Row over new rates support for north and north-east firms

Peter Chapman MSP

Businesses in the north-east will continue to benefit from rates relief measures as well as a new package of support.

But opponents said many firms still had a “millstone around their neck”.

A year after the Scottish Government’s business rates bombshell plunged scores of companies into turmoil, Finance Secretary Derek Mackay said ministers were now funding the “most competitive” relief package in the UK.

Worth a record £720million next year, it includes a new “growth accelerator” and a decision to cap the rise in business rates at CPI (consumer price index), together saving firms £96million.

The draft budget said the government would continue special transitional arrangements for offices in Aberdeen and Aberdeenshire, and all but the very largest hospitality properties.

And from April 1, when an existing property is improved or expanded there will be a 12-month delay before rates increase as a result, and new build property will pay no rates until occupied, with new tenants enjoying 12 months rates-free.

Gillian Martin, SNP MSP for Aberdeenshire East, said: “Last year, the Scottish Government took decisive action to protect north-east businesses, by capping business rates rises and supporting the hospitality sector and small businesses.

“It’s excellent to see that firms across Aberdeenshire and Aberdeen City will continue to benefit from the Scottish Government’s transitional cap to business rates, even if Tory councillors decide to remove local relief in the coming months.

“The fresh announcement that the Consumer Price Index will be used rather than Retail Price Index to calculate inflation in Business Rates poundage for the year ahead is also welcome – saving businesses even more money.”

However, north-east Conservative Peter Chapman said: “The finance secretary has failed to take any action to reduce the large business supplement, which is a millstone around the neck of many firms.

“This tax has a disproportionate impact on the north-east, with millions extra paid by companies in Aberdeen and Aberdeenshire.”

Meanwhile, Mr Mackay confirmed that the government had accepted all the remaining recommendations of the Barclay Review into non-domestic rates, except the removal of charity relief entitlement for certain university properties.

That was bad news for independent schools, which will now lose their relief.

John Edward, director of the Scottish Council of Independent Schools, said: “It is dispiriting to learn that the Government considers that independent schools and their parents alone are deserving of a targeted five-fold rates rise.”

The budget also included a 70% increase in investment in business research and development, a new £150million Building Scotland Fund to unlock new house building, and £340million to provide initial capitalisation for the Scottish National Investment Bank

And following on from action in the UK Government budget to help first time buyers, it was announced that 80% of first time buyers will benefit from a new relief on Land and Building Transaction Tax of up to £175,000.

Liz Cameron, from the Scottish Chambers of Commerce, said:  “We welcome much of the substance of Mr Mackay’s announcement today.  In particular we appreciate his willingness to listen to the voice of business and move towards levelling the playing field with the rest of UK on business rates and incentives for housebuyers through the Land and Buildings Transaction Tax.”