Scotland passes Covid-19 business rates compensation law

26 Mar 20

Legislation to compensate Scottish councils for the loss of business rates revenue in the light of the coronavirus pandemic has been approved by the Scottish Parliament.

MSPs backed an order on Tuesday afternoon which will see the general revenue grant allocated to councils boosted to offset the fall in revenue which will follow the government’s guarantee of total rates relief for businesses worst hit by the spread of the virus.

The measure, aimed at properties in the retail, hospitality and leisure sectors, was part of a £2.2bn support package for Scottish businesses announced last week by the Scottish Government.

Public finance minister Ben Macpherson said that an estimated business rates shortfall of £972m in would be met by a corresponding increase in general revenue grant, meaning that the total package provided by the Scottish Government to local authorities would remain at £11.4bn.

Macpherson said the Scottish Government would continue to work with councils and the UK Government “at scale and at pace” to provide further support to the people of Scotland, particularly those most at risk.

“The pandemic that we face is disrupting lives like never before,” he said.

“A key priority and focus of the Scottish Government in partnership with local government will be to ensure our communities are supported and protected as much as possible under the current circumstances.”

Supporting the order, Labour local government spokesperson Sarah Boyack said the guarantee of funding was “absolutely crucial” for councils.

“It will enable them not just to continue to provide key services that we take for granted, such as waste services and education services, but to put in place new services and to work with the third sector to support our constituents over the next few weeks and months of the crisis,” she said.

Willie Rennie, leader of the Scottish Liberal Democrats, said that in the aftermath of the crisis there would need to be a review to ensure local government had received the funding it needed at the right time.

“Councils need to make the right decisions now without worrying about whether they have all the money that they need to make them happen,” he said.

Meanwhile, economists at the Fraser of Allander Institute said the coronavirus outbreak had already led to a sharp economic downturn in Scotland which would “undoubtedly” change the shape of the economy in the long run.

Graeme Roy, the institute’s director, said the mothballing of the economy that had taken place in response to the pandemic was unlike anything seen since the second world war, and that hopes the economy would emerge with only limited damage to its productive capacity were likely to be over-optimistic.

“The scale of the shutdown in our economy is so large it will take months, if not years, to recover,” he said.

“Key now will be ensuring that long-term scarring effects of any recession can be mitigated as much as possible.

“The economy that emerges from this, from the shops on our high street through to day-to-day working practices, is likely to look quite different.”

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