Scotland's Economy

Business rates, the BBC in Scotland and other conundrums

There is no point in sugaring the pill – the Scottish Government dropped the ball on business rates. However, to be fair, it did manage to turn adversity into advantage simply by getting its act together before the UK Government, making the Scottish Government look more competent by comparison.

Ironically, on this issue, the lack of a Scottish Six news programme worked in the SNP’s favour this week. On the day that the Scottish opposition parties were trying to paint the SNP as making an embarrassing climb down in the face of growing business opposition, the main UK news programmes led with English business rates problems and the pressure on the UK Government.

By the time we reached the Scottish news and Derek Mackay appeared on Scotland Tonight, his fairly comprehensive and quite cleverly targeted support measures looked pretty damn good compared to the Tory MPs lining up to accuse Local Government Secretary Sajid Javid of being dishonest about the impact of rates rises in England.

Earlier in the week, Business for Scotland called for the Scottish Government to step up and be the champion of the business community on rates and to propose a robust set of rates relief measures that protect businesses from rapid rates rises, protecting jobs and economic growth. This seemed to surprise many of the seven or so major newspapers and media outlets that carried the call, with the Scotsman editorial amusingly pointing out that this was the first time BfS has been critical of the SNP Government.

That’s not the case, it’s just that we like to discuss and offer expert opinion rather than lobby through newspapers. Business rates have been re-evaluated right across the UK, so it’s not a problem of the Scottish Government’s own making. However, the solution was always in their hands, and rather than just reacting to the inevitable they could have got in front of the problem.

The Government needs to listen to business groups, surveyors, hoteliers and retailers much earlier in the policy-making process to avoid situations like this arising again.

I am not calling for big corporations to have more of a say in policies, but small to medium-sized Scottish businesses, especially in retail and hospitality, were the ones that would be least able to pay increased rates. All this was pointed out beforehand by many commercial property experts, industry groups and business organisations, so reviewing the potential issues with those stakeholders in more detail would have put the Scottish Government in a position to instantly offer a tailored relief package that would secure jobs and the future of the affected small firms that are the real lifeblood of the Scottish economy.

Aberdeen has had a hard time of it recently and the UK Government’s broad shoulders have just shrugged off their duty to the city, so the region receiving special status with respect to the economic conditions in the oil and gas sector is to be welcomed.

The 12.5 per cent cap for hotels, pubs, restaurants and cafes is a great outcome for many businesses that were genuinely worried about their ability to continue trading. However, rural businesses in general need more help and a more radical approach is due to business rates policy that takes into account the poor trading conditions that Brexit will bring. The Barclay Review into business rates is a start, but it is narrow in its remit and it may well be that the best solution is a complete reinvention of how we tax business property use.

One excellent move by the Scottish Government on business rates was the expansion of the SBBS (Small Business Bonus Scheme), raising the eligibility threshold for 100 per cent relief to a rateable value of £15,000, taking 100,000 properties out of rates altogether, generating a saving of up to £6,990 per property.

Also making the news this week was the fact the BBC has rejected the idea of a Scottish Six and instead plumped for a Scottish TV channel to take over BBC2 from 7pm till midnight with a budget of £30 million a year. The channel will run a Scottish-led international and domestically focused news programme at 9pm. The cynic in me says that’s a massively underfunded fudge of a compromise with a news programme airing in a prime drama slot when no-one wants to watch news. It seems like its built to fail, while giving the impression that they tried. The optimistic viewpoint, and I assume the SNP are going down this route, is they think that this means we will have a Scottish Broadcasting Corporation in waiting and a team of journalists ready to take over and launch a Sottish Broadcasting Corporation after independence.

People might watch the 9pm news programme because more and more will realise that hours of stories about NHS England and Wales, English business rates, English immigration worries and complaints about the route of HS2 before a singe relevant thing to Scotland is discussed in the regional “news where you are” section is pretty demeaning. Don’t get me wrong, England has a bigger population and if you make news for the whole of the UK its only fair it is dominated by English issues. I just don’t see why we can’t have a national Scottish news programme at 6pm that does all the international news coverage but doesn’t cover news that’s irrelevant to most Scots.

It will be interesting to see how the two news channels treat the issue of independence. If one takes a balanced and fair view and the other takes its lead from London’s impression of what’s going on in Scotland, then the news will be reported very differently, and that will be a Trojan horse in the heart of the BBC. The lack of a Scottish Six could even help the independence movement, with the UK Government falling apart during Brexit and independence looking all the better for the comparison just as with business rates.

In 2014, during the closing weeks of the referendum campaign, the BBC’s lead journalists arrived in Scotland and didn’t understand where the debate was. They brought a typical Home Counties understanding of the issues and through unconscious incompetence (that looked very much like bias) helped stem the growth of the Yes vote. By adding a second-rate Scottish channel, the BBC might think it has reached a compromise that works for everyone, but I suspect it will work for no-one.

Update: Victory – Since the UK government has now been forced to admit that HS2 will never reach Scotland.  The civil servants who compile the GERS report have confirmed to Business for Scotland that they will now refuse to accept any contributions to the cost of HS2 on Scotland’s behalf.


About the author

Gordon MacIntyre-Kemp

Gordon MacIntyre-Kemp is the Founder and Chief Executive of Business for Scotland. Before becoming CEO of Business for Scotland Gordon ran a business strategy and social media, sales & marketing consultancy.

With a degree in business, marketing and economics, Gordon has worked as an economic development planning professional, and in marketing roles specialising in pricing modelling and promotional evaluation for global companies (including P&G).

Gordon benefits (not suffers) from dyslexia, and is a proponent of the emerging New Economics School. Gordon contributes articles to Business for Scotland, The National and Believe in Scotland.

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