Warning as rates burden up £150m

By Tim Pauling

Published: 12/10/2010

The rates burden facing businesses has risen by more than £150million this year, official figures have revealed.

The Scottish Chambers of Commerce warned last night that the situation was “damaging competitiveness”, while Labour has written to Finance Secretary John Swinney calling for transitional relief to be reintroduced to help ease the impact.

Most councils have recorded a rise in the business rates collected in 2010-11, compared with the previous year, according to figures obtained by Labour.

According to a parliamentary answer from Mr Swinney, local authorities collected £2.165billion in business rates in 2010-11, a rise of £150.9million on the previous year.

Aberdeen City Council collected an extra £20.6million, while Aberdeenshire Council took in £10.6million more. Highland Council collected an extra £9.8million.

The figures show that in Aberdeen 41.6% of businesses had a reduction in rates while 57.8% saw their bills stay the same or increase. In Aberdeenshire, 20.6% had a reduction and 79.4% saw no change or an increase.

In Highland, 28.7% enjoyed a reduction in their bills, while 71.4% saw no change or an increase.

The figures were uncovered by parliamentary questions asked by Aberdeen Central Labour MSP Lewis Macdonald, who said the answers proved that the “SNP’s myth” that 60% of businesses were better off following revaluation was false.

“The SNP can no longer justify their position on non-domestic rates when these answers so clearly demonstrate the unfairness of this policy,” he said. “It is time John Swinney admitted he got this decision badly wrong. If the SNP government really wanted to support the Scottish economy, John Swinney would reintroduce transitional relief as a matter of urgency.”

Aberdeen and Grampian Chamber of Commerce chief executive Bob Collier said the figures backed the organisation’s argument that the government could afford to pay transitional relief at 12.5%.

The £150million collected was more than enough to cover the full cost of transitional relief, estimated by the government at £136million, he said.

“The Scottish Government appears to have tied itself in knots on this issue,” Mr Collier said.

“They should accept that they got it wrong and reintroduce transitional relief without delay, and before more damage is done.”

Scottish Chambers of Commerce chief executive Liz Cameron said it had taken the government eight months to admit that as a result of scrapping transitional relief, businesses were paying more than £150million in additional business rates.

“Far from making Scottish businesses better off, it is now clear that the government’s decision to remove transitional relief is damaging the competitiveness of our economy,” she said.

A Scottish Government spokesman said the chambers of commerce had “misinterpreted the facts” because the net impact of this year’s revaluation, and the decision to set a “relatively low poundage”, meant £200million less was being collected this year.

He said the figures were “provisional” and therefore overstated the income collected, as most of the appeals will not be settled until later this year.

“To introduce a transitional relief scheme similar to England would have transferred almost £77million this year alone from the private sector to cushion rates’ increases for the public sector and a relatively small number of large businesses – hitting retailers, pubs and offices particularly hard,” the spokesman said.

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