Meeting date: Thursday, March 16, 2017
Meeting of the Parliament 16 March 2017
Agenda: General Question Time, First Minister’s Question Time, Non-domestic Rates (North East Scotland), Draft Climate Change Plan, Farriers (Registration) Bill, Decision Time
- General Question Time
- First Minister’s Question Time
- Non-domestic Rates (North East Scotland)
- Draft Climate Change Plan
- Farriers (Registration) Bill
- Decision Time
Non-domestic Rates (North East Scotland)
The next item of business is a members’ business debate on motion S5M-03651, in the name of Ross Thomson, on the impact on north-east businesses of the hike in non-domestic rates. The debate will be concluded without any question being put.
That the Parliament understands that, as a result of the 2015 revaluation, businesses across the North East Scotland region are facing enormous increases in their non-domestic rates; believes that this impacts on companies across a range of sectors, including hospitality, oil and gas, engineering and retail, with some being subjected to increases in excess of 200%; considers that this represents a substantial hike in charges that will render it extremely difficult for some to avoid liquidation; welcomes the Press & Journal campaign, which, it understands, aims to highlight a number of compelling examples of businesses that will be adversely affected by the increase, and notes the calls for the Scottish Government to take expedient and meaningful action to address this issue and to seek a solution to ease the impact of this.12:46
I am delighted to have secured this members’ business debate, and I thank members for the cross-party support that has enabled it to take place.
Businesses right across the north-east have been desperately crying out for help with their business rates revaluation. Business owners warned of the devastating impact that it would have on their business and their community if nothing was done to help. I launched a petition that called for support and which accumulated more than 2,000 signatures in the space of only 48 hours. Businesses told me time and again that they risk going to the wall, which would result in the loss of jobs, if something is not done. I am proud to speak for each and every one of those businesses this afternoon.
Sadly, the Scottish Government simply tried to pass the buck. From the outset, we were told that the Government would not intervene because this is a matter for the independent assessor and local councils to deal with. To give credit to Derek Mackay, he came to Aberdeen to hear for himself the very real concerns of local businesses. However, the Government’s attempt to dress up “extra” funding for all Scottish councils as income that could be used to mitigate business rates rises fooled no one in the north-east business community. Aside from the fact that every council in Scotland received a top-up, with only Aberdeen City Council and Aberdeenshire Council being expected to spend that income on rates relief, Mr Mackay and the Scottish National Party declined to mention the fact that the overall budgets for all local authorities were still being slashed. A cut is still a cut.
Only now, after the criticism of his Government hit the national press and Mr Mackay faced calls to make a statement to Parliament, are we seeing action. The cabinet secretary made a “screeching, embarrassing U-turn”, to quote an Angus Robertson phrase. That followed hot on the heels of the reversal of the ill-thought-out plan to raid north-east council budgets and send the income to the central belt.
A 12.5 per cent cap will be welcomed by the hospitality sector and will make a difference to the hefty bills that have been levied on office premises in the north-east. However, based on the Scottish Government’s own figures, it appears that around 8,000 businesses in the region will not benefit from the changes. Furthermore, the cap will be in place for only one year. Businesses say that they need certainty over at least three years. The Scottish Chambers of Commerce hit the nail on the head when it said that the Government’s so-called bespoke solution for the north-east will not deal with the root of the problem. It is nothing more than a sticking plaster.
It is crystal clear to everyone in the north-east that a fundamental re-examination of the whole business rates system is essential, so I hope that the recommendations of the Barclay review will provide much-needed relief and support for businesses in the north-east.
However, the cabinet secretary is right about one thing: the north-east is facing “exceptional circumstances”. But what is he going to do about it? Aberdeen City Council and Aberdeenshire Council have identified sums of money to help to alleviate the problem, in the face of savage cuts to their budgets from the Government.
Mr Thomson rightly identifies that local authorities have the ability, under the Community Empowerment (Scotland) Act 2015, to put in their own rates relief schemes. Why is it that Tory councillors in Aberdeenshire and Aberdeen have voted against such schemes, and has Ross Thomson told businesses across Scotland when he has been going out and about that that is what his Tory colleagues have done on both councils?
Mr Stewart obviously spends more time in Edinburgh than he does in the north-east. If he had allowed me to continue, he would have heard what I am about to say, which is that I am pleased with the role that I have played in securing £3 million in local funding for rates relief in Aberdeen. If Derek Mackay is true to his word that the north-east faces “exceptional circumstances” and that he is willing to work with local councils, I am sure that he will match that funding and will happily accept Aberdeen City Council’s invitation to him to meet and discuss that programme. Match-funding such a scheme could allow councils to support the businesses and sectors that are currently not being helped by the Scottish Government cap.
Mr Mackay has the money to do it, because he can use some of the £320 million extra from the United Kingdom Government to put in place funding for councils to support businesses that are affected by rates rises. The UK Government has announced a £300 million relief fund for local authorities for business rates relief in England. I tell the Scottish Government today that business rates rises and increases are not something that it can ignore and hope will go away. More must be done.
Mr Mackay says that local councils keep every penny of business rates that they raise; it has recently come to our attention that Aberdeenshire Council will raise £23 million more than was allocated by the Scottish Government in its local government settlement. Will the Scottish Government provide a cast-iron assurance—it likes those—that those missing millions will stay in the local area and will not be swallowed up here in Edinburgh?
I have seen the “missing millions” catchphrase in the local press. I am surprised that Ross Thomson, as a sitting councillor, does not understand how council budgets work. I have not been a councillor, but I understand that money is allocated to councils over a five-year period, and that budgets are not based on the tax take of one year.
