Despite the fact that thousands of small Scottish businesses continue to face huge uncertainty due to the ongoing Brexit chaos, Labour and Conservative MSPs have voted to worsen the situation by withdrawing nearly £300 million of rates reliefs for businesses across Scotland.
A vote to end business rates relief
An attempt to end the vital business rates relief schemes has been made by Labour and Conservative MSPs, perhaps because it stands as a very popular SNP Government policy. Last week, MSPs of both parties voted for a Green amendment to the Non-Domestic Rates Bill that would remove the power of Scottish Ministers to determine the business rates poundage. Instead, the ability to set business rates would be devolved to local councils.
This transition of power would automatically end the schemes, and would have extremely damaging effects on over 100,000 businesses across Scotland that currently benefit from the Scottish Government’s Small Business Bonus.
At the moment, Scottish businesses receive the most generous business rates reliefs, in comparison to the rest of the UK, equating to nearly £750 million to businesses across Scotland. The Small Business Bonus, for example, brings huge benefits to companies across Scotland. This business rates relief scheme offers 100% relief on each individual property to businesses with premises of a total rateable value of up to £15,000, and offers discounted prices to businesses with premises of a total rateable value of up to £35,000.
BfS CEO Gordon MacIntyre-Kemp said “Business for Scotland supports the Scottish Government’s relief scheme and lobbied hard for changes to the rates revaluations three years ago. During this time, we criticised the Scottish Government’s handling of the process and called for and achieved reforms.” “We now have a situation across Scotland where small businesses experience a level playing field on rates and we cannot introduce a postcode lottery for rates relief”.
Could you be affected?
- The Highlands: 11,000 businesses would lose £19.4 million in relief
- Angus: 3,110 businesses would lose £5.74 million in relief
- South Lanarkshire: 4,400 businesses would lose £11.4 million in relief
The importance of small and medium-sized businesses in Scotland
While this amendment would impact businesses of all sizes, small and medium-sized companies would experience severe consequences. SMEs (Small and Medium-Sized Enterprises) build the foundations of Scotland’s economy. In March 2019, there were 354,125 SMEs operating in Scotland. This accounts for 99.3% of all private sector businesses in Scotland and provides approximately 1.2 million jobs. Therefore, it is clear that by ending business rates relief and damaging thousands of SMEs across the country, Scotland’s economy would face a massive blow.
Will the amended bill actually be passed?
Stage 2 of the debate resulted in a majority vote to end the standardised business rates and transfer the power for setting the poundage rate, reliefs and any local supplements/levies to local councils. However, a hearing will take place on 8th January 2020, where further evidence will be given, and greater clarity will be provided on some of the key issues surrounding this decision.
Meanwhile, the Scottish Tourism Alliance (STA) and SNP politicians are opposing the attempts to end crucial rates relief schemes. The STA have expressed their hostility towards this dangerous proposal and have requested the opportunity to attend the hearing to provide a range of evidence from various companies and trade bodies that stand against the matter. Scotland’s tourism industry already faces enormous pressures, that have only been enhanced by Brexit, and the companies involved in this industry are continuously being challenged with regards to the vast amount of money they are required to pay for non-domestic rates.
We suggest that BfS members urge their local Conservative and Labour MSPs to back track with the final stage of the bill looming.