Meeting of the Parliament 04 February 2026
I remind members of my entry in the register of members’ interests, although it is some years since I have been responsible for paying non-domestic rates.
It is a great shame that this Parliament does not sit on Mondays, because Monday was groundhog day. Here we are again, having the same debate, yet, on this important issue, we are barely getting even a difference in nuance from the minister. I understand that it is complex, and the minister is right to reflect on the fact that the revenue that is raised pays for local services, but he must also acknowledge and address the deep flaws in the rates system.
When Kate Forbes was finance secretary, she was quite right to repeatedly restate Adam Smith’s principles of taxation—equity, certainty, convenience and economy. At least two of those are probably being broken, certainly when it comes to hospitality and the rates system.
However, the issue is not just with hospitality. If members will indulge me a little, the problem is that, in many sectors, the revaluations just do not make sense. For example, Edinburgh airport’s rateable value has increased by 300 per cent, whereas Glasgow airport’s has increased by just 50 per cent and Prestwick airport’s has increased by 39 per cent. I imagine that the owners of Prestwick airport might be taking that up with the assessors if the rates bill is increasing by that amount.
The important bit here is the explanation of assessors: not only are assessors making different assessments; they are basing them on revenue. Rates are not supposed to be assessed on that basis; they are meant to be linked to rent—what a property could be rented out for. Assessors are unilaterally changing the methodology and explaining that after the rates bill has arrived.
Most critically, on the point of equity, the fundamental issue with the rates system is that it does not correlate with the economic contribution of different sectors, with some sectors paying significantly more than the contribution that they make to the overall economy. For example, retail—my old sector—makes an economic contribution of 11 per cent but pays a 24 per cent share of the rates bill. The position for hospitality is even worse—its gross value added is 3 per cent, but it contributes 9 per cent to the rates bill. That is the fundamental issue.
I accept the technicalities and the complexity. I accept that the minister has, in a sense, inherited the system, but the Scottish Government is in a position to change the system were it to acknowledge the issues that exist. It seems to acknowledge those in part, but the problem is that it is far too slow to do so. Even within the existing system, the Government is simply not being as generous as other parts of the United Kingdom. The UK Labour Government is putting in place a £4.3 billion support package, capping increases at 15 per cent for most small businesses with a value of under £100,000.