As a sitting councillor, I can tell Gillian Martin that last year, just as this year, we had to set a one-year budget. The Government is giving us no clarity on our future. We have to set our budget looking into the future without knowing what that future is going to be. We keep getting told that we keep every single penny of non-domestic rates, but we do not. That is the evidence that was presented to Aberdeenshire Council and it is the evidence that I am providing to Gillian Martin this afternoon.
It is our duty to do all that we can to help businesses, particularly those in the north-east that have endured difficult times due to the downturn in oil and gas. Unfortunately, Scottish National Party tax policy on non-domestic rates, the large business supplement, council tax, income tax and stamp duty are hindering economic growth and hammering our region. It is time to do more.12:53
I remind members that I am the parliamentary liaison officer for the Cabinet Secretary for Communities, Social Security and Equalities, and that I am also a sitting councillor.
I thank Ross Thomson for lodging the motion and for allowing us to discuss a vital issue in the chamber today. It is an issue that I am sure has dominated other members’ mailboxes in recent times, as it has mine.
I was initially contacted by the Belvedere hotel in Stonehaven, whose proprietors raised concerns about the increases affecting businesses in the town—hospitality businesses, in particular—and I met them and many others. The Belvedere hotel faced a 106.6 per cent increase in rates. It was by no means alone. One guesthouse was facing a 250 per cent increase in its rates, which was substantially above the 37 per cent average increase nationally. The business owners whom I met in Stonehaven had compiled a list of all businesses, highlighting those that would be affected. Of 355 businesses, 87 were affected by the revaluation. A number of those were hospitality businesses, but there were other problem areas.
I was contacted about another case by a landlord on behalf of the tenant, regarding a building for agricultural use. The use was queried by the assessor’s office, which has yet to make a final decision. In the meantime, the tenant is being asked to pay £130,000 worth of rates as well as an extra £13,200 surcharge for the writ they received demanding the payment.
Then there are retail premises. I recently met the owners of the hardware store in Laurencekirk, who told me about the 100 per cent increase in their business rates. That is a business that has not made alterations or grown in size and that has, over the past few years, seen its footfall and takings drop. The decline in footfall for that business started when the banks pulled out of town. The people from the surrounding areas who went to Laurencekirk to use a bank would frequent the shop. That is a slight side point, but one that highlights the impact that such closures have on our rural communities. Had the rates not increased there, the business would now be eligible for the extension of the small business bonus, although it may well still be if it is successful on appeal.
It is not just the actual increases themselves that are the problem. Those individual cases highlight the fundamental problems that there are with the current rates system: how the rates are determined, how the valuations are reached, their frequency and the appeals process. Businesses can appeal, but although they have six months to lodge an appeal, the problem lies, as the Belvedere pointed out to me, in that they have potentially to wait another two years for the appeal to be heard, during which time the higher rates have to be paid. That is enough to force some businesses under.
The Barclay review, which is expected in the summer, will be of fundamental importance. I sincerely hope that it will address some of the concerns that have been raised with by local businesses in my constituency, and across the region. The Scottish Chambers of Commerce and the Federation of Small Businesses in Scotland, among many others, have called for changes to the system to address the problems, and have asked for a reduction in bureaucracy, more transparent processes, more frequent valuations and a system that is more adaptable to our changing economy, which is of fundamental importance in the north-east. They also call for a system that incentivises business creation and investment.
While all of us eagerly anticipate the outcome of the Barclay review in the summer, we also need to recognise the good news in all this: tens of thousands of businesses have been lifted out of business rates altogether by the measures that have been taken by the Government.
Will the member take an intervention?
I am sorry, but I am in my closing seconds. I will happily discuss the point with the member after.
Of the businesses in Stonehaven that I mentioned earlier, 54 have benefited from the new threshold, which has lifted them out of rates altogether, while the remainder of the 355 pay no rates at all. Extra relief packages have been introduced by Aberdeenshire Council, over and above the support that was announced by the Government a few weeks ago, which have helped many of the businesses that contacted me initially. I would have hoped that there would have been more support for that from Mr Thomson, but given his party’s actions or—should I say?—lack of action in Aberdeen and Aberdeenshire, I suppose that I cannot be surprised at some of his comments.
One thing is for sure: while the Tories will continue to carp from the sidelines, the SNP will be the party that continues to work for our communities, and for all the businesses in our communities.12:57
I thank Ross Thomson for bringing this issue to the chamber. It is without doubt one of the biggest issues that we face in the north-east right now.
I want to highlight the impact on a sector that has had little mention in the chamber but which, according to Gary Walton of businessratesadvice.com,
“has been particularly hard hit”.
That sector is our nurseries. Nurseries in the north-east are facing an increase of, on average, 50 per cent in their rates.
It may be handy for Liam Kerr to know that not one nursery in Aberdeenshire will not be assisted by the new business rates relief schemes that have been put forward by the administration of Aberdeenshire Council.
I thank Gillian Martin for her incorrect intervention because—as I will go on to talk about—I have a particular example. Perhaps she should have given me longer to develop the argument.
Nurseries in the north-east are, on average, facing an increase of 50 per cent in their rates, with the highest increase being a staggering 177 per cent. More than one faces the prospect of closing its doors completely in the face of such increases. All that, of course, is in the context of the Scottish Government’s aim to increase free childcare from 600 to 1200 hours per year. Councils across the country already face a dilemma about where to put children because there are not enough nursery spaces—a problem that will only be exacerbated if nurseries close.
Last week, in response to a huge number of emails from many nurseries and their clients on that issue, I visited a Croft Nurseries Ltd nursery in Stonehaven. That nursery and Croft’s two other sites in Stonehaven and Chapelton are excellent establishments. They are exemplars of good practice with good facilities and have used innovative thinking to build the best environment for children. They were built over 25 years by entrepreneur Linda Pirie. Linda’s three nurseries now face rates increases of 54 per cent, 28 per cent and a staggering 82 per cent. She faces a choice: she can hike prices to parents, many of whom cannot pay, because north-east unemployment is rising and pay freezes are biting—it therefore makes more sense for parents, especially women, to stay off work and provide the care themselves—or she can close. Linda began to cry as she told me that. This is real—real people, real families, real businesses and real jobs are involved.
