Now firms risk losing tax break if they don’t pay real living wage
SMALL firms face being hit by extra taxes unless they commit to paying the ‘real living wage’ and other ‘fair work’ policies.
A review commissioned by the SNP Government has urged ministers to consider excluding firms from the £300million-a-year benefits of the Small Business Bonus Scheme (SBBS) unless they agree to implement a series of policies for their workers.
The move has led to a backlash from business groups, amid warnings it would have a ‘devastating’ effect on small firms which are the backbone of the economy.
Around 100,000 companies are given discounts on their business rates bills of up to £12,000 a year under the SBBS, which has repeatedly been trumpeted by SNP ministers.
But the report suggests the funding could be withdrawn unless firms commit to a series of ‘fair work’ policies, such as paying the real living wage of £12 per hour or committing to offering employees ‘living hours’ of at least 16 hours work per week.
David Lonsdale, director of the Scottish Retail Consortium, said: ‘Ministers should think very carefully before making eligibility for business rates relief contingent on payment of the “real” living wage.
‘If ever there was a time to progress such a move then, given the weak economy and burgeoning regulatory costs facing firms, now isn’t it.
‘Thousands of smaller shops, hospitality and other businesses in Scotland are currently eligible for some form of rates discount, including those entitled to transitional or rural rates relief.
‘Retailers embrace many of the aspirations of fair work and have for several years been increasing pay at a faster rate than across the economy as a whole. However, any extension of conditionality along the lines envisaged could substantially impact the operating costs of companies previously eligible for rates relief, often smaller businesses.
‘Increasing taxes on business won’t grow the economy.’
The report, Fair work policy levels in Scotland, which was commissioned by the Scottish
Government on behalf of the Fair Work Convention, proposes a number of actions to improve employment practices across the country.
It suggests ‘there are policy areas in which further conditionality might be applied’ on firms and highlights that ‘examples like the Small Business Bonus Scheme could reach smaller employers’.
The report, written by the Scottish Centre for Employ ment Research at Strathclyde University also controversially questions whether the SBBS is money well spent.
It states: ‘It is not clear what the significant investment in the SBBS (£279million in 2020) delivers in terms of outcomes.
‘Evaluation found no empirical evidence the scheme delivers improved business outcomes and
highlighted limitations with the data collected on businesses in SBBS that make it difficult to identify any employment-related benefits from the scheme.’
SNP ministers have already faced heavy criticism for failing to offer hard-hit firms in the hospitality, retail and leisure sectors the same 75 per cent business rates relief provided south of the Border.
Colin Borland, director of devolved nations at the Federation of Small Businesses, said: ‘Any erosion of the scheme, including making eligibility conditional, would be devastating for our small businesses.
‘Because the scheme is linked to a firm’s rateable value, it’s valuable to those trading from the smallest premises in the least economically advantaged areas of the country.’
A Scottish Government spokesman said: ‘We are committed to using the levers at our disposal to extend Fair Work conditionality with clear standards and minimum requirements to cover forms of Scottish Government support within the limits of devolved competence.
‘We will always consider suggestions from the Fair Work Convention and investigate potential outcomes before making any future decisions.’
‘Increasing pay at faster rate’