New Deal for Business Non-Domestic Rates Sub-Group minutes: 20 June 2023

Attendees and apologies

• Martin Clarkson, Gerald Eve
• Marc Crothall, Scottish Tourism Association
• Stacey Dingwall , Federation of Small Businesses Scotland
•  Jim Doig, Scottish Assessors Association
• Heather Honeyman, Scottish Assessors Association
• Murray Lamont, Scottish Licensed Trade Association
• David Lonsdale, Scottish Retail Consortium
• David Melhuish, Scottish Property Federation
• Stephen Montgomery, Scottish Hospitality Group
• Robert Nicol, Scottish Assessors Association
• Alan Puckrin, Local Authority Directors of Finance
• Les Robertson, Institute of Revenues, Rating and Valuation
•  Jonathan Sharma, Convention of Scottish Local Authorities
• Paul Togneri, Scottish Beer and Pub Association
•  Leon Thomson, UK Hospitality Scotland
• Pete Wildman, Scottish Assessors Association

Scottish Government

• Tom Arthur, Minister for Community Wealth and Public Finance (Chair)
• Ellen Leaver, Deputy Director, Local Government and Analytical Services Division
• Scottish Government officials

Apologies

• Liz Cameron, Scottish Chambers of Commerce (Business Lead)
• Brian Rogan, CBRE
• Fiona Campbell, Association of Scotland’s Self-Caterers

Items and actions

Welcome

The Minister welcomed members to the meeting and apologies were noted as above.

Minutes of last meeting

The minutes of the previous meeting held on 13 June 2023 were agreed and accepted as an accurate record.

Paper for New Deal for Business Group 

The Minister noted that each New Deal for Business Group (NDBG) sub-group had been tasked with producing a report of initial outcomes which the group will consider when it meets on 28 June, after which the Cabinet Secretary for Wellbeing Economy, Fair Work and Energy will report to the First Minister. He added the timelines were challenging as this report had to be provided on Monday and highlighted that this sub-group was unique – the matter is technical and complex, and it is also large and diverse. He emphasised that while a range of topics have already been covered, most will require more time to consider and this is only the start of the process.

He welcomed views on the paper that was circulated for this meeting, explaining this could be used as the basis for the report to the group if members of the sub-group agreed. He also stated the meeting today offered an opportunity for joint agreement on how the points raised thus far by the sub-group could be considered further. 

He explained that Annex B of the paper had been provided for information to the sub-group, and proposed that it not be included in the report for NDBG. Members agreed. 

He also thanked Liz Cameron and Scottish Assessors for the ideas paper that was circulated last week, noting this provides starting point for further discussion on improvements to the transparency of valuations and the information provided in valuation notices. 

The Minister suggested each section of the paper could be covered in turn, and that this then be used as a basis for the report to NDBG.

Introduction and overview

The sub-group agreed the introduction and overview sections of the paper.  

Jonathan Sharma asked if the recommendation around reviewing Empty Property Relief was the same as that which Ministers had already committed to. The Minister confirmed that it was.  
David Lonsdale highlighted that while there were a number of positives in the paper, he felt that it did not match the ambitions set out by the First Minister in his speech ‘New Leadership, A Fresh Start for Scotland the Fresh Start’; as it did not contain specific recommendations on how NDR could better support business. The Minister explained that the meeting today offered an opportunity for the sub-group to refine the recommendations as it sees fit, and that this is only the start of the process.

Recommendation 1

The Minister stated that Recommendation 1 is that non-domestic rates should feature among the considerations of the Tax Advisory Group as part of the Scottish Government’s broader approach to engagement on tax policy. He asked for comments.

David Lonsdale asked about the timescales and remit of the Tax Advisory Group and Les Robertson asked if there would be representation from local authority professionals on that group. Ellen Leaver and the Minister confirmed to the respective points that details would be announced next week. 

Stephen Montgomery asked that ‘should’ be replaced with ‘must’ – and that this also applied to other recommendations.

The group agreed Recommendation 1 subject to the comments made being reflected where relevant in the next version that would be circulated. 

Recommendation 2

The Minister stated that Recommendation 2 proposes that the issues raised, such as reliefs and tax rates, should be taken into consideration when non-domestic rates policy options are developed for Budget 2024-25; and that these decisions will be further informed by the deliberations of the Tax Advisory Group. He asked for comments.

Stephen Montgomery asked that ‘should’ be replaced with ‘must’. Stacey Dingwall stressed the importance of the Small Business Bonus Scheme (SBBS) to the Federation of Small Businesses’ members, and suggested that government’s commitment around SBBS be reiterated in this recommendation. David Lonsdale equally called for government’s commitment around the Higher Property Rate to be restated here. He also called for a commitment to a uniform NDR (i.e. no local rate-setting) and no new ad hoc levies or supplements for the duration of this parliament. Martin Clarkson queried whether the recommendation should be more open-ended in time and not simply focus on the next Budget. David Melhuish noted that members of the Scottish Property Federation often raise issue with having to pay NDR when they renovate a property. The Minister stated the importance of ensuring that NDR supports investment and helps grow employment. Stephen Montgomery explained that the return on investment has to outweigh the cost of investing, adding that this is easier for bigger business. He also noted that in hospitality, small businesses face a barrier to financing and therefore to invest in property improvements. Paul Togneri stated that he agreed with this and noted it was a particularly acute issue for the hospitality sector.