Three weeks ago in Laurencekirk, I sat with a number of local businesses that had got together after receiving no responses to their letters to the SNP. They asked me to go down and see them in a town that has lost key facilities that draw people in, including its petrol station and its bank, in the context of an oil sector downturn and reduced footfall across the board.
I was particularly concerned about Mearns Hardware Ltd—I believe that Mairi Evans visited it this week. It is a small retail hardware shop on the High Street whose rates are going up by 100 per cent. At best, it might have to cut the hours of its staff; at worst, it will close its doors completely. That would be yet another empty property on one of our high streets, more redundancies in the local economy and another loss to Laurencekirk.
Thanks to Scottish Conservative pressure and the excellent campaign by The Press and Journal, we secured a 12.5 per cent cap for the hospitality sector and office space. However, as I have frequently pointed out in the chamber, more than 10,000 businesses in the north-east still face increases in their bills and getting no relief at all from the Government.
At general question time today, Derek Mackay trotted out his line that the councils might help if people like Linda Pirie beg them. However, as we all know, Aberdeenshire Council is one of the lowest-funded councils in Scotland and faces further swingeing cuts. The Government will say that people should appeal. However, as Linda told me just yesterday, retaining an expert to do that on their behalf is another cost, and people are expected to pay until an appeal can be heard—in two years, at least.
Those businesses say, “I see you and the north-east Conservatives trying hard. I see the P and J campaigning to try to save us. I have not heard anything from the SNP constituency MSPs.” They are right. When the people of the north-east need their MSPs to stand up to the Scottish Government on this, as on so many other issues, they are met with stony silence. Linda Pirie has written again to the First Minister. She did not get a reply last time. Will the First Minister bother to respond this time? We shall see.
I commend Ross Thomson’s motion for the dangers that it highlights and for highlighting the terrible consequences for the north-east if the Government does nothing, and I fully congratulate The Press and Journal and thank it for its effective campaign.
Earlier today, Derek Mackay said that the Government will support people through revaluation, and he asked us to trust him to support businesses. Okay—now is the time to deliver and help our businesses, before it is too late.13:02
I, too, congratulate Ross Thomson on bringing the debate to Parliament.
All members who represent the north-east should know just how tough times have been for the Aberdeen city region in the past two years. However, for many people who run businesses, the rates revaluation has seemed to be the final straw. Part of the problem is that the new values that have been placed on their premises are not based on their rental value now, two years into the downturn; instead, they are based on a tone date of 1 April 2015, when the impact of the falling oil prices had not yet worked its way through the supply chain or the regional economy.
All the trend statistics over the past two years confirm that Aberdeen and Aberdeenshire have been hardest hit by the downturn, whether through the increase in unemployment or the fall in property prices and values. None of that is reflected in the rates revaluation.
This is not about appeals by individual businesses. Ministers have responded to questions that I have asked by standing up in Parliament and saying that any business can appeal and that the issue is therefore not for the Government. That simply insults the intelligence of ratepayers. If everyone whom a person knows is in the same situation and the person knows that the whole of their sector across their city region has been overvalued, they will know that the issue is not the individual assessment, but the overall approach. Ministers have recognised that that is true—if only for some sectors. The fact that they have recognised it at all is welcome, but the problem is that capping two sectors without addressing the root problem of assessments in Grampian has only exacerbated the problem for everybody else.
Ministers have not explained why they accept that there is a sectoral problem in office accommodation and hotels, but do not recognise the same need for action for nurseries and childcare. The Bridges Pre-School Nurseries—in Westhill and Bridge of Don—is facing an increase in rateable value for its premises that is equivalent to more than the cost of an additional member of staff. I am sure that the same is true for Linda Pirie, whose business in Stonehaven and Chapelton was mentioned by Liam Kerr.
Ministers accept that the downturn in the price of oil and gas has hurt the Aberdeen city region’s economy, but with the selective caps they have done nothing to mitigate the impact of the revaluation on companies in the oil and gas supply chain. North Sea Compactors is a specialist engineering company that designs and manufactures heavy-duty waste compactors for offshore platforms and drilling rigs. It is facing a 100 per cent increase in rates. Graham Dawson Body and Paint Shop Ltd faces a revaluation that has taken it over the threshold, so that it no longer benefits from any rates relief as a small business, but the amount of business that it does has not increased at this difficult time. Like others, Graham and Linda Dawson fear that the increase that they face could put them out of business.
Ministers have implicitly accepted that there is a structural problem with the revaluation in the Grampian area, given regional economic circumstances, but they still respond to questions as if appeals by individual companies are the only solution.
Precision Oil Tools may well appeal against its 60 per cent increase in rates. Its previous rating bill was calculated in March 2015, only weeks before the nominal date of the current revaluation, yet its bill has gone up by 60 per cent. Even if Precision Oil Tools decides to appeal, it knows that it will have to pay the new rates in full in the meantime, and it is deeply concerned by what that may mean for its loyal and hard-working staff in the next few weeks.
The Scottish Government must act to sort out the problem. It is the Government’s responsibility and it must provide local councils with additional resources to let them take the action that is so urgently required, not just in hospitality and office accommodation, but in nurseries and child care, the oil and gas supply chain and across the economy. Only if all businesses are treated fairly in these tough times will all business owners believe that their voices are being heard. I urge ministers to act now, before businesses have to lay off workers to pay their bills, or go to the wall altogether.13:07
I refer members to my entry in the register of members’ interests and especially to the interests that concern the business sector.
