Rates rise comes in below inflation

Finance secretary had no shortage of rates rabbits to pull from Budget hat

Derek Mackay’s draft Budget included a below inflation increase for rates

NEXT year’s business rates increase will come in below inflation, Scottish Government finance secretary Derek Mackay announced in his draft Budget for 2019/20.

Mackay announced that the poundage rate, on which business rates are calculated, will increase from 48p to 49p, an increase of 2.1%, but below the Office for National Statistics latest inflation figure of 2.2%.

The finance secretary also revealed that for the remainder of the current parliamentary term — which runs until 2021 — he will freeze annual poundage increases at the Consumer Price Index (CPI) inflation figure, rather than the RPI figure which was used previously. Historically CPI has been the lower figure of the two.

Other measures in the draft Budget included the introduction of a £50m capital fund to help support town centres through diversification.

Mackay also said that following appeals from business, he had decided not to introduce an out-of-town levy for businesses outside of town centres.

That announcement followed an open letter appeal from 21 organisations including the Scottish Grocers Federation, Scottish Retail Consortium and Scottish Wholesale Association, urging the finance secretary not to introduce such a charge.

The Small Business Bonus Scheme, which offers rates relief for business premises with a combined rateable value of £35,000 or less and individual premises with a rateable value of £18,000 or less, will also be maintained through 2019/20.

SGF head of public affairs John Lee said the organisation supported in principle the £50m investment in town centres, but added it “has to produce something meaningful, impactful and relevant to retail.”

Commenting on the rates proposals, Lee said: “Business rates are one of the main costs that retailers face and we welcome the Scottish Government’s commitment to capping the rate rise.

“Retailers face significant pressure from a range of costs in a hyper-competitive market and any measure which assists in keeping costs down is beneficial.”

Scottish Retail Consortium director David Lonsdale said the organisation was glad Mackay had been “more Christmas Elf than Mr Scrooge”.

He said: “The move to set the most competitive headline poundage rate in the UK is welcome, as is the move to scrap complex and costly proposals for an out-of-town rates levy.

“The new Town Centre Fund appears to be a promising initiative and we’ll await the details with interest.”

Lonsdale added the SRC was pleased the finance secretary “listened to the chorus of concern led by the retail industry” and opted not to pursue the proposed out-of-town levy.

The draft Budget was still subject to Scottish Parliament approval as Scottish Grocer went to press.