SNP Finance Secretary Kate Forbes extends Covid business rates relief after backlash

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BUSINESSES hardest hit by the coronavirus lockdown are to have their rates waived for a further year, Kate Forbes has announced.

Following an opposition backlash, the SNP Finance Secretary also extended the measure to newspapers, after initially ruling it out.

The U-turns were welcomed by business leaders and opposition parties.

Ms Forbes also announced that a £5m-a-year charitable tax break for private schools, which was supposed to end last September, would carry on until April 2022.

Setting out her draft budget for 2021/22 last month, Ms Forbes announced a three-month extension of 100 per cent rates relief for retail, leisure, hospitality and aviation businesses – a measure criticised as inadequate for firms struggling to stay afloat. 

Ms Forbes also failed to extend the relief to newspaper premises, which had only been covered thanks to opposition parties out-voting the Government last year.

It prompted warnings she was undermining the Scottish press and the Government’s own public health messaging on Covid to local communities.

Opposition parties voted last week to demand the reinstatement of the relief, which had been due to expire at the end of March. 

However in a budget update at Holyrood today, Ms Forbes announced a raft of changes following talks with the other parties on getting the budget passed on March 9.

Besides the business rates relief, she also announced one-off payments of £275m to councils to make up for lost revenue in lockdown, £40m for councils to make schools safer, £60m for colleges and universities, and £25m to tackle poverty and inequality, including a further 3100 hardship payment for children getting free school meals due to low incomes.

The spending was funded by the UK Government giving an extra £1bn on top of a previously guaranteed £8.6bn for this year which will be carried forward into 2021/22.

Based on the assumption that another £500m will be available under the Barnett funding formula because of Covid, Ms Forbes said she would extend 100% non-domestic rates relief for properties in the retail, hospitality, leisure and aviation sectors for all of 2021/22.

The rates relief move puts pressure on Chancellor Rishi Sunak to follow suit in the UK budget on March 3.

Ms Forbes said: “In addition to extending 100% relief for these sectors we will continue 100% non-domestic rates relief for newspaper publishing in 2021/22… and we will defer the removal of charitable rates relief from mainstream independent schools to 1 April 2022.”

The year-long extension of rates relief is estimated to cost around £700m, with the newspaper premises element costing around £5m.

There will also be another £60m to help pupils in state schools catch up on learning lost in lockdown, and £100m to help low-income households in the coming year.

In addition, there will be a £120m mental health recovery and renewal fund, taking total spend on mental health in 2021/22 to over £1.2bn.

Ms Forbes said: “When I presented our budget last month I guaranteed to extend non-domestic rates relief further if I was given the necessary resources.

“I can now deliver on that promise, providing the UK Budget in March delivers the funding we require.

“The other measures I am proposing today, including further support for hospitals, schools and local government and measures to tackle climate change, build on our priorities to ensure a robust recovery for our economy and public services.  

“This welcome additional consequential funding was confirmed to us yesterday and I wanted give early notice to parliament and provide clarity to businesses.

“We are still in the throes of a national emergency and it is important Parliament works together to respond. I will continue to work with all parties to help deliver a budget for the nation fit for these times.”

The respected Fraser of Allander has endorsed Ms Forbes’s assumption of another £500m in so-called Covid consequentials as a “prudent strategy”.

Tory MSP Murdo Fraser said: “At long last, the SNP have relented and u-turned on extending business rates relief.

“Businesses have again been treated as an afterthought by the SNP and left waiting on a decision that should have been made weeks ago, considering this was already the biggest ever Scottish Budget.

“Businesses need this certainty for the whole of this year as they continue to live under restrictions and recover from the Covid pandemic.

 “This U-turn is better late than never. It will give businesses some welcome breathing space while they wait for business support to finally reach them from the SNP.

 “The Scottish Conservatives have repeatedly demanded this extension and we are pleased the SNP have finally given in to our demands  to support the retail, leisure, hospitality, aviation and newspaper sectors.

“We are pleased to see more funding for councils, but we will wait to see the detail of the SNP’s offer as they have form for short-changing local services.”

Interim Scottish Labour leader Jackie Baillie said she welcomed the business rates relief extension whole-heartedly, saying it had been “a key ask in Labour’s budget priorities” and would provide “certainty for businesses for the period ahead”.

However she said the eligibility criteria for business support remained too tight, and not all the existing money was being spent. 

“Secondly, let me also welcome the additional funding for health services, particularly for mental health.

“But it falls, I think, well short of what is required. In England and Wales, mental health spending is more than 11% of their overall health budget, and by comparison in Scotland it is approximately 8% of the health budget.” 

Dr Liz Cameron OBE, Chief Executive of the Scottish Chambers of Commerce, said: “The Finance Secretary committed to extending non-domestic rates relief if she had the budget to do so, so we welcome this confirmation.

“This will provide much-needed relief to the retail, hospitality, leisure and aviation sectors who have been devasted by the effects of coronavirus restrictions.

“We would further urge the Cabinet Secretary to ensure that safeguarding jobs and the economy will continue to be high on the list of considerations as she sets out further priorities for the £1.1bon in additional Covid-19 funding recently allocated from the UK Treasury.’’

Andrew McRae, of the Federation of Small Businesses in Scotland, said: “Extending rate relief for the next financial year will allow many more smaller firms to make it through to the end of this crisis and help them get back on their feet when the economy re-opens. 

“Should many bigger businesses choose not to take up this tax break, we’d like to see the money saved spent on measures to give local and independent businesses a shot-in-the-arm.

“We’re also right behind extra help for mental health services, given that two in five of our members have had concerns about their own wellbeing. We’d like to see new initiatives to make sure small businesses and the self-employed make the most of these services.” 

Scottish Newspaper Society Director John McLellan said: “We are both delighted and also relieved that the Scottish Government has accepted the will of Parliament and recognised the massive challenges facing independent news publishing in Scotland and this will go a long way to ensuring that titles large and small can survive what remains an extremely precarious financial landscape.”  

The Government and other parties are expected to continue horse-trading over the finer points of the budget, including income tax, for another few weeks.

Patrick Harvie, whose Green party has been key to passing the last four SNP budgets, said he wanted more done to help poorer communities and was looking for “significant movement” before agreeing to a deal.

He said: “The Scottish Government must go further to deliver a budget that tackles poverty and lays the foundations for a green recovery.

“The Scottish Greens have engaged constructively with government since it outlined its budget last month.

“We have made it clear that a much greater emphasis on tackling poverty is required. We’ve shown how this can be done by increasing direct payments to families, expanding the free school meals programme and extending eligibility for concessionary bus travel.

“As is so often the case it is those who were already living in poverty prior to the pandemic who have borne the hardship throughout the crisis and it is them we must support now.

“The Scottish Government’s budget also fails to adequately address the challenges posed by the climate crisis. We know for instance that rolling out home energy efficiency schemes is a great way to create green jobs, reduce energy bills, and lower emissions. 

“Greens will continue to engage constructively with the Scottish Government, but we are clear that there must be significant movement from the government on our key asks if they wish to strike a deal with us.”  

Scottish Liberal Democrat leader Willie Rennie added: “We will negotiate the budget constructively and seriously. The Finance Secretary knows that our priority is to put the recovery first.

“That means cutting mental health waits, tackling the impact of the pandemic on education and ensuring that the Governments tackles the budget shortfalls identified by local authorities.

“This budget needs to have a needle-sharp focus on the recovery, ensuring that everyone can live in a Scotland that is fair, generous and green.

“A single penny spent on preparing Scotland for another independence referendum is a penny denied to these vital services. This is the first budget of the recovery and the government’s priorities should reflect that.” 

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