THE Scottish Government has not had its troubles to seek over business rates. The botched revaluation which led to some premises facing increases of up to 400 per cent in their bills earlier this year rightly led to a stinging backlash.
After The Herald campaigned for the Government to think again, Finance Secretary Derek Mackay belatedly took action, introducing targeted reliefs worth £45 million for 10,000 firms.
However the initial warm response has cooled, with businesses expecting a 12.5 per cent cap to apply to their increase learning it would actually be 14.75 per cent after inflation. Nor would it be automatic, but would rely on them applying for relief.
Through it all, the SNP has reassured businesses these scrappy, short-term fixes will soon be a thing of the past. Fear not, goes the message, help is at hand: the Barclay review is coming.
Led by former Royal Bank of Scotland chairman Ken Barclay, the year-long exercise should report to ministers in July. Its remit was confined to businesses paying non-domestic rates (NDR), and its consultation last summer asked a single question: “How would you redesign the business rates system to better support business and incentivise investment?”
But if ministers thought it was an answer to their prayers, they should think again. Judging by Mr Barclay’s appearance before Holyrood’s local government committee yesterday, it is more likely to be the crowning disappointment in an already miserable saga.
Mr Barclay reported there was a widespread desire for a rates system that was transparent and easy to understand. Unfortunately, the same could not be said of his review and MSPs quickly established there was a gaping hole in it.
Although its title refers to business rates, it is not just businesses which pay NDR.
Thousands of public sector buildings, such as hospitals and police stations, do too, accounting for more than £1 billion of the £2.8bn raised through NDR for council services last year.
As this is essentially the public sector billing itself in an inefficient merry-go-round, MSPs wanted to know if the review would consider excluding public property from NDR, so “business rates” were genuinely focused on businesses.
But despite his group’s recommendations potentially affecting the public sector, Mr Barclay revealed he had not talked to the public sector.
Those bodies “have not yet been engaged in the process”, he said. As Tory MSP Graham Simpson justly pointed out, that left the entire exercise open to “huge criticism”.
It was equally unnerving to hear the review had yet to make any firm decisions, with 60 lines of inquiry still being explored, including fundamentals such as whether NDR, which is property based, should be supplemented by a tax on profits. It all seems up in the air.
It is now obvious that, for its own credibility, the review should be extended to the public sector.
For the credibility of the SNP it also needs to decide what it is for – does it want to overhaul a broken system, or is it content to tinker timidly at the edges? Time is running out.
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