Fife Council has raised concerns that the Scottish Government’s proposed changes to business rates, announced in its Draft Budget for 2016-17, will undermine the Scottish economy, and hamper the industrial sector.
Cllr Lesley Laird, Fife Council’s Depute Leader and Executive Spokesperson Economy and Planning, has written to John Swinney, Finance Secretary and Deputy First Minister, welcoming the review, but outlining her concern that the Scottish Government is proposing to reduce non-domestic rates empty property relief on industrial buildings, and to increase the large firms supplement.
Cllr Laird said: “Fife Council is pleased that the Scottish Government has listened to our call for a review of business rates. We hope that this review of non-domestic rates will result in radical improvements. However, the fact that the Scottish Government has also announced some immediate changes affecting larger businesses and industrial properties is causing alarm, and should not proceed ahead of the comprehensive review.
“Business rates have become a major cost pressure for many firms, and a reduction in the reliefs available to the owners of empty business properties, particularly the proposal for industrial buildings, will negatively impact on Fife businesses and the wider economy. Our analysis shows that this will cost Fife businesses in excess of £4.1 million per annum.
“In challenging economic circumstances, it is more important than ever to maintain provision of existing business space and encourage the speculative construction of new space to support and attract investment. We have already seen the very real impact of similar reforms to vacant relief in the office sector, where the value of office properties in some parts of Scotland has collapsed. Local evidence from the mid-Fife area shows that the fall in value of office buildings has been in excess of 75% in some cases.
“These proposals do not sit well with the Scottish Government’s stated aims of supporting growth, jobs and exports. Property agents and the business community have already asserted that these proposals will bring an end to the speculative construction of industrial and commercial space, not just within Fife, but throughout Scotland.”
Cllr Laird added that the rise in the large firms rates supplement is also alarming: “This needs to be a comprehensive and fair reassessment of the rating system, but the proposal to double the large business supplement from 1.3p to 2.6p will cost Fife businesses £5.3 million, based on current occupancy levels. This supplement affects an estimated 12% of Fife’s non-domestic property stock. As well as the immediate financial impact, Fife’s business community has also voiced concern that this will affect Scotland’s relative position compared to the rest of the UK, with a negative impact on our ability to attract and retain international investment.
“Business rates are an issue that Fife firms repeatedly raise with me. There is great interest in the planned review among the business community, who recognise that the current system is hampering economic development. This is why Fife Council has requested that all non-domestic rates reform is postponed until after the review has taken place.”
As well as scrutinising these plans, Fife Council is also seeking clarification on proposed timescales for the rates revaluation review.