Official Report search · Parliament Workbench

Committee

Local Government Committee, 10 Nov 1999

10 Nov 1999 · S1 · Local Government Committee

Item of business

Rating Revaluation

Brian Smillie (Scottish Retail Consortium): Watch on SPTV

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 of our organisation. The British Hardware Federation does not relate to computer hardware, but to traditional hardware—ironmongery and housewares. Most of the members of the federation run small businesses. One of the benefits of being president is the opportunity to go round the country, speaking to members in their localities, chewing the fat about the business. It will come as no surprise that rates can be an emotive issue for most small businesses. There is a degree of apprehension about the new rating process. Nobody likes to pay tax and we accept that there will always be some dissent. However, the new system has aroused genuine feelings of apprehension because of the perceived uncertainty surrounding parts of it. There is no doubt that one factor that is important to the people whom I represent—and to most other retailers—is transitional relief. That has been one way of removing the uncertain, large additional costs. It has helped to smooth out the process. There is a full accord on transitional relief.I would like to reinforce Patrick Browne's comments. Most retailing companies face an increasing rates burden. In general, rates go up. The figures on increases are smoothed out across all the different categories of buildings, but for retailers the tax burden is an increasing one. I would argue that rates tend to make up a larger percentage of business cost for retailers, because of the nature of their location, than they do for other types of business. Retail businesses need to be in a visible spot and, therefore, their property will be perceived to have a higher value than a warehouse or factory in a less visible location.There is already a classification within the system to allow transitional relief for large and small businesses. However, it is sometimes difficult to classify businesses on the basis of their property. My company considers itself to be a small business. I know that it is invidious to discuss one example, but it might give members a flavour of the situation. I am not making a complaint; I am trying to give members an indication of the increases in the rates bill for my company in Edinburgh. Although the property value has gone up, following the last revaluation—we are now facing another one—I am referring to the increase in the amount that we have paid.Since 1994-95, the rates bill has increased by 49 per cent. The five successive increases have been: 10 per cent, 11.5 per cent, 12.12 per cent, 4.7 per cent and 4 per cent. That makes a total increase of 49 per cent. That has been an increasing burden on our business.I recognise that property in George Street in Edinburgh has increased in value, but we never realise the property value of our businesses until we come out of business. The tax is therefore arrived at in an arbitrary way, although we recognise that there must be some basis for it. Most retailing companies face an increasing burden. There are no swings and roundabouts. Most companies see it as a cost that always goes up.We are concerned by the suggestion that there would be some cross-subsidy between smaller businesses and larger businesses. We need to go back to how one classifies small and large. If we are to change from a system that is based on the value of a property and apply an overriding percentage to businesses that are perceived as large to subsidise businesses that are perceived as small, we will be breaking away from the fundamentals of the current system. We can all argue about the rights and wrongs of using property as the basis of the tax, but, if it is the basis, it should continue to be the basis, rather than being tinkered with by cross-subsidy. We need to know where to draw the line.As Patrick Browne said in his introduction, the rateable values of many of our members, who are not large businesses, tend to be above the £10,000 threshold. They see themselves as small, suburban, high-street town people and would not be happy if they felt that they were subsidising another sector of business sizes. That would be divisive.

Search Hansard contributions

Local Government Committee, 10 Nov 1999

In the same item of business