Tommy Sheppard

MP for Edinburgh East

Business rates response was democracy in action

Sometimes, democracy works. It worked last month with proposed changes to business rates in Scotland. Independent assessors recalculated what each business would be charged. Since it had been seven years since the last review it was no surprise that some would see big changes.

Two thirds of local businesses saw no increase or a cut but some were facing dramatic eye-watering hikes in their rates. The hospitality trade – hotels, pubs and restaurants – seemed to be worst affected. Business owners contacted their local political leaders in anger and panic. They feared, rightly, that the scale of the increases could put them under.

Councillors and Members of Parliament got involved, taking up the case of businesses in their areas. And last week the Scottish Finance Secretary, Derek Mackay, stepped in to limit increases to 12.5%. Problem identified. Representation made. Action taken. Case solved. If only it happened that way all the time.

The Scottish Government’s intervention means Porty pubs and Tollcross taverns can breathe a sigh of relief. It creates a breathing space to consider how changes in rateable values can be phased in. It also means that we can all take a look at how the organisation in charge of the process, the Lothian Valuation Joint Board, does its business. From my investigations I’m pretty sure that part of the problem is out of date methods leading to out of date results.

I’ve always thought there’s a logical simplicity to the idea of rates. Edinburgh is worth a certain amount and we all own a share of it, no matter how small. So in deciding how to fund the city it seems fair to allocate costs to each of us according to how much of it we own. So far, so good. But this only works if the way we calculate value is fair and transparent.

The Valuation Board assume that a reasonable estimate of the value of a property is the rent it would fetch on the property market. That might be true in the city centre where most property is leased but that’s just not the case in other areas.  The growth in bars, cafes and restaurants in places like Portobello and Leith Walk in the last 20 years hasn’t come from corporations and franchises expanding. It’s been the result of individuals taking a risk on setting up a business. Usually, ploughing their savings into buying and developing a property.

In areas where most businesses are owner occupied its plain daft to base their value on the minority of rented places. Worse, if some of these rented properties are owned by large pub companies driving up rents by contract rather than market price, it makes it look like values are increasing when they are not.

In some cases, particularly with pubs, the Board base value on turnover. But as anyone who has run a business will tell you there’s a world of difference between turnover and profit – a busier pub doesn’t necessarily mean you are making more. And if you set up a business in an area because rates are low only to find they get hiked if you make a success of it, it sort of defeats the purpose.

If we are going to base charges on value then maybe what a place costs to buy would be fairer.

However value is calculated, we need to take account of ability to pay. That’s why transitional relief should assist people facing huge increases. The Scottish Government have just offered the mother of all transitional relief schemes – but rightly it’s a temporary measures. Now the challenge falls to the city council to make things fairer in years to come.

Article first published in Edinburgh Evening News - 2nd March 2017

March Newsletter - Parliamentary Business
The Facts on the Ground
 

Comments

No comments made yet. Be the first to submit a comment
Already Registered? Login Here
Guest
Friday, 20 October 2017

Tommy's Blog Articles

Tommy Sheppard
11 October 2017
Tommy's Blog
Articles
Media
I have never been prouder of our SNP Scottish Government than I was last Tuesday when the Energy Minister, Paul Wheelhouse MSP, made a statement to parliament on fracking. He was responding to a huge public consultation on the issue and he made it crystal clear that fracking would not be part of the energy mix in Scotland.Not only was this the right decision but the manner in which the government ...
Tommy Sheppard
03 October 2017
My work for you in Edinburgh East
Tommy's Blog

Long before I stood for election I opposed fracking and I’ve been very pleased to be able to coordinate opposition over the past couple of years.

So you’ll not be surprised to hear that I am delighted by the announcement that has just been made by Paul Wheelhouse, Minister for Business, Innovation & Energy, in the Scottish Parliament.

Tommy Sheppard
02 October 2017
Tommy's Blog
Yesterday I got back from a holiday – the only time of the year where I switch off from the world.  I turned on my phone to see with horror what was happening in #Catalonia.The actions of the Spanish authorities were shocking. Images beamed around the world of police violence against young and old alike who simply wanted to cast a democratic vote.  I’m in awe of the voters who remained peaceful an...
Tommy Sheppard
22 September 2017
Tommy's Blog
I was delighted to attend the International Fund for Animal Welfare (IFAW) Westminster launch of a new report on the illegal ivory trade across Europe, (Ivory seizures in Europe, 2006-2015), which found that the European Union is still a destination for illegal ivory, a major transit route between countries and a key exporter of antique ivory to South East Asian markets.I fully support the campaig...
Tommy Sheppard
10 September 2017
Tommy's Blog
Workings of Westminster

There was a big turnout from SNP MPs to support Royal College of Nursing #scrapthecap demo at Westminster.

And great to see Geoff who had made the journey from Edinburgh East alongside other RCN members from across the UK.