Retail Consortium joins Scottish Chambers in warnings over ‘business rates time bomb’

The Scottish Government has come under increasing pressure from various quarters including from the Scottish Retail Consortium (SRC) and the Scottish Chambers of Commerce to take steps to reform business rates in the wake of the UK’s vote to leave the European Union.

Chambers chief executive Liz Cameron said swift action was needed because of the uncertainty caused by Brexit that had left businesses facing a “rates time bomb”, while the SRC said there is an urgent need for the Scottish Government to take “tangible action” to support the retail sector and consumer confidence.

The appeals also came after the Scottish Conservatives also urged the Scottish government to implement a five-year rates freeze for businesses.

The retail industry is Scotland’s largest private sector employer, providing 253,000 jobs.

But Economy Secretary Keith Brown said there was no plan to cut Scottish business rates in light of the Brexit vote and it was investment in infrastructure that would be the most effective course to take to mitigate the shock inflicted by June’s referendum decision.

Speaking yesterday he said: “The most effective way to make an economic impact and provide certainty in terms of jobs and to businesses is to invest in infrastructure, not just because it employs people right away but because it improves our productive capacity in the country.”

First Minister Nicola Sturgeon this week unveiled an initial £100 million of capital spending to stimulate growth.

Mr Brown said business taxes would be reviewed in due course.

But launching her appeal to politicians, Chambers chief executive Liz Cameron said: “Scotland Business Rates will be revalued in less than eight months’ time but the values that will apply are based on the economy as it was on 1 April 2015 – over a year before the EU referendum and before the worst effects of persistent low oil prices became apparent. If the Scottish Government chooses to do nothing about next year’s rates bills, then businesses will be hit with valuations that bear no relevance to the economic conditions they will be facing next year.

“The Scottish Government has the power to remedy this situation now, before the impact is felt. It can use its devolved powers to ensure that next year’s valuations are based on current economic conditions, not the artificially high levels associated with an April 2015 valuation. If it fails to do so, then it is failing Scottish business at a time when we need a supportive Government and is adding to the iniquity of the current Business Rates system.

“Whilst we acknowledge the Scottish Government’s business rates review group will be meeting shortly, it will not report until next July – three months after the revaluation. Action is required now to prevent a damaging revaluation next April hitting the cost base of businesses across Scotland at a time when they can least afford it. Inaction is no longer an option for the Scottish Government on business rates. This is a rates time bomb that must be defused now.”

Meanwhile, the SRC, whose members include well known high street, online and grocery retailers. is calling for the SNP to put competitiveness and productivity at the heart of its Budget and Spending Review which is expected next month.

A new paper produced by the SRC entitled ‘Open for Business: Growing a more productive and competitive Scottish economy’ and submitted to the Scottish Finance Secretary, puts forward detailed policy recommendations across key areas including business rates, income tax, council tax, business taxation, apprenticeship levy, charges, regulation and infrastructure.

The detailed submission from the trade association comes ahead of the expected publication this autumn of the Scottish Government’s spending and taxation plans.

Specifically, the SRC is recommending that Scottish Ministers:

David Lonsdale, director of the Scottish Retail Consortium, said: “The retail industry was going through an unprecedented period of transition before the vote to leave the EU. With that added uncertainty, the Scottish retail industry faces significant challenges.

“The SRC shares the devolved administration’s aim of making Scotland the most competitive part of the UK to do business, however that goal has yet to be achieved. This is why we want to see a bold and ambitious Budget with Scottish Ministers using their powers to significantly improve the Scottish economy. In particular, the powers over personal taxation can have an immense impact on the health of Scottish retailers. That’s why we argue now is not the time to raise taxes on the vast majority of working Scots, which would of course impact on their discretionary spending

“However, the Scottish Government should go further and look to reduce the burdens on retailers so they are at the very least no more onerous than elsewhere in the UK. That means scrapping the unfair Scotland-only large business rates surcharge, working with firms to ensure they directly benefit from the Apprenticeship Levy monies, and developing a joint government/industry retailstrategy to support small, medium and large retailers across the country.

“The Scottish Government is rightly concerned about the potential economic impact of the Brexit vote on Scotland. However, they have the powers at hand right now to do more to encourage growth and promote productivity in Scotland. With half of VAT receipts being assigned to the Scottish Parliament our politicians at Holyrood have a direct stake in facilitating a flourishing retailindustry. Retailers will be looking to the Finance Secretary to act when he brings forward his Budget later this year.”