The Forum of Private Business has expressed its concern to the Scottish Government over proposals to massively reduce non-domestic rate relief, describing the cut as ‘too sharp and too quick’.
The Forum – a not-for-profit business support organisation – wrote to the SNP’s Minister for Local Government and Planning, Derek Mackay, asking him to reconsider the proposals.
Alex Jackman, the Forum’s Senior Policy Adviser, said the move – that would see relief reduced from 50% to 10% – would be particularly harmful to small business in the current economic climate.
“The Forum has supported the need for new and existing businesses to be able to access affordable properties, and rate relief has in the past led to situations where rents are kept artificially high, excluding some of those businesses from accessing premises,” he said.
“However, we also recognise that there is a balance to be struck. There are many landlords that are actively pushing tenants to move through a variety of means, including substantial rent reductions but they are faced with a clear lack of demand.
“I am aware that the Scottish Government is attempting to stimulate this demand through a 50% business rate discount for qualifying businesses, an announcement we welcome wholeheartedly. However, it is not yet a proven policy to stimulate the kind of levels needed.
“To that end, we continue to have concerns that the proposed 50% to 10% rate relief decrease is too sharp and too quick in the current climate. We are concerned that whilst we were free to – and did – make representations on the issue, no formal consultation was carried out.
“This is particularly concerning given the suggestion in a letter we received in July that we would be able to contribute to a wider consultation on business rates. Given that the changes to Empty Property Rate Relief have been made prior to this consultation being published – and which we have learned will fall outside the scope of this review – and given further that no Business Regulatory Impact Assessment was carried out, we are a little concerned that the move has not been fully thought out.
“In the current economic climate it should be those landlords that are not proactively seeking to rent out properties because of the Empty Property Rate Relief that should be targeted, rather than the proactive ones that simply cannot find the tenant despite dropping rental prices.”
The Forum has now asked the Scottish Government to reconsider its policy. Added Jackman: “If an owner is actively marketing a property at a realistic or slightly below market rate we feel they should continue to merit the full 50% EPRR, or at least a much less significant drop.”