Swinney responds to ‘misleading’ CPPR report

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The row over the Scottish budget report compiled by the Centre for Public Policy for Regions (CPPR) continued today with our publication of a statement by Scottish Finance Secretary John Swinney in which he describes analysis contained in the CPPR report as “misleading”.

The report led to claims by several Scottish newspapers and broadcasters that Wednesday’s Scottish budget will lead to businesses paying an extra £849 million in business rates over three years.  However the CPPR has since denied producing any such figure and are expected to issue a letter tomorrow morning.

Below is the full text of a statement John Swinney issued yesterday.

The row over the Scottish budget report compiled by the Centre for Public Policy for Regions (CPPR) continued today with the release of a statement by Scottish Finance Secretary John Swinney in which he describes analysis contained in the CPPR report as “misleading”.

The report led to claims by several Scottish newspapers and broadcasters that Wednesday’s Scottish budget will lead to businesses paying an extra £849 million in business rates over three years.  However the CPPR has since denied producing any such figure and are expected to issue a letter tomorrow morning.

Below is the full text of a statement John Swinney issued on Friday.

Dear Editor,

CPPR ANALYSIS OF DRAFT BUDGET 2012-13

I am writing in response to the report that the CPPR has published this week on the Scottish Government’s Spending Review and Draft Budget 2012-13.

The report provides a misleading analysis of the facts. It is simply wrong to suggest that the Scottish Government is increasing costs for business in the way suggested. The Spending Review confirms the Scottish Government’s policy on business rates and reiterates our commitment that Scotland will remain the most competitive place to do business in the UK.

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.

The budget shows an increase of £493 million in business rates income between 2011-12 and 2014-15. 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. Under the previous administration business rates income increased by 13.3 per cent between 2003-04 and 2006-07.

The remainder of the apparent increase reflects assumptions about the levels of business activity as the economy recovers and the impact of appeals losses. These depress income in earlier years and inflate it in later years and skew comparisons between years in the revaluation cycle. 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.

The only substantive changes on business rates are the Government’s plans to introduce a Public Health Levy on large retailers who sell tobacco and alcohol  – £30 million in year one,  rising to £40 million in years two and three of the spending review period  – and changes to Empty Property Relief, worth £18 million per annum in years two and three.

The Scottish Government will continue over the spending review period to match the English poundage rate and to maintain the most generous package of reliefs available anywhere in the UK, worth £2.6 billion over the 2010-15 revaluation cycle. Central to that relief package is continuation of the Small Business Bonus Scheme supporting tens of thousands of properties.

As a consequence of this government’s actions, Scotland is the only part of the UK where unemployment is falling and employment has increased by 23,000 compared with an aggregate UK fall of 69,000 in the latest figures. We now have higher employment, higher economic activity and lower unemployment than the UK as a whole. It is clear that the actions of the Scottish Government are making a positive difference. The most recent Mori poll, published September 2011, also showed individuals in Scotland were more positive about the outlook for the economy than the UK as a whole.

This information sets out the strong record of the Scottish Government in establishing Scotland as the most competitive place in which to do business in the UK and our determination to deliver economic recovery in Scotland.

JOHN SWINNEY