Michael Moore, the Liberal Democrat Scottish Secretary, last night intervened in the growing row over the SNP’s plans to hike business rates by demanding a detailed explanation of how they would affect Scottish firms.
Echoing concerns from business leaders, Moore warned the projected £850 million rise in rates by 2015, which was buried in the small print of last week’s Spending Review, could deter investment.
He said: "I am alarmed at the reaction that the Scottish Government’s Spending Review has provoked from the business community. In particular, I’m concerned at the fears expressed about the projected business rates and the significant risk that they could prove a major disincentive to new investment in Scotland.
"Scottish firms’ fears that they could be facing a damaging hike in business rates set by the Scottish Government must be addressed."
Finance Secretary John Swinney issued the SNP Government’s three-year spending review on Wednesday, alongside a draft budget for 2012-13.
It included a new "public health levy" on stores selling alcohol and tobacco, which will net £110m by 2015 through a supplement on premises with a rateable value of more than £300,000.
The new charge, dubbed the Tesco Tax, is a revised version of the levy the SNP tried to impose on all stores with a rateable value of £750,000 or more earlier this year.
That plan was killed off by opposition parties at Holyrood after an outcry from retailers. However, the SNP’s new majority, and the promise to use the £110m for health services, means there has been little resistance from MSPs this time.
The day after the Spending Review, the Centre for Public Policy for Regions (CPPR) at Glasgow University pointed out business rate increases were far larger than the £110m health levy.
The CPPR calculated that by 2015, the Government was projecting the total business rates raised by councils would increase by 22%, or £849m in cash terms, which was far above inflation.
The CPPR also said there was "scant" evidence the Government’s so-called Plan MacB for the Scottish economy -- spending more on construction projects to sustain jobs -- actually worked.
Swinney denounced the thinktank’s report as "misleading", and said the business rate rises were largely explained by inflation and projected growth in the economy.
But the CPPR analysis spooked business leaders. CBI Scotland said ministers were being very optimistic by relying on such a "hefty jump" to help maintain council spending.
The group’s assistant director, David Lonsdale, said: "The risk is that by taxing business too much they may deter investment and the creation of new jobs desperately needed to aid the recovery."
Moore said London and Edinburgh should work together on a Scottish Trade and Growth Board. "But right now we need to know the assessment the Scottish Government has made of the impact of their proposals, in particular with regard to business rates and the so-called Tesco Tax."
Jenny Stewart, head of public sector at KPMG Scotland, claimed that councils were in a far more "uncertain" position than other parts of the public sector, with a £1 billion real-terms cut by 2014-15 only partially offset by a "very significant rise" in business rates.
However, a spokesman for Swinney hit back: "It is for Michael Moore to explain why he supports Tory cuts to Scotland’s budget, giving the worst funding settlement since devolution.
"The reality is, despite mistaken and misleading claims, that the Spending Review confirms the Scottish Government’s policy on business rates."
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article