Hammered again! Firms face a £90m rates blow

SCOTTISH companies will pay nearly £90million more than those elsewhere in the UK unless SNP ministers follow Philip Hammond’s lead with a business rates revamp.

The Chancellor has announced plans to change the way nondomestic rates are calculated south of the Border, which will see small firms pay £2.3billion less in the next five years.

Mr Hammond has said rate rises should be based on the lower Consumer Price Index (CPI) inflation measure rather than the Retail Price Index (RPI) – so rates will rise by 3 per cent next April instead of 4 per cent.

But as business rates are devolved, this could mean firms based in Scotland would pay up to £87million more than those elsewhere in the UK.

At present, medium and large businesses pay £62million more than firms south of the Border due to the doubling of the Large Business Rates Supplement from 1.3p to 2.6p. If Finance Secretary Derek Mackay refuses to follow Mr Hammond’s lead by changing the way rates are calculated,

‘Tackling this is a priority’

this would add a further £25million.

Scottish Tory finance spokesman Murdo Fraser said: ‘Scotland is already gathering a reputation as the UK’s high tax enclave. These figures show just how wide the gap could be between us and the rest of the UK.

‘Scottish businesses deserve a level playing field with the rest of the UK if they are to stay competitive. That is why the SNP must follow the lead from down south and restrict business rate increases to CPI rather than RPI.

‘High taxes inhibit economic growth and put off small businesses from setting up shop. Tackling this must be a priority for the SNP.’

Earlier this year, businesses mounted a backlash against the Scottish Government following the first revaluation of non-domestic rates since 2010. This saw thousands of compa- nies face rate increases of up to 400 per cent, until Mr Mackay was forced to offer relief with a one-year cap.

He is now under pressure to use his Budget next month to announce an overhaul of the rates system.

Analysis released by the Scottish Retail Consortium (SRC) yesterday shows that shops face paying up to £17million more than those elsewhere in the UK.

SRC director David Lonsdale said: ‘Switching future annual rises in business rates to CPI rather than RPI indexation would be a further step towards a more sensible and affordable rates regime.

‘Ideally, this would be implemented from next spring, otherwise Scottish firms will be paying a headline business rate higher than competitors and counterparts down south.

‘Without action in the Scottish Budget next month, the existing rates gulf between Scotland and down south will only worsen, and could soar by nearly £90million a year.’

Earlier this year, the Barclay Review, by former RBS chairman Ken Barclay, failed to recommend an overhaul of the business rates system, with firms warning it would mean rates ‘remain onerous’.

But the review did include a number of controversial proposals, such as forcing leisure centres, golf clubs and private schools to pay full rates.

A Scottish Government spokesman said: ‘We are doing everything within our powers to support our economy, including retailers. We have also gone beyond the recent Barclay Review recommendations with new measures to drive investment.

‘Further detail, including confirmation of the rates poundage for next year, will be confirmed in the draft Budget next month.’

Comment – Page 16

‘Existing gulf will worsen’