Business leaders welcome MacKay rates u-turn

Finance secretary Derek Mackay yesterday succumbed intense pressure from business leaders and political opponents over hugely inflated fees by announcing a cap on business rates.

Mr MacKay announced an ad hoc package of measures to assist business ratepayers who will face huge increases in their business rates liabilities due to a forthcoming rating revaluation.

The additional support package includes:

Mr Mackay suggested the measures – which will cost the government £44.6 million this coming financial year – showed that he had listened to concerns.

The Federation of Small Businesses welcomed the move as “sensible”.

Colin Borland, FSB’s head of devolved nations, said: “In recent weeks, FSB has emphasised to Ministers that the Small Business Bonus scheme continues to provide critical help for tens of thousands of smaller firms.

“However we’ve also strongly argued for extra revaluation support for independent businesses beyond its scope, alongside parliamentary scrutiny of the valuation process.

“The sensible measures announced today should provide some comfort for Scotland’s vital tourism and hospitality industries. Targeted help for the economy of the north east will also be welcomed by local firms.

“The furore associated with this year’s revaluation shows why the system is long overdue for reform. And, it’s important to note that much of the help outlined today is only funded for one year.

“Therefore, a programme of modernisation must be delivered soon after the Barclay review reports. In addition, Scottish councils should considering supplementing these measures, with a particular focus on smaller businesses on local high streets and nurseries.”

Ewan MacDonald-Russell, Scottish Retail Consortium head of policy, said: “Mr Mackay’s announcement today is yet another sticking plaster on the suppurating wound of the unreformed business rates system. Today’s measures will hopefully help some of the businesses affected by the revaluation, albeit only by adding even further complexity to an already fiendishly complicated system. However, it will do little to deal with the underlying problem caused by revaluations which take place too rarely to flex with the economic conditions.

“The rates system is no longer fit for purpose. It regularly fails to reflect economic or trading conditions, with rates bills way too high, especially for the 21,000 commercial premises in Scotland which continue to pay a higher tax rate than competitors or counterparts in England.

“Profound structural changes are changing the Scottish economy. For example, in retail almost a quarter of non-food retail sales are done online, and over the past seven years the number of shops has fallen by 1,700 in Scotland. These changes are likely to accelerate, calling into question the very wisdom and financial sustainability of the tax.

“The Finance Secretary today reaffirmed his commitment to implement the recommendations of the Barclay Commission as swiftly as possible. Retailers will hope to see action once the review’s conclusions are published later this year.”