I speak from my experience in the business sector and I am grateful to my colleague Ross Thomson for lodging the motion. It is vital that businesses feel that they are represented in Parliament, although it is clear that SNP members regard business and businesspeople with disdain and as a block in their never-ending quest for separation. The SNP does not understand business and, with Alex Salmond gone, it has given up all pretence of trying to understand.
The SNP needs to remember that it is businesses that power our economy, employ people, create jobs and—importantly—pay the taxes that are necessary to support our public services. When businesses say that they are in trouble, the Scottish Government needs to listen.
It is no wonder that I have been contacted by so many businesses in my area about the crippling hike in business rates. From nurseries to restaurants and from oil companies to those in renewables, no one is falling for the sticking plaster of a 12.5 per cent cap that will last only a year.
The Scottish Retail Consortium has gone so far as to say that the sticking plaster only adds
“even further complexity to an already fiendishly complicated system”.
Others have labelled the plaster a half-baked, back-of-a-fag-packet fix.
In my constituency, a local nursery still faces the maximum 12.5 per cent hike for the coming year. That is certainly an improvement on the 65 per cent rise that it was facing a month ago, before I flagged the issue at First Minister’s question time. However, the cap does not address the main problem, which is that the nursery has no choice but to pass the extra charges on. That means that parents will be able to afford less nursery time, which will disproportionately prevent mothers from returning to work.
The SNP is not only strangling the north-east but simultaneously destroying the balance sheet of Scotland. With no money for further relief, empty-property rates will lead to capital value being destroyed, in a return to the days of the window and roof taxes.
Derek Mackay is still trying to plaster over his mistakes. At the Finance and Constitution Committee, he said:
“it is true to say that every local authority area keeps every penny of non-domestic rates ... every council area will still keep every penny that it raises.”—[Official Report, Finance and Constitution Committee, 8 February 2017; c 4, 5.]
That position was repeated by Gillian Martin and Paul Wheelhouse at an Inverurie business association event only weeks ago. However, it is simply not true.
Will the member take an intervention?
The total money that Aberdeenshire Council raises will be £116 million, but the total money that will be available to the council is £93 million. I would like to ask the finance secretary where our missing £23 million is. Will he keep his word and make sure that rates that are raised locally are spent locally? Perhaps we will find out, following the Conservative amendment that has forced SNP members to find the backbone to represent their constituents and write to the finance secretary.
Will the member take an intervention?
It is clear that only the Scottish Conservatives will stand up for the north-east and that the SNP is prepared to cripple Scotland’s economy at any cost.13:10
I congratulate Ross Thomson on securing the debate. It is extremely important, and I acknowledge his work over past months to bring the matter to everyone’s attention.
I have to say that I get a little fed up with Conservative members saying that only they stand up for the north-east, which is blatantly not true. I make an appeal to the Conservatives. Ross Thomson said that we should do all that we can and I agree entirely with him—I was going to say that I agreed with every word that Conservative members had said, until the previous speaker made his speech.
Words are important, but they are easier than actions. I gently say to my Conservative colleagues from the north-east in particular that last week we had an opportunity to do something about the issue when we debated the local government finance order, which distributes money from the Scottish Government to councils. We all know that Aberdeen City Council receives the worst handout from the Scottish Government and that Aberdeenshire Council receives the third worst. That has been the case for many years under this Administration.
I have long given up on asking SNP members from the north-east to stand up for the north-east. They just do not do it.
Will the member take an intervention?
No—just hear me out.
Three Aberdeen city members are members of the Government. I would not ask them to resign from the Government, which they would have to do if they voted against the local government finance order. However, that restriction does not apply to Conservative north-east members.
I do not want to sound patronising—I am not trying to be—but there are five new Conservative MSPs from the north-east. They obviously listened to the advice of their finance spokesperson, who told them to abstain in the vote on the finance order, but that is not the way to stand up for the north-east’s interests. I urge Conservative members from the north-east not to listen to such advice next year and the following year. At the very least, I urge them to try to persuade their finance spokesperson, behind the scenes, to let them represent the interests of the people of the north-east and vote against the SNP Government when they think that what it is doing is wrong.
This is the Parliament. It is not just about standing up and saying the right thing, which Conservative north-east members are doing; it is about using the vote that people send us here to use, in the right circumstances. I have never been afraid to do that, and I am still here—I disappeared, but I am back again. That has done me no harm, despite difficulties in my party when I did that. We need a little more independence of mind and the freedom to do the right thing.
My comments are directed at my Conservative colleagues. The nation will face bigger issues over the next couple of years, on which I hope that we can all speak with the same voice. However, we also need to speak up for the north-east, not just by speaking but by using our voting buttons.
I give credit where it is due. I have given credit to Ross Thomson and the efforts of my north-east Conservative colleagues, but Conservatives are not the only people who are standing up for the north-east. It is much better to call for change in a cross-party way than in an entirely partisan way. As I said, I have given up on the SNP. At least I have a hope of the Conservatives.
I suggest that, given that there is a great deal of interest in the debate, members might want to extend the debate under rule 8.14.3 of standing orders. I invite Ross Thomson to move a motion to extend the debate by up to 30 minutes, as necessary.
That, under Rule 8.14.3, the debate be extended by up to 30 minutes.—[Ross Thomson]
Motion agreed to.13:14
Usually my script refers to the Deputy Presiding Officer, but it is nice to be before you today, Presiding Officer.
As a bit of a new boy, I thank Mike Rumbles for his words of advice, which I will note. As an accountant, I was just doing some arithmetic, and I note that there are more Conservative members in the chamber right now than there are members of all the other parties combined. I might be wrong about that, but it shows that we are taking an interest in our region, even if it is not quite in the way that Mike Rumbles would like us to. We are trying.
