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What a relief! - October 2010

Your Chamber continues to lobby hard for the re-introduction of transitional relief for business (non-domestic) rates. The ‘text’ for our campaign is ‘persistence pays profit’.

We recently wrote to the Cabinet Secretary for Finance and Sustainable Growth, John Swinney, regarding the re-instatement of transitional relief for non-domestic organisations, as part of a dialogue with him about the Chamber’s campaign for the re-introduction of a safety-net for private, public and third sector organisations in the region. The activity is also part of a national campaign being conducted by the Scottish Chambers of Commerce (SCC).

On behalf of members of the Aberdeen & Grampian Chamber of Commerce,  we wrote:  

“There is clearly no fruitful purpose served in continuing an exchange where we say look at the damage being done to a substantial minority of businesses facing massive increases from the withdrawal of Transitional Relief, and you reply that on average businesses are better off in Scotland from the changes. This does not help those who suffer.

“We continue to applaud your motives for helping small businesses, but in addition want to ensure that the minority of losers are not impacted adversely and unfairly, as this will cost jobs and investment. We have not yet persuaded you to accept this point of view, and will continue to make our case.

“Of course, it is by no means the case that only a few businesses are affected in the North-east, as your own figures which featured in the Press and Journal (recently) painfully demonstrate. In total 50.2% of organisations in the city and 52.3% of organisations in Aberdeenshire will be paying more this year compared to last. You will recall that our evidence submitted to you showed that organisations in the North-east would be paying £30m more this year, an average increase of some 15%.

“You will also recall, that at our first meeting with a delegation from the region, we indicated that we wanted to provide you with a mature and thoughtful lobby, constructive in approach and helpful in intention, and that you challenged us to suggest solutions which paid for the cost of transitional relief. We originally proposed a solution which fell foul of state aid regulations.

“We have considered this further and would make the following four constructive suggestions:

• We have estimated that re-introduction of Transitional Relief at 12.5% in the North-east would cost the Scottish Government c. £5m. (This is calculated as 15%= £30m, so 12.5% = £25m, and the difference is £5m.) Of course this would not be a cost to government but a reduced additional income, as the increased tax take from the region will be £25m instead of £30m. We would suggest that the cost is covered for this region. We would ask you to conduct this calculation for Scotland as a whole as we believe that Transitional Relief can be afforded by government. {The Rateable Values for Scotland as a whole increase year-on-year from £5,345m to £6,612m (Source: Annex C, Revaluation 2010 in Scotland) representing a 24% increase in Rateable Values. Extrapolating our own evidence for the region (a 29.8% increase in RV leading to a 15.1% increase in rates payable), we would estimate the increase in rates payable for the whole of Scotland to be c. 12-13%, an increased tax take for government of more than enough to pay for the £77m cost of transitional relief in 2010/11.}
• If we are wrong and 12.5% is unaffordable, then a member of our delegation who is expert in these matters has concluded, from the charts and statistics in your own paper published earlier this year, that a transitional relief level of 30-35% would be cost-neutral to government. This would also have the happy side-effect of helping those organisations most adversely affected. Those most likely to shed jobs and curtail investment, and not prejudice your valued support for small businesses.
• We also ask you to give fresh consideration to the option of excluding statutory undertakings from your calculations, which artificially inflate the cost to you of re-instating transitional relief.
• We would ask you to consider extending the deadline for appeals to be lodged beyond September 30 as, in our experience, many businesses which are not members of the Chamber are not aware of the deadline, despite our media activity.

“Our persistence in pursuing this matter is driven entirely by the impact on our members, the conviction that some form of transitional relief can be afforded, and the knowledge that this will help vulnerable businesses at a delicate stage of the economic cycle. We remain committed to finding a sustainable solution for you to implement.”

Maintaining our persistent approach on your behalf, we will be making this an issue in our manifesto for enterprise in the run-up to the May 2011 election.