Meeting of the Parliament (Hybrid) 09 December 2020
The Conservatives’ motion calls on the Scottish Government
“to provide certainty for businesses next year by committing to extending the non-domestic rates poundage freeze and the rates relief for hospitality, leisure and retail businesses into 2021-22”.
The Scottish Government provided 100 per cent rates relief for the retail, hospitality and leisure sectors for this year. It is difficult for it to make decisions for 2021-22, as the Tory Government’s spending review at the end of November did not provide clarity on its budget plans, specifically around non-domestic rates for the next financial year. As the Tories are well aware, the Scottish budget is dependent on the generation of consequential funding via the Barnett formula. Scottish businesses need certainty, but so does the Scottish Government for next year’s budget, so that it can continue to provide that support for businesses.
Following the Tory Chancellor of the Exchequer’s announcement at the end of November, the head of business rates at the commercial property company Colliers International stated:
“It’s also worrying that the Chancellor has not mentioned a timeline for when he will announce on the ‘Rates issue’. Although the statement today was not a tax review, it is inconceivable if he feels he can wait until the March Budget to discuss changes to the business rates system. By then many retailers will have made their plans for the forthcoming year and many of these will include closures and job losses in anticipation of the big bills coming through the letterbox.”
As the minister said, the Scottish Government is committed to creating a tailored package of business support measures, including rates relief, that best meets Scotland’s needs, and it is important that the package is tailored to those who need it most. In recent weeks, we have witnessed many supermarkets and discounters hand back to the UK Government £1.8 billion of business rates relief, following a backlash. The sector has rightly been criticised for paying huge dividends to shareholders while receiving taxpayer support that was designed to help businesses that have been crippled by the pandemic to survive.
A recent KPMG report on UK retail sector trends in 2020 highlights that many retailers have fared very well during the pandemic, with some having double-digit increases in sales. Those included supermarkets, retailers in the furniture and homeware sectors, do-it-yourself retailers and those that sell electronic goods. Those high-street brands that have good internet presence, such as Argos, Next, Boots, GAME and Wickes, are among the biggest winners. Hospitality, leisure and most clothing and footwear retailers need our support, however, and the Scottish Government should provide that additional support when it is in a position to do so.
I have highlighted that the Scottish Government requires certainty in order that it can consider business rates relief for next year, and that position is confirmed by the Finance and Constitution Committee in its pre-budget scrutiny report. In its conclusion, it states:
“The Committee recognises the enormity of the economic and fiscal challenge facing the Scottish Government in preparing next year’s Budget.”
With the support of the Conservative members of the committee, it states:
“without its own borrowing powers to fund day to day spending, the Scottish Government is largely constrained by UK spend and policy decisions when determining its own COVID-19 related spending and policies. For example, it would be very challenging for the Cabinet Secretary to continue with policies like business rates relief, in its current form, without Barnett consequentials.”
I therefore ask Conservative members to support their colleagues on the Finance and Constitution Committee and get behind the Scottish Government’s call for devolved borrowing powers so that we can provide the tailored support that Scottish businesses need.