, after taking representations from USDAW. I welcome the fact that they listened.

Mr Wightman’s amendments 23 and 23A at stage 3 seemed to be a clever manoeuvre, but he looked like a rabbit in the headlights as his erstwhile Tory and Labour allies deserted him. He even suggested that Sarah Boyack was sidling up to Derek Mackay, which Mr Wightman happily did in 2017, 2018 and 2019.

On amendment 25, Andy Wightman argued, Grinch-like, that charity shops should, in effect, have to pay rates, regardless of whether a local authority had decided to waive its rights to impose 20 per cent. That seems to be a reversal of the localism that he purports to champion. The Lib Dems supported the Greens, passing over the eight years of a Lib Dem-Labour Scottish Executive that was notorious for ring fencing 60 different local authority budget lines. The entire episode shows how important it is that colleagues examine the impact of amendments before deciding whether to support them.

As for all the nonsense about private schools, one would think that a drastic change was being imposed. In fact, the payment of rates is the equivalent of about 1.3 per cent of fee income. I must apologise to members, because yesterday I said that that percentage was 1.8 per cent. That is of course a lot less than the 6 per cent impact of the teacher pay rises and pension changes last year, and significantly less than the 4 per cent average rise in fees in recent years.

The Tories are clearly obsessed with that relatively minor part of the bill and, by not supporting it, they are throwing the baby out with the bath water.

It is not that the Tories are obsessed with the issue; it is a genuine concern of many parents who have children at independent schools.

No one wants to pay more, but it is only a 1.3 per cent increase, when they are paying, on average, a 4 per cent increase in fees. Let us be honest—most of the people who go to those schools are, shall we say, better off than the majority.

The reason for the Tories being so concerned is no doubt because many of them attended such schools or send their children to them, yet not one of them declared an interest, as Neil Findlay pointed out yesterday. An unseemly dozen Tories felt the need to suck up to their constituency associations, with those who attended comprehensives being particularly keen to speak and those who attended Eton and Harrow being surprisingly sedate. I hope that when Michelle Ballantyne takes over, she will impose a better balance in her array of speakers.

As for not consulting, the committee took plenty of evidence, including through a visit to and meeting at George Watson’s college, which is Liz Smith’s alma mater—the school that she attended, taught at and even wrote a book about.

What about bursaries? All they do is enable private schools to hoover up talented young folk from the state sector to help the schools’ grades and allow them to charge yet more fees.

Come to a close, please.

State schools pay rates. Private schools should pay rates, too, and I am delighted that the Parliament overwhelmingly agrees with that.


It makes me wonder how we get through our committee meetings. We have gone from James Dornan to Kenneth Gibson, who was as gracious as ever.

The bill is not perfect—I am clear about that. The Barclay review did not cover everything and we had some tight discussions in committee. However, the bill moves the situation forward and it picks up on some of the key issues in the Barclay review.

The challenge for us in Parliament will be post-legislative scrutiny. After the bill is passed, detailed discussions about many concerns will be required, including those picked up in Alexander Stewart’s amendments on having affirmative rather than negative instruments and the need for more consultation, as well as on additional things that we managed to get the minister to agree to move on. It is about what happens next. What political parties want to do is up to them. Some members might disagree with aspects of the bill, but we think that enough progress has been made in the bill to have made the process worth while.

The review was tightly constrained and it could have covered more, but we have dealt with what was in front of us. In relation to the devolution of non-domestic rates, there was a key issue about not just hearing from but listening to colleagues in local government. The strong view that came through was that, at the moment, devolving non-domestic rates without reviewing the fiscal settlements and, more generally, without the powers would entrench inequalities between some of our local authorities. Equalisation was a key concern, particularly at a time when local authority budgets are stretched to breaking point. We have demonstrated that we listened, even though there was much debate.

The fiscal framework is absolutely critical. I very much agree with Willie Rennie’s comments about the need to reform the existing council tax, which is regressive, a failure and not up to date. There is a lot of work to do on that. The Conservatives could come and join the rest of us on what is clearly a difficult issue.

I want to comment on the debate on private schools, which is the reason for the Conservatives not voting for the bill. Today, Murdo Fraser said that it was about the politics of envy, but it is not. It is about the politics of fairness.

The comment from the Barclay review was that independent and private schools are charities that benefit

“from reduced or zero rates bills, whereas council (state) schools do not qualify and generally will pay rates. This is unfair and that inequality should end by removing eligibility for charity relief from all independent schools.”

That is the right place for us to be.

Will the member take an intervention?

I will not.

The minister will have the flexibility to look at individual schools that make a case to her, which was the point raised by Andy Wightman yesterday. There is scope for ministers to act, but as a general principle, we support this provision in the bill.

We will support the bill this afternoon. The points made by Daniel Johnson on the need for a reality check on what it is like to run a small business were spot on. I hope that we have made some progress in this bill, but there will be more to follow, and increased transparency, oversight and parliamentary accountability are crucial going into the future. I hope that passing the bill today will not be the end of the story on the issues that colleagues have raised.


This has been an interesting journey. It is fair to say that what looked like a fairly uncontroversial bill has proved to be anything but. However, I want to start my closing remarks by expressing disappointment. The Scottish Conservatives should have been able to support this bill, which is largely sensible. Any issues that we had could have been ironed out.