I join colleagues in thanking Ross Thomson for bringing forward the debate. Like colleagues, I am aware of a number of businesses in my region that have been hit with significant increases in their business rates. Businesses the length and breadth of Scotland are genuinely concerned about the critical effect that the increases will have on the future of their business and, ultimately, their workforce.
Many examples have been cited during the debate, and I add that of Dundee Football Club. The club will be presented with a bill for business rates that is 63 per cent more than what it has paid until now. That increase represents the biggest percentage rise in business rates to affect any football club in the Scottish premiership. That is a prime example of a business that will not benefit from any relief or from the cap that the finance secretary announced last month.
The truth is that the fans will bear the brunt of the increase. As we all know, the market determines what people pay for a product and, even if it is only an extra pound or two at the turnstiles, or an increase in the price of a match-day or season ticket, it is a cost that fans and the clubs could well do without.
Sadly, as we have heard time and again today, Dundee Football Club does not stand alone when it comes to such increases. In Dundee, 20 per cent of rateable properties will see an increase in their bill. As was put to me by one constituent who got in touch, more than 1,100 businesses will have to find the money from somewhere to pay the additional cost.
I fear—as has been expressed already today—that that will result in job losses and in some businesses, particularly small businesses, questioning whether they can afford to survive. That is desperate news for our economy and the economies of our local communities.
A steady flow of businesses has come out against the increases and called on the Government to do something. The chief executive of the Scottish Licensed Trade Association said that the rates could be
“the last straw for many pubs”,
while the owner of Taypark house hotel in Dundee said that the rate rises
“were a threat to smaller businesses.”
I completely accept that the assessors are independent of Government, but it is within the Scottish Government’s powers to offer support to those who are most affected. Instead, what we got was dither and denial before the announcement of some relief measures. I welcome them and they will undoubtedly help some affected businesses, but why were Scottish businesses left waiting in the lurch for so long?
The head of policy for the Scottish Retail Consortium described Mr Mackay’s measures as “yet another sticking plaster”, while the Federation of Small Businesses said that
“The furore associated with this year's revaluation shows why the system is long overdue for reform”.
That remark chimes with those of a ratings expert from Ryden’s commercial property services in Dundee, who described the rates as “all over the place”.
It is clear that this debacle has left many businesses worried about their future and with no confidence in the valuation system. It is time that the Scottish Government listened to such concerns and acted to address them.13:18
Ahead of the budget last month, an additional £160 million was pledged to local authorities by the finance secretary. That additional local funding was part of a budget that is designed to grow the economy and fund our public services in north-east Scotland.
Aberdeenshire Council got one of the largest shares of that £160 million, at £8 million, and it was the first council to pledge that it would use the bulk of that funding for business support. Not only that, but the Scottish Government will reduce the rate poundage—the core tax that applies to the rateable value of business properties—by 3.7 per cent.
That is all in addition to the small business bonus scheme, which has already saved businesses more than £1 billion across Scotland, and which will be expanded from April to lift 100,000 businesses out of paying rates completely. In towns such as Ellon and Turriff in Aberdeenshire East, which is my constituency, that means the difference between vibrant high streets and empty high streets. In Inverurie, which is one of the areas of Scotland that have had particularly high property and rental values for a long time, many high street businesses have rateable values that are above that threshold.
Aberdeenshire Council has decided that businesses with a rateable value of between £15,000 and £18,000 will have their relief from the Scottish Government increased to 50 per cent, which is an extra 25 per cent. The scheme also includes approximately £208,000 for economic development support and about £105,500 for an extension of empty property relief. The Scotland-wide rates cap for hospitality businesses and particular provisions for the north-east for office space have already been mentioned. In Aberdeenshire, those measures will assist 150 hospitality premises and 159 offices.
The Aberdeenshire Council administration, which is a coalition between the SNP, Labour and Green parties and independent councillors, committed funding to give a 50 per cent reduction in rates increases to businesses with a rateable value of £120,000 or under.
Will the member give way?
I would like to finish the point, and then I will take your intervention.
Only 217 businesses in Aberdeenshire have a rateable value of more than £120,000. Not one nursery has a rateable value that is above that threshold, so all nurseries will be eligible for the rates relief scheme. It is disingenuous that nurseries are being mentioned. I take the point that nurseries need assistance, but they are getting it from the council.
I was slightly surprised at the bravado of Mr Thomson’s motion, but I thank him from the bottom of my heart for allowing us to have this members’ business debate, because it gives me the chance to point out that his Conservative colleagues on Aberdeenshire Council not only voted against such a relief system but, in their alternative budget, did not include any mention of a rates relief scheme for any businesses at all.
Does the member agree with Linda Pirie of the Croft Nurseries in Stonehaven and Chapelton that the increase in rates that is affecting her nursery business in Aberdeenshire is unfair and extortionate?
That is why the Barclay review is taking place. Businesses whose rates are being hiked and which are working with the assessors but are not getting any change in their valuation should contact the Government and put their views to the Barclay review. That is the kind of thing that the review will address.
Will the member give way?
I have just taken an intervention and would like to get on.
On the missing millions that members have been talking about, I will quote from the Scottish Parliament information centre on how local finance works. It has said:
“Non-domestic rates income ... is currently the single largest source of revenue under the control of the Scottish Government. The administration of business rates and relief schemes is a matter for each Local Authority”.
This is what I particularly want to say:
“Each council, having collected its taxes, reports the Non-Domestic Rates collected to the Scottish Government to be included in the central pool. The amount to be re-distributed from the pool is known as the Distributable Amount ... and is set by the Scottish Government ... It is based upon a forecast of the NDR income and prior year adjustments”.
That is how the system works. How can someone say that, because of what will be collected in non-domestic rates this year, they have planned something for the year before? That does not make sense.
Will the member take an intervention?
We are tight for time.
