Business Rate

Oral Answers to Questions — Scotland – in the House of Commons at 1:44 pm on 3rd July 1996.

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Photo of Mr Phil Gallie Mr Phil Gallie , Ayr 1:44 pm, 3rd July 1996

To ask the Secretary of State for Scotland what representations he has received on returning the setting of business rate poundage to local authorities; and if he will he make a statement. [34174]

Photo of Mr George Kynoch Mr George Kynoch , Kincardine and Deeside

The Labour party is committed to returning responsibility for the setting of business rates to local authorities.

Photo of Mr Phil Gallie Mr Phil Gallie , Ayr

Does my hon. Friend agree that the drive to a uniform business rate has been at the behest of commerce and industry in Scotland—the job creators? Does my hon. Friend further agree that the abandonment of the uniform business rate would mean job losses and company bankruptcies? That would be the Labour loss for Scotland.

Photo of Mr George Kynoch Mr George Kynoch , Kincardine and Deeside

My hon. Friend is right. Anything that affects the competitiveness of Scottish business would be bad for it and bad for employment in Scotland. Under the uniform business rate, companies have saved £1.4 billion in the five years since 1990. Returning the rate to local authority control would cost Scottish business. Coupled with the tartan tax proposed by Labour, it is no wonder that the new chairman of the Scottish chambers of commerce has stated that such a proposal is utter folly.

Photo of Mrs Maria Fyfe Mrs Maria Fyfe , Glasgow Maryhill

Why should a Scottish parliament have less control over financial affairs than the smallest district council in Scotland?

Photo of Mr George Kynoch Mr George Kynoch , Kincardine and Deeside

As I understand Labour's proposals, a Scottish parliament would be responsible for raising tax. A Scottish parliament would be funded from south of the border and it is likely, according to the constitution unit, that such a parliament would have to raise taxes or make a significant reduction in services. Tax increases, coupled with any uniform business rate increase, would make Scottish business less competitive. The hon. Lady does not understand the competitive situation of Scottish business. The sooner she does, the better for Scottish business and the Scottish economy.

Photo of Margaret Ewing Margaret Ewing , Moray

I realise that the Minister is trying desperately to embarrass the Opposition parties, but does he agree that the uniform business rate, because of the valuation arrangements, means that small and medium-sized Scottish enterprises have been paying £1,200 million per annum more than their English counterparts? Should not that difference be immediately eradicated? It is very much a London levy.

Photo of Mr George Kynoch Mr George Kynoch , Kincardine and Deeside

As the hon. Lady knows, the valuation system is now harmonised north and south of the border.

Photo of Margaret Ewing Margaret Ewing , Moray

indicated dissent.

Photo of Mr George Kynoch Mr George Kynoch , Kincardine and Deeside

The hon. Lady shakes her head. I have said on more than one occasion that if anyone can find positive evidence that the system is not harmonised, I shall be happy for the assessors to examine the situation. One problem is that local authorities in Scotland spend 30 per cent. more per head of population than their counterparts south of the border and must therefore be funded to that extent. We have achieved the level playing field north and south of the border that Scottish business wants, and it has welcomed that development. Even the Federation of Small Businesses has said that it does not want the departure from the uniform business rate that the Opposition parties are proposing.

Photo of Mr John Marshall Mr John Marshall , Hendon South

Does my hon. Friend agree that getting rid of the uniform business rate would be very unfair on business, which would have no say over expenditure by the local council? Is not the hon. Member for Glasgow, Maryhill (Mrs. Fyfe) to be congratulated on admitting that a Labour-controlled council and a Labour Scottish Parliament would like to spend more and tax more?

Photo of Mr George Kynoch Mr George Kynoch , Kincardine and Deeside

Yes, my hon. Friend is right. The Opposition, and particularly the Labour party, are intent on trying to find back-door ways of raising taxation so that they can spend even more. At this year's local authority budget setting, one member of the Labour party—the hon. Member for Dundee, East (Mr. McAllion), who seems to be able to stick to his guns—called for an extra £395 million to be spent by local authorities. That money must come from somewhere. I suspect that the Opposition are considering all types of routes to find it, including returning control of the uniform business rate to local authorities and, of course, implementing the proposal for a tartan tax.

Photo of Mr Archy Kirkwood Mr Archy Kirkwood Liberal Democrat Chief Whip

May I focus the Minister's attention on the problems faced by small retail businesses in market towns across the length and breadth of Scotland? Irrespective of whatever changes there have been and whoever is levying the tax, there are real problems for small family businesses in market town high streets. Will the Minister examine the factors involved in levying rates to determine whether some element of the social and economic context faced by small businesses can be taken into account when setting the assessments on which they pay rates?

Photo of Mr George Kynoch Mr George Kynoch , Kincardine and Deeside

The hon. Gentleman will be aware that we are currently consulting on village shops to try to help local post offices and shops in rural areas. As a part of harmonising the situation north and south of the border, rating authorities may now remit any rate in cases in which ratepayers would otherwise suffer hardship or in which it is in the interest of council taxpayers to do so. So there is some flexibility in the hands of the councils.