Meeting of the Parliament 05 February 2020
I will make some concluding remarks on the Non-Domestic Rates (Scotland) Bill. The bill will implement the findings of the Barclay review of non-domestic rates, many of which were welcome.
The move from a five-year to a three-year revaluation cycle has been supported by the business community, as have proposals for a business accelerator, which will create an incentive for businesses to expand and will help to remove the existing disincentive for speculative development by landlords. If it works, it will stimulate growth and investment and assist economic growth. Some of the technical changes in the bill, such as making it easier to collect information from ratepayers and improving transparency, will also be welcome.
The bill does not of course implement all the findings of the Barclay review. It was hamstrung from the start by being told it had to be revenue neutral and therefore had to look for means of raising money to balance out the new reliefs being granted. Ken Barclay and his colleagues found two targets from which to raise extra money—local authority arm’s-length external organisations and independent schools.
The recommendation to end the tax relief for ALEOs proved to be highly controversial, with local authorities across the country complaining, rightly, that it would mean a negative impact on their budgets and/or an increase in charges at the likes of local leisure centres and swimming pools. Fortunately, following vigorous opposition from the Scottish Conservatives against the swim tax, the Scottish Government decided to U-turn, and it backed down on the proposal.
Regrettably, the Scottish Government did not back down in relation to the other measure that is intended to raise additional funds—namely a change to the tax treatment of independent schools. Yesterday, we set out some of the arguments why we feel that that is the wrong move. As the Office of the Scottish Charity Regulator has made clear, a number of independent schools are in a marginal financial position. For example, I can think of five independent schools in Perth and Kinross that have closed in the past two decades—schools such as Rannoch, Croftinloan and Butterstone, all of which not only provided education but were important parts of local economies.
The money spent on independent schools supports jobs in what are often rural areas, directly in terms of teaching and non-teaching staff in schools but also in terms of the broader spend in local economies. In the local economy of a town such as Crieff, in which there are a number of local independent schools, shops, hospitality businesses and tradespeople’s livelihoods depend on the existence of those schools and the spend from the school and the staff who work there.
The same would apply to a town such as Dollar in Clackmannanshire, where the major local employer is Dollar academy. Taxing those schools more will have a negative economic impact. That is not to suggest that a school the size of Dollar academy is necessarily going to close because of the bill, but there are smaller independent schools, including small Christian schools as we heard yesterday, that may find themselves in that category.