If Gillian Martin looked through the rest of that SPICe briefing, she would see that the total NDR take and the distributable amount, which is NDRI, will be 6 per cent down in real terms for 2017-18 in Aberdeen and down by 4.1 per cent in Aberdeenshire.
It is time to wind up, Ms Martin.
The non-domestic rates take goes into the pool and is then provided to local authorities in future years, based on the spend that they are asking for.
It has always been a treat for fans of slapstick to behold the Tories in Aberdeenshire speaking in the press about some kind of fantasy that money has been withheld from my area. The vast majority of businesses in Aberdeenshire are being lifted out of paying rates. Let us take Ellon as an example.
You need to wind up, Ms Martin.
I am winding up. I want to say a last thing before I sit down.
Council tax payers deserve a little more respect than the Tories are giving them. They cannot expect people not to notice that, despite all their wailing in the press, the Tories tried to vote down a budget that included a business rates relief scheme that is worth more than £3 million. In the same way, they cannot put forward a council budget that specifies taking more than £8 million away from education and then stand up in this place to criticise school staff shortages. People’s heads do not zip up the back. We can all see behind the bluster.13:24
I, too, thank my colleague Ross Thomson for bringing the debate to the chamber.
Back in budget season, which seems so long ago now with all that has happened since, I asked our local SNP MSPs whether they would stand up for businesses against the rate rises. Needless to say, they did no such thing. Instead, Gillian Martin stood up at a business breakfast in Inverurie and offered no support to owners who were facing hikes in business rates that were putting the very future of their businesses at risk. She even had the gall to suggest that Westminster was to blame, for not supporting the oil and gas industry enough. Ladies and gentlemen, that was absolutely disgraceful.
Since I have been mentioned, will the member take an intervention?
The point that I was making at that business breakfast was that we should be supporting all businesses; I was concerned about some of the rhetoric around small businesses. Someone—not Mr Chapman—said that small businesses should be ashamed not to be paying rates. I take issue with that, because there are an awful lot of struggling small businesses that populate our high streets.
With regard to Westminster, the member has a bit of a cheek—
Get to the question, please, Ms Martin.
Westminster is not supporting the oil industry with any of the tax concessions or loan guarantees that have been asked for repeatedly by Oil & Gas UK.
I reiterate—we have heard it again. It is an absolute disgrace. We are talking about £2.3 billion in tax cuts—the most beneficial tax regime anywhere in the world. If we had an independent Scotland, there would be none of that support for the oil and gas industry.
Even Gillian Martin’s predecessor, Alex Salmond MP, did not think that that line of argument would work, so he set our finance secretary on the straight and narrow. He dropped a wee hint to Nicola and chums—sorry, I should say to the SNP Cabinet—in a video blog that he was not happy about what he described as these “legitimate” concerns being ignored by the SNP Government. That is what he said.
It is a shame that the once-great double act of Salmond and Sturgeon has been so reduced that the former First Minister has to communicate with the SNP Government through social media and the local paper. I guess that Nicola Sturgeon and Derek Mackay were too feart to take his calls. The finance secretary was humbled by the Conservative Opposition when he was dragged before this chamber after the grown-ups had told him where to get off. He was chastised by parties across the chamber for not going far enough, but he had kept the party leader happy—sorry, the former party leader. However, problems remained on the ground. Aberdeenshire councillors were not playing the game of being grateful for the crumbs off Mr Mackay’s table. They rounded on him for having the gall to say that he was boosting their funding, as he gave with one hand and took away much more with the other. In other words, it was a second-rate deal from a second-rate finance secretary.
That little story, ladies and gentlemen, takes us up to the present day, except that all is not said and done on the matter. To return to the finance secretary’s role in all this, he still has some explaining to do. I suspect that we will receive no answer on the matter because his boss—the MP for Gordon—has not asked him the question yet, but I hope that he will see the value in explaining his thinking.
When Mr Mackay spoke to Aberdeenshire Council on this matter, he made it abundantly clear that any money raised locally would be for the local authority to spend. However, Aberdeenshire Council—as we have heard—will collect £116 million in business rates and receive only £93 million back, so despite what everyone on the SNP side of the chamber says, £23 million has vanished. Maybe Mr Mackay was distracted by setting up a fundraising website for a second divisive independence referendum when he should have been looking after taxpayers’ money, or else it is another example of the SNP’s inability to understand deficits. Maybe the money is down the back of Mr Mackay’s sofa for a rainy day, but I think that the people of Aberdeenshire deserve an answer from the cabinet secretary, because he promised that any money raised locally would stay local; he needs to explain why he is now breaking that promise.
Businesses in my part of the world expect politicians to do what they say. When rate rises hit local businesses such as the Spotty Bag shop in Banff and the Tufted Duck hotel, or even international powerhouses such as Score, they need to know that that increase will go to help their local community. If the finance secretary does not believe in local taxes being spent locally, he should just say so. Anything less is an insult to the business owners of the north-east who will be left paying for the SNP’s next vanity project.13:30
I congratulate Ross Thomson on securing the debate. It is of critical importance to the business community, particularly in the north-east of Scotland where the impact is more significant than in any other area of Scotland. Four minutes is not a great deal of time, Presiding Officer, so I will not test your patience, and I am sure that members will forgive me if I simply cut to the chase.
The Scottish Government has delayed the revaluation of business rates, which I believe is why the increase is so high for so many businesses. As Lewis Macdonald rightly said, the current revaluation is based on property values before the decline in oil prices, when the economy was performing better than it is today. Businesses tell us that they want revaluations to be done more often so that there are no more dramatic increases. I note that the rest of the UK is moving to three-year revaluations—the Scottish Government should do at least the same.
We have heard stories of the impact that the increases will have. There is a hotel in my area that was going to be subject to something like a 200 per cent rise in its rates bill. That would have had a direct impact on jobs. Members can imagine how hard that is in a small rural area where the hotel is a significant local employer.
