New Deal for Business Non-Domestic Rates Sub-group minutes: 24 November 2023

Attendees and apologies

• Colin Wilkinson, Scottish Licensed Trade Association (CW)
• David Lonsdale, Scottish Retail Consortium (DL)
• David Melhuish, Scottish Property Federation (DM)
• Heather Honeyman, Scottish Assessors Association (HH)
• Jonathan Sharma, Convention of Scottish Local Authorities (COSLA) (JS)
• Leon Thompson, UK Hospitality Scotland (LT)
• Les Robertson, Institute of Revenues, Rating and Valuation (LR)
• Martin Clarkson, Gerald Eve (MC)
• Pete Cheema, Scottish Grocers Federation (PC)
• Peter Wildman, Scottish Assessors Association (PW)
• Brian Rogan, CBRE (BR)
• Stancey Dingwall, Federation of Small Businesses (SD)
• Stephen Montgomery, Scottish Hospitality Group (SM)
• Paul Togneri, Scottish Beer and Pub Association (PT)

Scottish Government

• Tom Arthur, Minister for Community Wealth and Public Finance (TA)
• Scottish Government Officials

Apologies

• Ellen Leaver, Scottish Government
• Marc Crothall, Scottish Tourism Alliance
• Alan Puckrin, Local Authority Directors of Finance
• Liz Cameron, Scottish Chambers of Commerce

Items and actions

UK Autumn Statement and Budget 2024-25

DL stated that the Autumn Statement had been underwhelming, with few measures which will actually reduce the cost of doing business in Scotland in the near term, and that the downgraded growth forecasts were disappointing. He noted the heavy uplift in the National Living Wage and consequences this would have for the largest private sector employer in the country, retail. He noted that one positive was a reduction in employee National Insurance Contributions, which may help consumer spending in the new year. He further stated his disappointment that the headline business rate had not been reduced, and noted that many members would see large uplifts in their rates next year in England. He noted that real terms retail sales have declined in each of the last 4 months and called on Scottish Ministers to provide support, even if they were not able to freeze the business rate. On Retail, Hospitality and Leisure (RHL) relief, DL stated he was keen for equal application in Scotland, and he called for the Higher Property Rate to be reduced. 

MC called for targeting assistance to the RHL sectors, and for a freezing of the poundage and of the supplements in Scotland, noting this would make Scotland competitive. TA asked for further views on competitiveness with England.   

SM stated that hospitality is in ‘desperate need’ of the relief in England being passed on in Scotland. He stated the example of a member whose costs are going up £1.8m due to the rise in living wage, and noted the rise in energy costs, adding there had been a 66% rise in insolvencies in the UK in the hospitality sector. He called for relief in the near term and further reform of Non-Domestic Rates (NDR) in the long term.

SD stated FSB were happy with three things in the Autumn Statement – skills, rates and National Insurance Contributions. She echoed SM’s calls for RHL relief to be replicated in Scotland. 

DM called for rates not to go up by inflation given the high figure and stated the increases in England would have an impact across the board. He noted the extension from 5 to 10 years of the Freeports announced in England, stated that councils were seeing the Freeport relief offer as an incentive for business to move in, and called on Scotland to align with England on the timescales. TA noted that this would be considered, and explained that when previously speaking to committee in Parliament on Land and Buildings Transaction Tax, he had stated that part of the underlying rationale for Green Freeports was that the offer align with England. He invited DM to follow up in writing with any further views on this.

PC called for relief to be replicated in Scotland and said this was a critical time. 

PT called on SG to pass on the 75% relief, particularly for hospitality businesses. He stated the increase in National Living Wage (NLW) would have an impact and called for a 35p multiplier for hospitality businesses noting that regardless of the 75% relief, the sector would end up in the same position at the end of the year with high rates. He stated SBPA would write early next week to Ministers with their budget asks. TA acknowledged the Chancellor had stated relief would be for one year only, and emphasised the need for the group to consider more meaningful, long term reform to NDR. 

BR noted apologies from LC for the meeting. He called for a lowering of the tax rate, or a freeze if possible, to give Scotland a competitive advantage on England. He noted the hospitality sector is concerned about operating costs, profitability, and called for relief or a lower tax rate for this sector. He stated the industry really need assistance at the moment, but noted the relief in England is capped per business at £110,000 and that the offer may therefore not in fact benefit large businesses substantially. 

LT stated his members had reported that if they did not get relief, they were considering job losses or closing some of their properties. He called for the 75% relief to be passed on to assist with business survival. He noted the rise in the NLW and the major implications this would have for businesses. He noted that consumer confidence remains low and that prices including energy costs may still rise. He stated that he would be providing a letter to Ministers, in particular once he had discussed the implication of NLW with his members in further detail. 

TA welcomed any further information on the impact of NLW.

LR stated that from an administrative point of view the English reliefs would be easy to implement if introduced in Scotland. He highlighted the rise to NLW was lower than the Scottish Living Wage - and voiced disappointment that business did not appear to be paying this. TA noted employment law is reserved and this posed challenges.

CW called for a freeze on the Uniform Business Rate. He stated that the hospitality sector’s rateable values were often higher in Scotland than England and therefore the claim that the poundage was the lowest in the UK did not always ring true with his members. He added that he echoed the views that had been expressed by others in the meeting. 

SM stated they had devised a hospitality model on a profit and loss sheet comparing this year and last year’s costs that he would share. He queried whether the increase in the NLW would be passed on to salaries on the higher end of the scale in order to maintain the differential between low and high skilled work.

JS stated COSLA had no specific ask in term of today’s discussion but that longer term reform to NDR still needed to be considered. 

BR stated CW’s point on rateable values in the hospitality sector in England had been well made – he noted the tone date was different in England and Scotland and this may explain the difference in part. He suggested this may have created a ‘double whammy’ in Scotland given the lack of relief.

TA asked members for further comment, and thanked members for attending. He noted the Budget would be published on 19 December.