Part of the debate – in the Scottish Parliament at on 10 October 2019.
I am pleased to open the debate on the general principles of the Non-Domestic Rates (Scotland) Bill, which was introduced to Parliament on 25 March 2019. I will set out the background to the bill and then move on to its substance, although I will keep my remarks short because I recognise that members want as much time as possible to offer their views.
The Government is committed to using the limited economic powers at our disposal to create a tax environment that supports economic opportunity. As Scotland’s second-largest tax, non-domestic rates plays a key role in balancing the need to deliver a competitive and sustainable taxation environment, while ensuring that we have sufficient resources to fund the public services that we all rely on.
The remit of the independent Barclay review was to ensure that the rates system supports business growth and long-term investment, as well as better reflecting changing marketplaces. The Barclay review made 30 recommendations. As our implementation plan outlined, we accepted the majority of the recommendations and have already made moves to implement them, including the recommendations on the business growth accelerator, which was warmly welcomed by the business community, and the fresh start relief to support town centres.
We said that we would introduce primary legislation by 2020 and the bill that we are debating today fulfils that commitment. The bill contains meaningful reforms to the rates system, with the notable inclusion of a three-year revaluation cycle. That has been welcomed by many, including the Royal Institute of Chartered Surveyors and the Scottish Retail Consortium, because it delivers justice by more closely aligning valuations with the market. The bill also gives new powers to assessors, local authorities and ministers to improve the administration of the system and to tackle tax avoidance.
A lot of hard work has been undertaken by a range of stakeholders prior to today’s debate. I pay tribute to the members of the Barclay implementation advisory group, the sub-groups that looked at billing and appeals and the working group that considered sports club relief guidance. Members of those groups have given, and continue to give, freely of their time to help ensure that these rates reforms—subject to the will of Parliament—can be implemented as efficiently and effectively as possible.
I turn to what is perhaps the most important area of the bill, which is the appeals system. Our proposed reforms to the appeals system are the most important and ambitious of the reforms that we are implementing, but they are also the most complex. If we fail to reform the appeals system effectively, we risk negating any benefit from all the other proposed rates changes.
I understand that the recent reforms to the appeals system in England have delivered a system that is bogged down in bureaucracy and red tape, resulting in possibly millions of ratepayers being unable to access a fair rates hearing. We must learn from that and make every effort to get our reforms right.
The report of the appeals sub-group, which was established to inform advice to the Scottish Ministers, was published today and offers views on the potential design of a new appeals system.
I received the report this morning and a copy has been sent to the lead committee considering the bill. I look forward to reading the report and reflecting carefully on its contents.
It is fair to say that not all the provisions in the bill have been universally welcomed; I refer specifically to the removal of charitable rate relief from mainstream independent schools. I recognise that the independent school sector is a well-established part of the Scottish education system that promotes choice for parents. However, we agree with the Barclay review that the current difference in rates treatment between independent and local authority schools is unfair and must end. I stress unequivocally that that is a change to rating and not to charity law.
I am grateful to the convener and members of the Local Government and Communities Committee for their scrutiny of the bill at stage 1. I welcome the committee’s support for the general principles of the bill. This morning, I wrote to the committee to respond to the various issues that were raised in its report. I will comment briefly on some of those points.
I welcome the committee’s recognition that the bill’s provisions aim to address weaknesses in the current appeals system. I agree with the committee’s view that getting the detail of the new appeals process right will be critical in enabling the move to three-yearly revaluations. That is why I wrote to the committee on 3 September to say that, towards the end of this year, we will produce a set of illustrative draft appeal regulations, which will allow the committee and other stakeholders to see and comment on our detailed draft proposals.
The committee considers that fees should be introduced at both the proposal and appeal stage of the new appeals process. Although I have yet to reach a conclusion on the matter, I welcome the committee’s position and views. I will reflect further on the matter, and I am sure that I will also be informed by the comments of the appeals sub-group.
I will touch briefly on assessor and local authority information-gathering powers, on which the committee supports the bill’s overall direction of travel. It is important to say that the issue is not all one-way traffic. Assessors accept that they need to get better at providing information to ratepayers in the first place to help them better understand how the valuation assessment has been derived.
The committee’s report comments on the divergence of views expressed on some key issues, such as the level at which civil penalties have been set. We recognise that, and I look forward to further discussions on those important issues during the bill’s amending stages.
I will end there to give back some time to the debate.
I move,
That the Parliament agrees to the general principles of the Non-Domestic Rates (Scotland) Bill.