10 October 2003
Business rates income in Scotland is £500m more than estimated, providing the Scottish Executive with a 'windfall', members of a parliamentary committee have been told.
The extra income, over a four-year period, has put pressure on Finance Minister Andy Kerr to reduce non-domestic rates. However, Kerr rejected the calls for a cut, stressing that the Executive had already decided to freeze business rates.
The minister pointed out that improvements to property, bringing higher valuations, and lower losses on appeals had been the main reasons why income was more than estimated. 'I have asked officials to use both those features to ensure better, more accurate forecasting,' he said.
The excess figure was disclosed in a report to the Scottish Parliament's finance committee. Scottish National Party enterprise spokesman Jim Mather said: 'Every business in Scotland is carrying a heavier rates burden than their English counterparts and is therefore less able to compete, grow and create jobs.
'Andy Kerr has been caught spinning a line that his own economists now admit is simply untrue.'
Labour MSP Wendy Alexander, questioning Kerr at the finance committee meeting, said the £500m raised the question of 'whether the windfall should be spent on other services or whether a proportion of it should be returned to the business community'. She added: 'It is implicit that the Executive has decided to spend the windfall on services. Will that decision be revisited or is it a commitment for the lifetime of this session?'
Kerr said all matters could be revisited as part of the spending review process. However, he warned that the decision to freeze the business rates had cost £28m and that, if this figure were returned to the Scottish spending block, it could result in higher, above-inflation increases for business.
PFoct2003
