Committee
Local Government Committee, 03 May 2000
03 May 2000 · S1 · Local Government Committee
Item of business
Budget Process
Councillor Roberton:
Watch on SPTV
Much would depend on the way in which the matter was handled. Businesses are generally fearful of the idea of business rates being returned to the control of the local authorities. However, if that happened, a reduction in rates would be equally likely as an increase. It may well be that many authorities would like to reduce business rates because it would make their areas more attractive to business. Many local authorities are upset about the fact that many areas, particularly the cities, collect much more than is returned to them in the pooled allocation.
Last year, Glasgow collected £264 million and the amount returned through grant directly from the unified business rate was £201 million. Glasgow could find a lot of things to do with that £63 million. Glasgow might reduce its business rate in order to make the area more attractive to business. One of the anomalies that arises from the unified business rate is the fact that, no matter how much the economic development of an area increases, the local authority sees no benefit. Because of the pooling of the business rate, it is possible for major developments in an area to be of no direct benefit to the local authority, although there might be an indirect benefit in terms of employment. That is not necessarily the case in cities, however, as about half the working population of any of our cities commutes from outside the city.
A dialogue with the business community could provide opportunities for improvement. We have raised with the Executive the possibility of developing business improvement districts, which are add-ons to the existing business rate set-up. In the districts, the local authority establishes an objective that the local business community would like to support and hypothecates an element of the business rate to provide that. The amount that can be collected that way depends on the project for which funding is required. However, if the business rate were returned to local authorities in total, the money would be there in any case. We think that it would be useful to have more flexibility.
We return to the question that McIntosh raised about the accountability of local government and the fact that local government raises only 20 per cent or less of its income. The business rates would bring that figure up to about 45 per cent.
Last year, Glasgow collected £264 million and the amount returned through grant directly from the unified business rate was £201 million. Glasgow could find a lot of things to do with that £63 million. Glasgow might reduce its business rate in order to make the area more attractive to business. One of the anomalies that arises from the unified business rate is the fact that, no matter how much the economic development of an area increases, the local authority sees no benefit. Because of the pooling of the business rate, it is possible for major developments in an area to be of no direct benefit to the local authority, although there might be an indirect benefit in terms of employment. That is not necessarily the case in cities, however, as about half the working population of any of our cities commutes from outside the city.
A dialogue with the business community could provide opportunities for improvement. We have raised with the Executive the possibility of developing business improvement districts, which are add-ons to the existing business rate set-up. In the districts, the local authority establishes an objective that the local business community would like to support and hypothecates an element of the business rate to provide that. The amount that can be collected that way depends on the project for which funding is required. However, if the business rate were returned to local authorities in total, the money would be there in any case. We think that it would be useful to have more flexibility.
We return to the question that McIntosh raised about the accountability of local government and the fact that local government raises only 20 per cent or less of its income. The business rates would bring that figure up to about 45 per cent.
In the same item of business
The Convener (Trish Godman):
Lab
Good morning, comrades.If the SNP and Johann Lamont stop talking, we can start.
Mr Kenneth Gibson (Glasgow) (SNP):
SNP
Does Colin Campbell speak for all of us?
The Convener:
Lab
Yes, he speaks for all of you.
Colin Campbell (West of Scotland) (SNP):
SNP
What did I say?
The Convener:
Lab
We will take evidence this morning from the Convention of Scottish Local Authorities. We have with us Councillor Craig Roberton, who is the COSLA spokesman o...
Councillor Craig Roberton (Convention of Scottish Local Authorities):
Thank you very much.We are pleased to be here today and welcome your invitation. We have circulated a paper, which gives some detail on the case that we will...
The Convener:
Lab
Thank you. As you know, the Executive has considered some of the things that you mentioned, such as the possibility of three-year funding. This committee has...
Mr Jamie Stone (Caithness, Sutherland and Easter Ross) (LD):
LD
I would like to ask you about two things, one of which you have touched on and one of which you have not. Many of us who were councillors in the past had con...
Councillor Roberton:
It would be difficult to give you a figure for charges now. We could provide figures for the overall increase in charges, but its implications for services a...
Mr Stone:
LD
Do not the witnesses agree that there is a potential problem because that arrangement is based on a gentlemen's agreement, which means that the members of th...
Councillor Roberton:
I am not certain that a police board or a fire board would act in unison in that respect. They would find it difficult to reach consensus on an increase—ther...
Norie Williamson (Convention of Scottish Local Authorities):
I would like to make a couple of comments.When local government was reorganised, it was recognised that there might be a problem with—if I may say this—peopl...
The Convener:
Lab
Before Kenny Gibson asks his questions, I would like to say that community councils and other such groups that are concerned about crime in their areas are a...
Mr Gibson:
SNP
Thank you for your excellent document and presentation; I wish that the Scottish Executive produced such clear-sighted documents.
The Convener:
Lab
Just ignore him.
Colin Campbell:
SNP
He will not go away, however.
Councillor Roberton:
Perhaps we have better officers than the Executive does.
Mr Gibson:
SNP
We took evidence from the Scottish Executive last week; the Official Report was published only this morning, so you will not have had the chance to see it. I...
Councillor Roberton:
To someone of your political viewpoint, it is of interest that these rules are Treasury rules. There seems to be a contradiction in the responses that you ha...
Norie Williamson:
Annexe A of our submission is a straight copy of the statement made by the Minister for Finance last October. The top two lines of the table are of special s...
Mr Gibson:
SNP
It depends on whether a common view can be reached on that.
Norie Williamson:
It was interesting that down south there was a joint approach by the Department of the Environment, Transport and the Regions and the Local Government Associ...
Mr Gibson:
SNP
I have a supplementary question on the amount of money that is raised by council tax. In his presentation last week, Professor Midwinter said that the propor...
Councillor Roberton:
Council tax is only one of the three elements of local government funding. Council tax replaced the poll tax, which replaced the rating system. Historically,...
Mr Gibson:
SNP
But you think that the—
The Convener:
Lab
Kenny, I have to stop you. Six other members want to speak. If there is time at the end, you can come back in.
Donald Gorrie (Central Scotland) (LD):
LD
I would like to pursue the same line of questioning. There seems to be a serious disagreement between the Executive's civil servants and people in local gove...
Councillor Roberton:
I agree wholeheartedly with all those points, Donald. If you look at annexe A, which gives the expenditure that was provided by the Scottish Executive—they a...
Bristow Muldoon (Livingston) (Lab):
Lab
You raised the issue of business rates, which many local authorities have raised with us in the past. You will be aware that the Executive is reluctant to go...
Councillor Roberton:
Much would depend on the way in which the matter was handled. Businesses are generally fearful of the idea of business rates being returned to the control of...