Business rates row: CPPR throws the dice and sees double

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By Russell Bruce

Headlines abounded on Friday that the SNP Government was to hit business with a £849 million additional bill for business rates over the next three years.

The acronym CPPR sounds very much like something that is a hangover and vestige of the Soviet era.  In fact it stands for Centre for Public Policy for Regions and is based at Glasgow University.

Our academics perform a useful purpose in poring over the data emerging from government and to have unearthed this ‘hidden’ detail and made such an extraordinary claim and then bounced it across the airways and print media they must have done their sums.

So all I had to do would be to go to the CPPR website and there with full academic diligence and in painstaking detail would be all the detailed calculations, reference base with full sources quoted to verify this extraordinary finding.

Not a word. Not a mention.

So what conclusion are we to draw about claims purporting to have been made by a serious academic body. Have they been infiltrated? Are others speaking in their name?  Do we have CPPR doppelgangers masquerading as serious academics?

On Good Morning Scotland (1) Colin Borland of the FSB was also perplexed as to where the CPPR produced this £849m figure. He explained to listeners that a revaluation of business properties was not due until 2015. So rate revaluation was not the source.

The poundage for business rates is currently 42.6p in the pound but the Cabinet Secretary for Finance had made a commitment that any increase in the poundage would not rise above the equivalent English rate in the lifetime of this Parliament to maintain Scotland’s competitive position.

The amount businesses actually pay is therefore rateable value multiplied by the poundage figure, currently 42.6, but is increased each year in line with the Retail Price index.

We know from the 250 page Scottish Spending Review 2011 and Draft Budget for 2012/13 that a Public Health levy is to be introduced on large retailers of tobacco and alcohol that is to generate additional income over the next three years of £30m in year one and £40 million in each of the following two years.

So that’s £110 million accounted for. In addition the scrapping of empty property relief is also to be abolished in line with England generating another £36 million over years two and three.

We now have uncovered increases totalling £146 million not that these have been any kind of secret since the publication of the Spending Review.

What about the Small Business Bonus Scheme? Again the Spending Review is clear that will continue. Scottish businesses with a rateable value of up to £10,000 pay no rates above which, on a sliding scale, they pay 50% up to £12,000 or 75% up to £18,000.

Ten of thousands of Scottish businesses have benefited from this scheme introduced by the previous SNP government. It is worth £2.6 billion over the revaluation period 2010 to 2015.

But we have still not found the remaining £700 million hit on businesses claimed by CPPR.

The lines of a folk song run through my mind. ‘The King is in the parlour counting Scotland’s money.’

Now we know a man in the East with a fearsome reputation for financial accuracy. His 3D digital abacus is legendary.

You may have heard of him. His name is John Swinney and he was delighted to answer my questions on behalf of Newsnet Scotland.

In regard to the CPPR £849 million figure which grabbed a headline or two but failed the substance test, the Cabinet Secretary said:

“It is wholly inaccurate to suggest the Scottish Government will be increasing the costs of business rates by £849 million reported yesterday, a figure which is a product of double and treble counting.”

Explaining the actual projected budget increase of £483 million for the years 2011/12 to 2014/15 Mr Swinney said:

“Over half of this apparent increase is a product of inflationary changes as we continue to match the English poundage rate which is tied to changes in the Retail Price Index.

“Inflationary increases in business rates are not new and have always been a factor in the business rates process.” Mr Swinney added: “Under the previous administration business rates income increased by 13.3 per cent between 2003/4 and 2006/7.”

The balance of the calculation is based on an increase in business activity over the period and the resolution of appeals that generate delayed income.

Commenting on CPPR’s assumptions John Swinney added:

“It is therefore grossly misleading to suggest that the changes in the income forecasts for these factors translate into increased business rates bills for existing businesses.”

Having read through the Scottish Spending Review 2011 and Draft Budget for 2012/13 I can only conclude that our Cabinet Secretary for Finance requires the full toolbox of fiscal powers to further his substantial achievements in delivering solid employment figures in these challenging times.

Only in Scotland is unemployment falling. Employment has increased by 23,000 compared to a fall in the UK of 69,000.

Scottish businesses have shown they can be swift footed in seeking out markets for Scottish products and services.  Confidence levels remain surprisingly strong in a Scotland facing up and achieving against a background of global turbulence.

 

1. http://www.bbc.co.uk/iplayer/episode/b014r334/Good_Morning_Scotland_23_09_2011/ (2hrs 46 mins in)

 

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