North-east businesses are facing “abjectly unfair, crippling rates”, it has been claimed – and the Scottish Government stands accused of “completely disregarding” their plight.
Aberdeen firms will pay nearly £268.6 million in rates next year, more than in the capital city Edinburgh.
And, as that figure trails only Glasgow, north-east Conservative MSP Douglas Lumsden says the huge bill shows the Granite City is being targeted unfairly to pay for itself.
The former council finance convener claims the high rates collected in Aberdeen – calculated against the value of commercial premises – allow ministers to steer piles of other cash to the Central Belt.
Rates are still being assessed against 2017 valuations of properties, while the north-east property market has slumped amid oil and gas turmoil.
Aberdeen’s budget in numbers: Business rates once again heavily relied upon to balance council books
Yet still, business rates make up around 68% of Aberdeen City Council’s budget – while in Edinburgh, Glasgow and Dundee, they account for only 28%, 21% and 11% of the money at their local authority’s disposal respectively.
Because of this, the other three of the Scotland’s four largest cities are given a larger piece of the government’s £7.8 billion general revenue fund.
Aberdeen’s £93.3m is around 1.2% of that pot, while the capital will be given £556.2m/7.1%, Glasgow gets £1.01bn/12.9% and Dundee earns £47.8m/3.57%.
It’s a situation Mr Lumsden brands “simply disgraceful” for the energy capital of Europe.
“Businesses are struggling in Aberdeen but you would not know that with this clueless government who continue to tax business here,” the Conservative tells us.
“Our citizens and businesses must wake up and smell the coffee because Aberdeen is being completely disrespected by the SNP/Green coalition with a lack of funding.
“Meanwhile, other comparable cities such as Glasgow, Edinburgh and Dundee benefit from the general revenue funding because of their lack of ambition.”
‘Abjectly unfair’ for north-east firms to still be paying rates based on 2017 valuations
Worse news still for north-east firms is that the respite of a revaluation due in 2022 was pushed back to next year due to the pandemic.
At the last revaluation, now approaching five years ago, Aberdeen and Aberdeenshire properties accounted for 45% of the rateable value in all of Scotland.
Aberdeen And Grampian Chamber Of Commerce’s Shane Taylor called the delay in looking again at what businesses would be due “a further blow”.
Though specific rates relief for north-east office premises and hospitality venues remains in place, the policy manager said research now showed it was having a “negligible effect”.
Other Covid-related relief will remain in place only until the summer.
Mr Taylor said: “Unfortunately, firms in the north-east are all too deeply aware of the abject unfairness of the business rates situation in the region.
“The Scottish Government needs to recognise the disproportionate impact of this delay on our region, and we would urge them to look again at the transitional relief scheme which was originally brought in to shield businesses somewhat from these eye-watering rates bills.
“The Scottish Government must review this vital relief and refresh it for the coming financial year, to ensure that north-east businesses get at least some respite from crippling rates costs while we await the much-needed 2023 revaluation.”
Government points to role of councils in deciding how money is divvied up
In response to the concerns, a government spokesman highlighted that every penny paid in rates in Aberdeen would end up in council coffers.
And he pointed to the role of the umbrella body for all 32 Scottish councils, Cosla, in deciding who gets what come budget day.
He added: “The annual local government settlement allocation formula uses the most up to date information for the full range of indicators, including population.
“The Scottish Government and Cosla keep this formula under constant review but any fundamental changes to this formula must in the first instance come from Cosla on behalf of all their local authority members.
“The Scottish Government guarantees all local authorities their formula share of general revenue grant, plus non domestic rates income. If any council collects less non-domestic rates income than estimated they will receive additional general revenue grant and vice versa.
“The 2022-23 Scottish budget provides local government revenue funding for Aberdeen amounting to a cash increase of £16.1 million and a cash terms increase of 4.3%.”
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