Scots councils to be empowered to vary business rates

16 Oct 15

Scotland’s local authorities will shortly receive powers to cut business rates in order to encourage investment.

The decision, due to be announced this afternoon by deputy first minister John Swinney in a speech to the Scottish National Party conference in Aberdeen, was warmly welcomed by the councils’ collective body, the Convention of Scottish Local Authorities.

Swinney is expected to tell delegates that the new power, which follows an undertaking from Chancellor George Osborne to give local authorities south of the border greater flexibility in setting business rates by 2020, will come into effect from 31 October – two weeks from now.

The Scottish power will allow councils, should they so wish, to vary business rates in different geographical parts of their areas, or for specific sectors or property types. It is seen as a potentially powerful tool in the drive to encourage businesses to locate in particular neighbourhoods, such as run-down town centres.

Swinney’s decision follows pressure from Cosla and others for decentralisation of power back to authorities from Holyrood, as recommended last year by the Commission on Strengthening Local Democracy, chaired by Cosla president David O’Neill. Cosla today called the move “a positive start to the journey on increasing local flexibility of funding and taxation powers for councils”.

The Scottish Government is able to bring the power in almost immediately thanks to the passage earlier in the year of another decentralising statute, the Community Empowerment (Scotland) Act, which allows Swinney to cede business rates responsibility to councils through a Ministerial Order.

Scottish authorities already retain all the business rate revenues raised in their areas, but until now the rate itself has been determined centrally. 

First minister Nicola Sturgeon, prefacing the announcement this morning in a BBC Scotland interview, said:  “It is an important power to be giving local authorities and it is part of our effort to de-centralise and devolve power to local communities.

“We want power to lie as close to people as possible and this is an illustration of putting that into practice.”

  • Keith Aitken
    Keith Aitken

    covers Scottish affairs for Public Finance from Edinburgh. He was formerly economics editor and chief leader writer on The Scotsman and now has a busy freelance career as a writer, broadcaster and event chair.

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