There is also the hydro project. It used to be zero rated; then it had a rates bill of £36,000; now it expects the rates bill to soar to £160,000. That is quite simply huge, unforeseen and unplanned. The Scottish Government says that it shares a desire to develop renewables. Let me say this as gently as I can—it will not find many people pursuing hydro projects in the future, when margins are already tight, if those are the rates increases that they will face.
I acknowledge that the Scottish Government, under pressure, has provided some welcome relief, but it is only in place for one year. What will happen next year is anybody’s guess. Rates bills will show a net increase for 31 per cent of businesses, and with 100,000 small businesses now exempt from rates because of the small business bonus, 56 per cent of non-small businesses will see their rates rise. As we warned earlier in the month, key sectors will see increases—of 27.1 per for universities and 11.6 per cent for hospitals—when there are significant public sector funding challenges.
I believe that the SNP Government can, and should, do more. We have heard lots of talk; I want to see practical action. I want to set out exactly what Scottish Labour would do, and I encourage the SNP to take our idea—to steal it, although I would be happy to give it to them—and implement it. Let us see that practical action.
As a result of the recent UK budget statement and changes to business rates provision in England, Scotland will receive some £36 million of additional money over the next three years. Labour’s proposal is to take all that money and apply it to business rates relief, in addition to what is being provided by the Scottish Government.
We want to see that money being given directly to local authorities, because they know best what is needed on the ground for their local businesses. We would base the allocation to local authorities on those areas that are worst affected, which would see the north-east receiving the most and other authorities receiving amounts proportionate to the scale of their problem. Aberdeen, which has seen an increase in business rates bills of 62 per cent, Edinburgh, which has seen an increase of 38 per cent, Glasgow, where the increase is 27 per cent, and Dundee, at the other end of the scale with an increase of 20 per cent, would all receive support.
Derek Mackay and the SNP cannot hoover up that extra cash coming to Scotland; it needs to go straight to the communities that need it the most. Councils should decide where the relief goes, based on the needs of their local economy. They have the power to deliver, but they do not have the necessary resources to help businesses.
Scottish Labour’s proposal would provide practical help at a local level. I commend it to the minister, because this must not be a nationalist cash grab. Labour has a plan for a fair deal for business.13:35
I, too, thank Ross Thomson for bringing the debate to the chamber. I remind members of my entry in the register of members’ interests as a councillor on Moray Council.
I asked to speak in the debate because—rightly—it focuses on the north-east of Scotland, and a small chunk of the Moray Council area, namely Buckie, comes into the North East Scotland region for the Scottish Parliament. Moray Council and Moray businesses face similar struggles to those faced throughout the north-east and, as I am the only member who represents Moray who has sat through the debate, I think that it is important for me to put on the record some of the issues that we have locally.
A SPICe briefing that was released today confirms that, out of 4,540 business properties in Moray, 1,590—43 per cent—will not be included in any of the SNP’s rates relief proposals and will continue to face crippling increases in their business rates with no support from the SNP Government. If we compare that with the 77 per cent of businesses in Fife that will benefit from the proposals that have been put forward, we have to ask why the north-east and areas such as Moray are being made to suffer by the SNP Government.
As I have done in the past, I put on record that I welcome the move by the SNP Government, after a continued campaign by those of us on the Conservative benches and The Press and Journal, to cap the increases for the hotel industry at 12.5 per cent. That was welcomed by the Cluny Bank Hotel in Forres, by the Beach Bar and the Stotfield Hotel in Lossiemouth and by many other businesses but, as the chief executive officer of Moray Chamber of Commerce said,
“Although the short-term help is welcomed, we need to not take our foot off the gas and work with partners for a long-term solution.”
There was some welcome in Moray for the proposals that the SNP has put forward but, as Alexander Burnett said, they are nothing more than a sticking plaster, and we have to look for more.
I also want to mention briefly the discussion that we have heard from SNP members today about the support of SNP councillors for their local businesses. I ask the SNP members, and perhaps the minister will indulge me with his response, whether they agree that, if SNP councillors such as those in Moray put forward a proposal that they expect other elected members to back, it should contain some detail, some costings and a budget? In Moray Council, we were asked to support a proposal by the SNP that was so vacuous it had none of that information. It came from the same SNP group that was able to do some research and find £1,000 for town centre clock face upgrades. It made that a priority but not our businesses, and that is shameful.
On appeals, which several speakers have mentioned, the 43 per cent of businesses in Moray that will not benefit from the rates relief that the SNP Government has put forward will want to appeal to the Grampian assessor. We have heard from members on all benches that appeals can take up to two years. That is unacceptable, as businesses continue to pay the higher prices during the two years. What reassurance can the Scottish Government and the minister give us that such appeals will be fast tracked to ensure that businesses are not out of pocket while they are appealing?
Businesses in Moray and across Scotland that face these huge increases need the help of the Parliament and the Government. We need assistance and a new system that provides the clarity, fairness and reassurances that our businesses are looking for and expect, rather than a one-year sticking-plaster approach that allows some short-term benefits but no long-term gain.13:38
I welcome this opportunity to respond on behalf of the Scottish Government on the important issue of the outcome of the business rates revaluation for businesses in the north-east of Scotland, which will come into force on 1 April 2017. The revaluation, which is undertaken by independent assessors who are appointed by local government, is the first to take place since 2010, and it broadly spans the recovery from the last economic downturn.
Our overarching priority has been to maintain a competitive rates regime, and we have engaged directly with a range of businesses and their representative organisations—including those in the north-east—to respond to their concerns.
