Mackay announces measures to limit business rate rises

A targeted package of measures to limit business rates increases was announced by Finance Secretary Derek Mackay yesterday in the wake of an outcry over the effects of the recent revaluation.

Hotels, pubs, restaurants and cafes will have the rise in their rates bills, which had been set to average about 37%, capped at 12.5% – as will offices in Aberdeen city and Aberdeenshire, which had faced increases of 15-17% even as they were worst affected by the downturn in the oil and gas market.

Mr Mackay had previously claimed the Government had done enough to mitigate the effect of the revaluation, with more small businesses exempt from rates, but with some still facing rises of up to 400% and threatening to close, he backed down in the face of a sustained campaign.

The anomalies arose partly because the date at which values fell to be assessed was before the downturn hit. Mr Mackay also promised free revaluation appeals, and work with local authorities on a local relief scheme to support key businesses.

The total package will cost £44.6m in 2017-18.

Business leaders generally welcomed the proposals, but some pointed out that they are for one year only. Ewan MacDonald-Russell of the Scottish Retail Consortium described them as "yet another sticking plaster on the suppurating wound of the unreformed business rates system".  

Ken Barclay, former chairman of RBS, is to report in July this year on his review of the business rates system. Mr Mackay yesterday promised early action following the review.