Derek Mackay has ruled out government intervention to save north-east firms that faced being crippled by surging business rates.
The embattled finance secretary, who held a meeting with corporate bosses in Aberdeen yesterday, instead said he would work with councils on a local relief scheme “as a matter of urgency”.
Last night business leaders admitted it was unlikely the controversial increases would be reversed but said they were “cautiously optimistic” their severe impact could be mitigated.
They have previously warned firms face bankruptcy from increases to their rates, given re-valuations were undertaken in 2015 before the full extent of the oil price downturn was realised.
Some companies are facing increases of more than 200%, and have warned they could have to shed staff or even close their doors due to the upsurge.
Following intense pressure to face angry business owners, Mr Mackay met with Aberdeen and Grampian Chamber of Commerce and their partners at the organisation’s Bridge of Don headquarters.
The minister spent about an hour behind closed doors where he admitted that local firms were faced with “exceptional circumstances” and needed additional help to ease the strain of the new rates.
Mr Mackay said he had looked at providing transitional relief nationally – but said this would disproportionately benefit big utility companies, while keeping rates “artificially high” for everyone else.
The SNP minister has instead pledged to work on a local solution with Aberdeen and Aberdeenshire councils.
Critics argue that both local authorities do not have enough cash to provide the appropriate support.
But speaking after his meeting at the Aberdeen and Grampian Chamber of Commerce, Mr Mackay said: “I felt it was constructive, informative and helpful meeting and we discussed a way forward.
“I have pledged to approach Aberdeen and Aberdeenshire councils now, as a matter of urgency and in a spirit of cooperation, to discuss what a local relief scheme could look like.”
Mr Mackay said local authorities will have increased spending power due to the end of the council tax freeze for Band E-H homes – cash he suggested could be used to provide relief.
Money raised from the business rates increases would also stay within the local authority, he said.
The finance secretary also refused to be drawn on whether the valuations could be considered fair – given they were undertaken before the full effects of the oil price downturn were felt in the north-east – noting that the assessments were “independent” and not a matter for government.
Encouraging businesses to appeal their valuation if they feel it to be incorrect, he added: “There is a further process for the assessors and I want to ensure businesses are sharing everything they can with assessors.”
Despite there being transitional relief for rate changes in England, Mr Mackay suggested such a policy would not work in Scotland.
He said: “When I looked at introducing it nationally the biggest beneficiaries would be big utility companies.
“It would keep rates artificially high. The government’s view is that it is not appropriate nationally but that it could work locally.”
The finance secretary also pointed to schemes such as the small business bonus, which the government believes will mean 6,000 firms in the north-east will pay no business rates.
Speaking after the meeting, James Bream, research and policy director at the chamber, said discussions had been positive but it was now time for action.
He said: “What we have here is something we can see something so we can try and do something about it.
“When you look to the question of what happens if nothing is done, we know that there will be job losses, we know there will be reduced confidence in terms of investment in properties in the area.
“I guess when we look at the fundamentals of how we would feel as a region, we’d really be concerned about what it means in terms of our place within the pecking order.
“I’m probably a glass half full type of person and so I’m cautiously optimistic that we might find a way to mitigate some of the impact.
“In a sense it’s imperative we do because actually it’ll be hard-pressed businesses that are impacted but actually at the end of that, it will be the people that feel it on the whole.”