Anouk Berthier queried whether Business Growth Accelerator relief (BGA) should be more targeted for instance looking to England’s forthcoming improvements’ relief, or to smaller properties. Stephen Montgomery replied that policy should encourage those with a barrier to investment more. David Melhuish noted that the UK Government’s approach to improvements relief may be too narrow in terms of the focus on the need for the occupier to be the same before and after the improvement works. He also stated that times have changed since the Barclay Review’s recommendation and it may be time to review BGA relief to ensure it continues to support investment. Martin Clarkson gave an example of BGA relief incentivising investment in Scotland including on bare sites.

Les Robertson stated that within the context of the Fiscal Framework for Local Government and the New Deal with Local Government, the report should highlight local government’s calls for greater local fiscal empowerment over NDR. Jonathan Sharma agreed that the Fiscal Framework for Local Government should be acknowledged. He also confirmed that while COSLA has not called for return of NDR to local government, it is keen that this feature in future discussions as part of the Fiscal Framework including the opportunities and risks of doing so for Local Government, and ratepayers including business. The Minister pointed to Recommendation 6 and noted that administrative efficacy is an important part of local autonomy; he also stressed that Scottish Government was keen to do things ‘with’ rather than ‘to’ Local Government. 

David Lonsdale stated that the devolution of NDR to Local Government would not be welcome by business. 

The group agreed Recommendation 2, subject to the comments made being reflected where relevant in the next version that would be circulated. 

Recommendation 3

The Minister explained that Recommendation 3 proposes that Scottish Government should work with assessors and other stakeholders to identify what, if any, further improvements can be made to the transparency of valuations and the information provided in valuation notices; and that it recognises that proposed changes would need to be consulted on. He asked for comments.

Heather Honeyman highlighted the importance of a continuous and efficient flow of information to assessors and asked whether this point could feature in the report. David Melhuish noted administrative improvements may be required, as some ratepayers had not received Assessor Information Notices (AINs). Pete Wildman explained that Scottish Assessors’ aim was to see information coming to them efficiently, and welcomed further dialogue on what the best method would be to achieve that. David Lonsdale stated that he would be happy to encourage his members to respond to AINs. 

The group agreed Recommendation 3 being reflected where relevant in the next version.

Recommendation 4

The Minster stated that Recommendation 4 recognises that Scottish Assessors have already indicated they will continue to engage with sector representatives, including those in this group, where appropriate, on valuation methodologies and consider any evidence provided to support a case for change. The group had no comments on this recommendation and agreed it.

Recommendation 5

The Minister stated Recommendation 5 acknowledges the questions raised around the evaluation of Empty Property Relief (EPR) and sets out the commitment undertake an initial review of Empty Property Relief before the next revaluation in 2026. Alan Puckrin noted we would need to be realistic about what any early evaluation of the devolution of EPR will actually show. For instance, most councils had not changed their policy. Alan Puckrin also noted that there was no proposal to review the appeals process prior to the next revaluation and queried whether that should be included. The Minister invited further comments on this point but none were made. 

Ellen Leaver confirmed that this recommendation should be clear that the focus was on the ‘devolution’ of EPR.  

David Melhuish noted he expected Edinburgh Council to adopt a different policy on EPR next year and agreed with the view that an evaluation before the next revaluation may not yield a full picture. Alan Puckrin noted that the terms of reference of the evaluation would be critical. 

Recommendation 6

The Minister explained that Recommendation 6 states that Scottish Government and Local Government should jointly give further consideration to the digital administration of the Non-Domestic Rates system, and that these discussions should take place under the auspices of the New Deal with Local Government. Stephen Montgomery called for the word ‘should’ to be replaced with ‘must’ and stressed that any reform should be supported by good systems in order for them to be successful. The need for benefits to the end user of was also highlighted. The group agreed to Recommendation 6 subject to comments being reflected where relevant in the next version.

Recommendation 7 

The Minister noted Recommendation 7 stating that the sub-group should continue to meet to consider progress on the above recommendations, discuss any emerging issues or identify future areas of joint work with business on non-domestic rates. He stressed that he was keen that this sub-group become a standing group allowing for continuous engagement and that it meet regularly to consider short, medium and longer term matters. He asked the sub-group if members wished to continue meeting.

David Lonsdale welcomed the opportunity to meet regularly to inform government on his members’ position. He queried whether a meeting every two months was excessive, and also noted that it would be useful to meet just before Ministers come to a decision on the Budget. He asked about the Scottish Ratepayers’ Forum and whether it would continue to exist. Pete Wildman stated he wants to see this continue given it focuses on the technical side of the valuation process. The Minister welcomed meetings with enough regularity to drive progress in the context of the First Minister’s ambitions including those set out in the New Deal for Business. He suggested that the next meeting should take place early September and offered the group the option of a smaller number of members convening if the sub-group wished. He also confirmed that within the context of a partnership approach, officials could reach out to members and have an initial conversation over the summer over the work programme.  

David Melhuish also voiced support for regular meetings to keep the momentum going, noting that rates and planning are the two main issues raised by the Scottish Property Federation’s members. Stephen Montgomery stated his support for regular meetings and offered to be involved in these conversations. Les Robertson also said he was happy to be involved. 

Stacey Dingwall queried whether there could be mechanism between meetings for members to share information such as the different ways councils refer to the Small Business Transitional Relief and the confusion this causes business. Murray Lamont agreed that such a mechanism would be helpful. 

The Minister asked if the sub-group was content with the recommendations that had been made subject to the points made in the meeting being taken on board. The sub-group agreed. The Minster thanked the sub-group for its contributions, noted that a revised paper would be circulated to the group the next day and confirmed that it had agreed to reconvene in September after parliamentary recess.