Minister unveils Scottish business rates rise capped for 9,500 more firms
(about 2 hours later)
Finance Secretary Derek Mackay is due to announce further support for businesses later in a bid to address the growing row over rates bills.
Scotland's finance secretary has moved to quell concerns over rapidly rising business rates by capping increases for an additional 8,500 firms in the hospitality sector.
In a statement to MSPs, he is expected to outline additional help for firms in key regions and sectors of the economy.
The 12.5% cap on any rise will also apply to more than 1,000 office premises in Aberdeen and Aberdeenshire.
An assessment of how much each Scottish firm will pay in non-domestic rates is under way, to take effect from April.
In a statement to Holyrood, Derek Mackay also outlined a package of relief for the renewables sector.
The Scottish Conservatives have warned of a "crisis", saying some businesses facing large increases could close.
The Tories said the government had been "asleep at the wheel" over the issue.
The announcement on business rates comes as MSPs are set to vote upon Scotland's income tax package for the year ahead.
An assessment of how much each Scottish firm will pay in non-domestic rates is currently under way, and is due to take effect from April.
The revaluation of how much firms have to pay is being carried out by independent assessors, funded by local councils. The Scottish Assessors Association has published provisional values, with the finalised figures to be sent out in March before they take effect in the new financial year.
The last revaluation in Scotland was carried out in 2010 - and there has been considerable disquiet from companies who have seen big increases in the amount they have to pay.
The last revaluation in Scotland was carried out in 2010.
Criticism has been particularly loud from the tourism industry and in the north-east, where valuations fixed in early 2015 have not taken account of the subsequent oil sector slump.
The Scottish government has insisted that action it has already committed to will ensure that seven out of 10 business properties will pay the same rates or less next year, with half paying nothing.
There has been similar controversy over revaluations elsewhere in the UK.
Speaking ahead of his statement, Mr Mackay said: "I have set out a competitive package of measures to give small and medium enterprises the security and confidence to grow in these tough economic times.
Mr Mackay told MSPs that almost 8,500 hotels, pubs, restaurants, cafes and other businesses in the hospitality sector would benefit from a cap on any increase to bills of 12.5%.
"Under the Small Business Bonus Scheme 100,000 properties will pay no rates at all next year and a further 3,500 properties will benefit from 25% relief. This package means around 9,000 properties will be up to £7,000 a year better off than their equivalents in England.
He also confirmed appeals against revaluation would be free in Scotland, unlike in other parts of the UK.
"Additionally we are cutting the tax rate that applies to a property's rateable value by 3.7% to 46.6p in the pound so even some properties with values going up will see their bills go down. And to help larger firms we have increased the threshold for the large business supplement, meaning that 8,000 fewer premises will pay it."
And he pledged early government action on the findings of a review into business rates, which is due in July, and said he would work with local authorities to introduce a local rates relief scheme to support key sectors or localities.
He later told the BBC's Good Morning Scotland programme that it was "fair to assume" he would take action to help the tourism sector and businesses in the north east of Scotland, which have been particularly critical of the revaluations.
Mr Mackay said: "Although councils retain all the revenue from business rates, and have the power to offer rate reductions, it has become clear that there are some sectors and regions where the increase in rateable values is out of kilter with the wider picture of the revaluation.
'Kicking and screaming'
"I have listened and decided that we will act nationally to tackle the impact."
Conservative finance spokesman Murdo Fraser said businesses need "real help" from the Scottish government.
'Positively dizzy'
"If they don't take meaningful action we face seeing the Scottish economy suffering as many businesses across Scotland will be left with no choice but to close," he warned.
The announcement on business rates came as MSPs prepared to vote on Scotland's income tax package for the year ahead.
Mr Fraser also said: "Derek Mackay was warned months ago about the damage that these rates increases could cause, but it's taken until now for him to do anything about it.
Opposition parties welcomed the business rates relief measures but questioned where Mr Mackay had found the money to fund the package - with the minister saying it would be come from the non-domestic rates pool.
"He's been dragged to parliament kicking and screaming after we forced him into discussing the issue with an urgent question.
The Scottish Conservatives said Mr Mackay had been denying for weeks that there were problems with the business rates revaluations.
"It was clear that a crisis was emerging but instead of acting the SNP sat back and tried to pretend that it had nothing to do with them."
The party's finance spokesman, Murdo Fraser, claimed it was "all too typical from a government who falls asleep at the wheel and only wakes up when it crashes into a wall".
Analysis by Douglas Fraser, BBC Scotland business and economy editor
Scottish Labour's Jackie Baillie also welcomed the changes, but added that she was "positively dizzy with the speed of the u-turn" from Mr Mackay.
Derek Mackay has been listening, and he's going to respond. The finance minister couldn't do otherwise. The noise has been deafening from those who see their business rates bills going up.
And Scottish Green MSP Andy Wightman, said the "last-minute package of measures" underlined the need for "proper scrutiny" of non-domestic rates, which generate almost £3bn a year for council services.
The voice of self-catering tourism businesses is the latest to join the chorus of disapproval.
Meanwhile the Scottish Tourism Alliance - which had been campaigning for a reversal in the proposals to increase business rates - said Mr Mackay's announcement was "hugely encouraging news".
Criticism seems to be particularly loud from the tourism industry, reflecting what independent assessor have seen about relatively strong rental valuations. That includes many small firms.
A spokeswoman said: "We know that it will be welcomed by tourism businesses across Scotland, businesses which yesterday were facing serious financial challenges post-April and in many cases, closure and the loss of many jobs.
Unhappiness is also notably strong in the north-east, where valuations fixed in early 2015 have not taken account of the subsequent oil sector slump.
"Today's announcement underlines and highlights the government's support for our industry and acknowledges the importance of tourism as the main economic driver in Scotland."
Small firms and the north-east are at the core of the SNP.
This is not just a Scottish government problem. A similar revolt has been brewing south of the border, also stoked by newspaper campaigning.
The difference is that in England, there is transitional relief - tapering the increases over five years. That comes at a cost of £3.6bn.
Derek Mackay sounded unlikely to follow that route, when interviewed on the BBC's Good Morning Scotland programme. He says it would be unfair to phase in the lower bills for those with reduced valuations, which is to assume that transition is not funded from the government's general funds, but from other rate-payers.
Instead, he was talking about special measures for sectors (tourism) and regions (the north-east).
There are already special measures to take small firms out of business rates, part funded by an additional levy on big properties. And with more interference in the integrity of the rates valuation system, it looks ripe for major reform.
To divert some of the criticism, a review is already under way, led by former Royal Bank boss Ken Barclay. The evidence so far does not suggest anything truly radical is likely to come from it.
A property, valuation-based tax looks likely to stay. Revenue based taxation would be a very difficult transition.
Perhaps more will be done to standardise exemptions at the bottom end, and to allow for social enterprises.
But remember: if the government is raising the same amount of money from business rates - £2.8bn this year - all the extra bills making the headlines should be cancelled out by lower bills elsewhere.
It's that firm and familiar rule of tax reform - those who lose make a loud noise about it, and those who gain take it for granted.
