Committee
Local Government Committee, 10 Nov 1999
10 Nov 1999 · S1 · Local Government Committee
Item of business
Rating Revaluation
Patrick Browne:
Watch on SPTV
The cost structure for retailing business is different from that of other types of business. On balance, retailing premises tend to be more heavily rated than other types of property, such as office property. Retailers also have to meet higher property, marketing and staffing costs than other types of business. They have additional costs, such as store security, which are unique to retailing.Retailers also have to be located near their customers. Unlike other business, they do not have the option to operate in a non-high-street or non-town-centre location. They tend to incur higher rates bills by the nature of their business.I will now ask Brian Smillie to give members a perspective on the significance of rates to small to medium retailers.
In the same item of business
The Convener:
Lab
We shall now start the second item on our agenda, which is the continuation of our inquiry into rating revaluation. Our witnesses are representatives of the ...
Patrick Browne (Scottish Retail Consortium):
Thank you, convener. I shall introduce my colleagues. Mike Flecknoe is the rating executive with Boots, which is one of our members and operates approximatel...
Mike Flecknoe (Scottish Retail Consortium):
I will express only the view of Boots. Boots is a supporter of high streets and town centres and wants small businesses to thrive as they add to the vitality...
Patrick Browne:
The cost structure for retailing business is different from that of other types of business. On balance, retailing premises tend to be more heavily rated tha...
Brian Smillie (Scottish Retail Consortium):
Good morning everyone. As Patrick Browne has said, I am president of the British Hardware Federation, and I would like to take a moment to explain the nature...
Patrick Browne:
We are aware that a great deal of the committee's attention has so far focused on the proposals for a system of rates relief for small businesses. We have ha...
The Convener:
Lab
Thank you for that presentation. I am sure that there will be questions.
Donald Gorrie:
LD
Most of us see the point of transitional relief, but the fact that we hope that the new lot of transitional relief will come on top of continuing transitiona...
Patrick Browne:
The Scottish Retail Consortium has not given a great deal of thought to what scheme could be used to help smaller businesses. My colleagues may be able to in...
Mike Flecknoe:
I deal with business rates and would not pretend to be an expert on other forms of taxation. The point that we are trying to make is that there is no correla...
Brian Smillie:
I tend to support that. I appreciate the difficulty that you have, but rates should relate to economic activity rather than to the value of the property, whi...
Mr Gibson:
SNP
We all accept that the current system has a number of flaws, but I am concerned about how the system that you are proposing would work. If rates liability we...
Mike Flecknoe:
I do not disagree. However, the problem with the rating system is that it operates on a five-year revaluation cycle, with transitional relief. Usually, prope...
Mr Gibson:
SNP
Patrick talked about funding transitional relief from the Scottish consolidated fund. Have you worked out how much that would cost and where the money would ...
Patrick Browne:
We would prefer the scheme not to be fully self-funded, as that would increase the burden on the businesses it covers. Rating is a complex subject, and becau...
Mr Gibson:
SNP
As Michael told the Confederation of British Industry, the difficulty that we have is in deciding which budget to take the money from if the scheme is not se...
Patrick Browne:
We have indicated our support for transitional relief, but I want to reiterate our concern about the proposals of the Federation of Small Businesses, which w...
Mr Gibson:
SNP
Only if it were not self-financing.
Patrick Browne:
If you chose to pass the cost on to businesses, they would be faced with an additional tab to that amount. Either way, the scheme would create losers.
Mr McMahon:
Lab
I want to focus on one issue that may involve you as landlords. Can you tell me why large organisations that generate rents through competition should be sub...
Mike Flecknoe:
Strictly speaking, landlords do not pay business rates, unless the property is vacant, in which case they are classed as the occupier. The vast majority of o...
Patrick Browne:
The only SRC member that I am aware of that owns a significant amount of property is Marks and Spencer, which has 22 stores in Scotland. My understanding is ...
Mr McMahon:
Lab
As Kenny Gibson said, last week we questioned the Federation of Small Businesses. In response to one of my questions, the federation said that it would prefe...
Patrick Browne:
It is difficult for me to comment, as we have major concerns about the FSB's proposals. It would not be appropriate for me to say how we think that something...
Mr Paterson:
SNP
I welcome the candid approach that the consortium has adopted today towards the mix of properties and the impact on small businesses, given that most of your...
Patrick Browne:
I have not.
Mr Paterson:
SNP
That is okay. I will not ask about the paper and I will rephrase my question. Would you be interested in a system that genuinely considered the impact of bus...
Patrick Browne:
As I said before, the consortium does not have a collective view on the issue of rates relief for smaller businesses because of the balance of our membership...
Mike Flecknoe:
The difficulty lies in considering non-domestic rates only as they apply to small businesses. The variables cannot be considered without considering other va...
Mr Paterson:
SNP
Would you support it or just consider it?