09 September 2005
Business rates in Scotland are to be cut and brought into line with bills paid in England, Scotland's First Minister Jack McConnell announced this week.
His decision, disclosed as he gave details of the Scottish Executive's legislative programme for the next 19 months, surprised business leaders and opposition MSPs as ministers had previously resisted their calls for a reduction in business rates.
McConnell, who gave details of 20 Bills that put a strong emphasis on law and order but covered other areas such as planning, transport, schools and tourism, said a reduction in the business rate would be possible because efficiency savings had exceeded initial targets.
Scotland's uniform business rate poundage is currently 46.1p compared with 41.5p in England. If the change had been made in the current year, it would have cost £200m to bridge the gap.
Business rates were a small element of overall business costs but at the margin they could be critical, McConnell told MSPs. 'Our policy of limiting rate increases to inflation or below has meant that, compared with England, the finance burden has been reducing,' he added. 'But now we want to go further.'
Stressing that the time was now right to secure a greater competitive advantage for Scotland, McConnell hinted at future restrictions on public expenditure, saying there was a limit to how long it could continue growing. 'The balance in Scotland's economy now needs to make a shift,' he said.
Scottish National Party and Conservative MSPs gave a guarded welcome to the business rate concession, claiming that businesses had already lost millions of pounds and that the change was long overdue.
The CBI in Scotland welcomed the announcement, and also voiced approval for a new Bill to modernise the planning system, described by McConnell as a measure that would help regenerate disadvantaged areas and pave the way for new jobs.
A Scottish Human Rights Commission is to be set up, and measures to improve the nutritional quality of school meals were also announced.
But the main focus of the programme is on law and order.
PFsep2005