The Government acted early to deliver a competitive business rates package, alongside an improved funding settlement for local government. As we recognised that the revaluation could lead to increased costs, the draft budget for 2017-18 that was published in December set out a highly competitive package. Notably, it reduced the rates poundage by 3.7 per cent, expanded the small business bonus scheme so that it will lift 100,000 properties out of rates completely, and limited the application of the large business supplement so that 8,000 fewer properties will pay it. Together those measures were already set to reduce the overall rates burden by £155 million and ensure that 70 per cent of businesses will pay less than, or the same as, they paid this year, and more than half of them will pay nothing at all.
Would it not be better for the minister to respond to the debate and the issues that have been raised by individuals, rather than reading out a pretyped script? It would be very helpful if the minister would do that.
I fully intend to go through a lot of the stuff that folk have gone through today. However, I am laying out what was in the original draft budget. It is important that we lay the ground with that.
We also recognised the particular challenges that are faced by the north-east economy and the fact that both central and local government have a role to play in ensuring that local issues are addressed.
Having continued to engage with and listen to businesses since the publication of the draft budget, we have acted to provide further support where it is most needed in light of the revaluation. Accordingly, we will ensure that, across Scotland, restaurants, pubs, hotels and cafes will see their bills increase by no more than 12.5 per cent on 1 April. Additional support is being injected into the north-east economy to recognise the impact of the oil and gas downturn, and the reliefs for the renewables sector are being expanded. Those measures amount to an additional £44.6 million of support, which offers proportionately double the total relief package that was announced by the UK Government on 8 March.
Can the minister explain today why the Government made the judgment that there should be additional support for the cost of office accommodation in Aberdeen but no additional support for businesses in the oil and gas supply chain, which have been hit by substantial increases in their rateable values?
Mr Macdonald is probably well aware that Mr Mackay and others have spoken to stakeholders in the north-east, including the Aberdeen and Grampian Chamber of Commerce. That is why our overall package for the north-east will mean that around 13,700 properties will pay no rates at all, as a result of the small business bonus scheme. It is why we are capping the increases at 12.5 per cent for hotels, pubs, restaurants and cafes, which will benefit almost 1,100 properties and will provide an additional £5.7 million. Capping bill increases at 12.5 per cent also for offices in Aberdeen and Aberdeenshire will benefit around a further 1,100 properties and provide additional relief that is worth an estimated £4.8 million.
In his speech earlier, Mr Macdonald stated that it will take years for an appeal to be heard. I clarify for all members that, under the legislation, businesses that appeal can request that their appeal be heard within 70 days. Let us not go around telling businesses that it will take years to appeal, when it can be done within 70 days.
Let us look at some of the other things that have been said in the debate. Both Ross Thomson and Alexander Burnett said that Aberdeen City Council is not getting to retain its business rates. All business rates that are collected are, in accounting terms, paid into a central pot. They are then returned to local authorities. Prior to 2011-12, that was done on the basis of population. Since 1 April 2011, each council has retained every penny of business rates that it collects. As a result, there is no need for redistribution. Those speakers have shown that they have a fundamental misunderstanding of local government finance in suggesting that councils do not retain all the business rates that they collect.
There seem to be quite a few fundamental misunderstandings. Mr Thomson, who is also a councillor on Aberdeen City Council, had the opportunity to vote for a local rates relief package in the city, but he did not even turn up for the budget to support an SNP proposal that outlined £4 million of support.
Will the member take an intervention?
I will take it in a moment. That proposal would have seen rate rises capped at 12.5 per cent for the retail and manufacturing sectors and at 3 per cent for the hospitality sector. Maybe Mr Thomson will tell the businesses that he has been around why he did not agree with the measures that were put forward by the SNP group in Aberdeen City Council.
I am happy to intervene, Presiding Officer. First, Mr Stewart is right that I did not attend the budget meeting. I was here, voting against his Government’s awful budget that gave an awful deal to Aberdeen. Also, if we looked at the minutes of previous committee meetings, we would see that Kevin Stewart did the same thing at the time of the 2011-12 budget.
It is true that the SNP put forward a proposal of £4 million to help the hospitality sector. What Aberdeen City Council has now put on the table is £3 million to devise a scheme with the chamber of commerce to help all the other sectors that are not getting help. The matched funding would take that to £6 million, which is far better than the £4 million that the SNP is trying to put on the table.
As I pointed out, the proposals were not just for the hospitality sector but for the retail and manufacturing sectors, too. Mr Thomson should have paid more attention to that. Tory councillors in Aberdeenshire voted down a similar package.
Will the minister take an intervention?
I am sorry, but I am closing. We have heard lots and lots of noise from the Conservatives. We heard from Mr Thomson about all the things that he has been doing, but there has been no correspondence from him to the Government on the issue. At the very least, one would have thought that there would have been.
We have taken cognisance of and have responded to the situation in the north-east. Looking forward, the Cabinet Secretary for Finance and the Constitution has already given an undertaking in evidence to the Local Government and Communities Committee that he will engage fully with the Parliament and its committees on any increased scrutiny of non-domestic rates. I agree with Mr Mackay that the time to do that is following the external review that is being led by Ken Barclay, which is currently engaging businesses to explore how rates might better reflect economic conditions and support investment. [Interruption.] Perhaps it would be better for Ms Baillie to listen to what I say, rather than shouting from the sidelines. The Scottish Government will look to support that investment in growth and will respond swiftly when the review concludes this summer.
On a point of order, Presiding Officer. I ask for your clarification. The minister made it very clear to every member who raised an issue about the appeals process that businesses are able to ask for an appeal to be heard within 70 days. Will you ask the minister whether he will confirm to Parliament that the SNP Government has resourced the local assessors to deal with every appeal in the next 70 days? That is the message that I will put out to my constituents in Moray, and I just want to make sure that the Scottish Government is prepared for that.
That might be a point for the minister, but it is not a point of order.13:48 Meeting suspended.
14:30 On resuming—