Scotland needs a new approach to business rates


This morning I had the chance to speak to a business audience from the Kinross-shire Partnership. My message to them was clear - we have seen real progress since the dark days of the recession. Now we need to take action to ensure that we are supporting businesses as they grow. I have called for a review of business rates to ensure that we do not penalize companies who choose to invest in their premises. 

This is what I had to say:

Thank you for inviting me to address your partnership this morning.  It is a double pleasure for me. Firstly, to be back at Loch Leven Larder which is a pioneer in the development of a quality food and retail experience on the shores on Loch Leven.  So many others have followed which is a testament to the work of Robin and his family.

Secondly, it is a pleasure as I almost rolled out of my bed to be here.  Having lived on the other side of Benarty Hill for the last 18 years and in Strathmiglo for the first 18 years of my life I have seen this area grow and evolve into a good place to work, rest and play - if I am permitted to steal a slogan from someone else.

Sometimes we take for granted what we have on our own doorstep and it takes someone from afar to capture it.

Just this week Countryfile on the BBC featured the Loch and its trail.  The images they used were outstanding, reflecting the true beauty of the area.

The combination of heritage, nature and service is what makes this area special. 

The royal connection, the reserve and the growing quality service between the cafes and the paths makes it a special place to be.

You can walk, run, fish, bike, fly, shoot, bird watch, ride horses around the loch and you can eat – eat until your heart is no longer content.  It is an outdoor destination which is easily accessible by hundreds of thousands of people.

 

And the Partnership is well placed to exploit the potential of those assets.  The scooters, the support for local organisations, the driving energy for change and probably, most important of all, the networking to make the business community thrive through partnership. 

It is what makes this area a successful place that I want to focus on this morning as I want the rest of the country to benefit from the Kinross-shire experience.

But firstly a warning.  If I may be political for a moment.

Whatever our views on independence for Scotland it is now imperative that we move on. We have had the debate and we made our decision.  What we don't need is a government or parliament to be focused on seeking opportunities to show the Scottish people that they were wrong after all.  We need unity not division.

We have managed to bring the economy out of recession across the United Kingdom. Growth is vying with the best in the G8, wages are outstripping inflation and employment is up by 170,000 in Scotland since 2010.

Just yesterday we saw new figures on the growth in the number of new businesses in Scotland which is positive news.

We have got that growth because of the difficult steps we took on getting our deficit under control, creating the environment for growth with lower corporation tax, incentivizing work by cutting taxes for those on low and middle incomes, NIC allowance, investment in renewables and green technologies and cutting regulation.  We also boosted technology with a £1 billion investment for broadband and mobile infrastructure with a disproportionate investment in Scotland.  More of that later.

We took the necessary steps to give confidence to the markets that Britain was a good place to do business.  And we provided the conditions for business to generate the jobs and taxes to pay for the public services we all value.  We reshaped that economy to make it sustainable, environmental and innovative.

So we have made economic progress which needs nurtured.

 

I wouldn't advise that you spend too much time watching Holyrood TV but if you do you may have observed that economy debates are rarely focused on the business side of the argument.

But business is not an evil that must be controlled. Business is an opportunity, a positive aspect of the way we run our lives.  The negative overtones of economic debates in Scotland only foster an anti-business environment

With Labour veering off to the left and the SNP racing to get there first that anti-business sentiment can only get worse.

 

We need to aim for a combination of economic discipline and social justice for Scotland.

There are some things I would soon forget about our time in government but our decision to put country before party for economic recovery is not one of them.

I will anchor our political purpose in the centre ground.  It will be radical and liberal but it will be firmly in that centre ground.

 

With the Holyrood elections only six months away tomorrow I want to set out my ambitions for the Scottish Economy.

I will set out in the coming months more detailed policies but I want to give you a sense of my ambitions today with a specific proposal that I think business will welcome.

My first ambition is to create an environment in Scotland where business is seen as a positive attribute not a negative threat. That requires a lead from politicians to encourage positive attitudes.  I will seek every opportunity to talk about the great businesses that are growing in Scotland.  Businesses like Loch Leven Larder.

My second ambition is that economic opportunity should be available to all parts of the country. To achieve that we need the investment in infrastructure both transport and new communications.  That means investing in fibre superfast broadband but also 4G mobile coverage.  It is clear that business needs modern and fast communications to compete with the best. Yet the roll out of this new digital infrastructure is too slow.

My third ambition that I want to set out today is that we need a business taxation regime fit for the modern age.  My party is already committed to localizing business rates so that the connection between the businesses that pay the rates and their local council can be improved.  But business rates are a fixed cost that are static irrespective of the profitability of the business or the state of the wider economy. Because it is based on property values rather than business profit that would be difficult to change.  What we need is a deep rooted review of business rates. 

Root and branch reviews are taking place in England and North Ireland and we need a similar review here too.

The Scottish Government missed the opportunity to look at how a property tax could work for business – perhaps based on the value of the land rather than the rental value of the property.

When I speak to the FSB or the CBI, they make the point that if a business installs renewable energy generation or otherwise improves the efficiency of its building, it immediately raises the rental value of the property and its business rate bill goes up.

So the review I want to see will look thoroughly at how a land value basis for business rates can help give incentives to companies that invest in their properties.

That has been missing from the Scottish Government’s review of business rates. It wasn’t allowed to be discussed as part of the review of Council Tax which is due out shortly.

The review should also look at the overall burden of taxation and the need to flex with the prevailing economic conditions.

My final ambition is that we remain an outward looking nation so that business is free to trade and the nation is an active participant on the global stage.

It is in the national interest to remain in Europe.

Prime Minister Gladstone saw the necessity to seek peace rather than conflict in Europe.  A generation ago there were nuclear weapons on the soil of some of our European partners pointed at Britain.

Yet now we are sitting round a table together. Were that the only case for staying in the EU it would be pretty overwhelming.

But it is not the only case.

The economic case for Europe is overwhelming too.

The EU provides the market for 46 per cent of Scotland’s international exports – worth £12.9 billion in 2013 – and more than 300,000 jobs are estimated to be associated with trade with member states.

So when the EU Referendum comes it is vital that all pro Europeans come together, stand together and win the case for our membership of the European Union together.

We must put our differences aside for the greater good. 

And I would urge business to speak up for Europe and do so early. Your positive, compelling arguments for trade, business and jobs will be important to convince people of the merits of our continued membership.

So thank you for the opportunity today to set out some of the issues we need to explore so that businesses like yours can growth and flourish.


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