Our big concern, the politically motivated assault on the independent schools sector, could have been smoothed over. We offered compromise, but we were talking to a brick wall. Kate Forbes got her own way on the matter, but she should not be happy, because treating one part of the charitable sector differently from the rest has been attacked by the charity regulator and I can imagine the prospect of a legal challenge.

My party should have been able to back this bill, but Ms Forbes was not for moving. I suspect that that position comes not from her but from higher up; it could maybe even come from the First Minister.

The upshot of hitting charities with bigger bills is that some will close. I am convinced that some smaller schools will not survive because of what Parliament is about to do. I hope that Hamilton college in my region will. Perhaps the minister can advise what should happen to the pupils and the building that they are in should it not survive. I could see it becoming a top-class hotel or private leisure centre, and “elitist”—how ironic.

Today, the Scottish Council of Independent Schools told me that

“The 30,000 families, more than 3,000 teachers and more than 3,000 non-teaching staff in the independent sector will yesterday have been left in no doubt over the support or otherwise forthcoming from the Chamber. ... Any cursory post-legislative scrutiny would have shown the Parliament the genuine success of the 2005 Charity Act and unique public benefit test.”

The letter goes on to say:

“The independent sector will keep doing what it does best—for pupils from across Scotland, from all backgrounds, from all political persuasion and none. That is Scotland’s highest attainment, keeping subject choice as wide as possible, exporting Scottish education to the wider world, bringing pupils from over 50 countries to this country, and making real change to lives in their extra-curricular offer and wellbeing agendas.”

Until we got to stage 2 of the bill, the independent schools issue had attracted the most comment, then all hell broke loose when Andy Wightman unleashed his amendment 9 on the world. What a hoo-hah there was; what should have been an opportunity to debate the issue of devolving rate setting to local government got completely out of hand.

Sarah Boyack said earlier—and she was right—that stage 2 should have been an opportunity to properly test issues such as her amendment on student accommodation. At least we have a commitment to look at the issue of local government funding, and that is to be welcomed. Some good has come of the process.

We have ended up with a bill that does not have widespread support. Businesses have concerns. They think that they are being penalised and that the system here will put them at a disadvantage to businesses in other parts of the UK. Dr Liz Cameron, the chief executive of the Scottish Chambers of Commerce, said:

“The Scottish Chambers of Commerce is deeply concerned about the impact of Section 8B of the Bill which has the effect of completely removing Scottish ratepayers’ appeal rights when there is a change in economic circumstances.”

I mentioned that issue yesterday. Dr Cameron also said:

“The Conservative party tabled a Stage 3 amendment to seek such a consultation but all other parties voted against this sensible amendment to what we believe is a part of the Bill that will be damaging to all ratepayers.”

That is not something that the minister should be proud of.

The bill could have been a lot better. Business is happy only because something that was not in the bill originally is still not in it, but it is not happy about what is in the bill. The charity sector does not like it. It could all have been so different. We could—and should—have been able to support it, but we cannot.


Before I respond to some of the specific points that have been made, I commend Andy Wightman on his efforts to raise the profile of non-domestic rates and the bill more generally through his amendments. I understand that this might be cold comfort, but I respect the fact that he is standing up for something that he passionately believes in. On that basis, I understand his decision not to support the bill. However, I thank him for his challenge, which has pushed me harder and made me rethink issues on a number of occasions. It has also caused my officials to think and think again. Although a faster review of the fiscal framework might be poor consolation compared with changing the law altogether, I do not think that the debate has been in vain. It might have been a frustrating experience in part, but he has done more than anybody else to raise awareness of the issue.

I understand their reasons, but I am disappointed that, although the Conservatives support 27 substantial sections of the bill, they will not support the bill because they do not support one substantive section.

On Labour’s position, Sarah Boyack is quite right to say that this is just the beginning for a lot of the issues that we have been airing for the first time during this process. Daniel Johnson brought to life the impact of the non-domestic rates system on real ratepayers up and down the country who are contending with the non-domestic rates system.

The bill progresses the issues quite significantly. Daniel Johnson, Sarah Boyack and James Dornan all talked about the next steps and the need for post-legislative scrutiny. The bill is clearly not coming to the end of the road tonight, although there will be a vote. It has opened up a number of conversations on issues such as phoenix companies, and we have agreed a timetable with Labour colleagues, which we are happy to share with other colleagues, for exploring that issue further and considering potential solutions. We are committed to working on a fiscal framework with local authorities, and we will progress that at pace. We are also committed to maintaining momentum on this issue. As an example of that, the appeals sub-group is being reconvened tomorrow to consider some of the issues that have been flagged.

I am delighted that the bill does a lot and delivers what ratepayers are looking for. Failure to support the bill tonight would deprive councils of policy responsibility for empty property relief, powers to prevent ratepayers from running up large debts and powers to tackle tax avoidance, including through phoenixing and the abuse of the small business bonus scheme and charity relief. The bill allows assessors to collect information that is necessary to set accurate rateable values and to allow them to resolve appeals more efficiently and effectively. It will support ratepayers and help them to be less exposed to the risks of volatility, inconsistency and a cumbersome and unresponsive appeals system.

The bill delivers the outcomes of the Barclay review of non-domestic rates. It supports growth, it improves the administration of the system and it increases fairness for ratepayers. For those reasons, it has the support not only of the Scottish Government but, more important, of the business community and local government. It has the support of Ken Barclay, and, at decision time tonight, I hope that it will also have the support of the Scottish Parliament.