Scottish business bodies call for rate freeze

Salmon Scotland is among 35 leading business representative groups and industry bodies calling for a business rate freeze for Scotland.

The 35 organisations have jointly written to the Scottish Government’s Deputy First Minister and Finance Secretary. They represent a broad cross section of Scottish industry and commerce, including retailers, wholesalers, manufacturers, tourism, leisure, and commercial property.

The Scottish Government is due to present its Budget on 19 December, which is expected to set the business rate and associated reliefs and thresholds for the 2024-25 financial year.

Last month, Scotland’s First Minister Humza Yousaf made the surprise announcement that domestic rates – property-based taxes on households that are levied by local authorities – would be frozen in the coming year. The shortfall for local authorities would be made up be a grant from the Scottish Government, he promised, but no figure has been put on that yet and many fear the move will require further cuts to councils’ spending.

The announcement did not cover business rates (also property-based), which are already at a 24-year high in Scotland and a fifth higher than at the start of the previous decade. If increased in line with current CPI (consumer price index) inflation, business organisations say, this could see business ratepayers across Scotland facing an extra £205m on their rates bills from next Spring.

Only the smallest businesses are exempt from rates.

The joint statement from business leaders says: “This would be at odds with the Scottish Government’s recently stated aim to use business rates to ‘boost business’.”

The letter from the business representative and trade bodies was submitted to Shona Robison MSP, the Scottish Government’s Finance Secretary, on 2 November. The text of the letter is as follows:

Dear Deputy First Minister,

We are writing jointly ahead of the Scottish Budget to ask that you do not increase the poundage rate in the coming financial year.

We fully recognise that the Scottish Government, like business, is facing its own costs and inflationary pressures at the present time. The work to improve the administration of the rates system through the New Deal for Business is encouraging, as is the headway made in recent years on broader aspects of reform including more frequent revaluations, the retention of the uniform business rate, and the pledge to restore parity on the higher property rate with England which should benefit 11,650 commercial premises here in Scotland.

Yet, after three and a half turbulent years of the pandemic and costs crunch the fact is trading conditions remain challenging, the cost of doing business remains elevated, and the near-term economic outlook is weak. We therefore ask that Scottish Ministers prioritise a freeze in the headline business rate poundage – which is already at a 24-year high – in the coming financial year. This would aid firms with the costs crunch, help them keep down prices for customers, and support business investment and competitiveness.

Our organisations have a range of ideas on how Scotland’s rates system could be improved. However, we collectively believe this practical measure to freeze the business rate requires to be taken in your upcoming Scottish Budget, which would be a positive step applicable to all commercial premises, help ease the burden at this difficult time, and support our shared objective of delivering more sustainable economic growth.”