Uniform Business Rate

HC Deb 17 March 1998 vol 308 cc1086-8

8. Mr. Gray

If he will make a statement on the future of the uniform business rate in Scotland. [33162]

Mr. Macdonald

The future of local business taxation in Scotland will ultimately be a matter for the Scottish Parliament. We shall be consulting on options for change later this year.

Mr. Gray

Does the Minister recall the time when Jenners in Princes street had to pay more in rates than Harrods in Knightsbridge? Is he aware of the concern expressed recently in the Scottish business community that we may be about to return to those bad old days?

Mr. Macdonald

I certainly acknowledge the benefits of the equalisation that has been introduced in the current rating system. We have committed ourselves to consulting on the possibility of some localisation, but no decisions have been made. When we have proposals, we shall ensure that there is full consultation with both local authorities and local businesses.

Mr. Jim Murphy

Does my hon. Friend agree that any change in business rates, at a local or Scottish level, should be made in full consultation with local businesses? What plans does he have to ensure that that is done, so that the many hundreds of local businesses in my constituency, which work effectively and profitably, can be reassured by any review and future consideration?

Mr. Macdonald

We have not decided whether there will be any changes as yet, but my hon. Friend is absolutely right. Any proposals should be subjected to full consultation with all sectors. Both local businesses and local authorities want the same thing: stability in the financing system for local government.

Mr. Swinney

Does the Minister plan to undertake any consultation on proposals that were recently advanced by the Federation of Small Businesses for low business rates for small companies, particularly those that are based in town centres?

Mr. Macdonald

I have not seen those proposals but, if the federation gets in touch with me, I shall be interested to examine them.

Mr. Davidson

I congratulate Scottish Office Ministers on attracting to Scottish Office Question Time the size of audience that their talents deserve. That is enough grovelling for one day.

Will my hon. Friend ensure that business rates that are raised in Glasgow are kept within the city and not dispersed elsewhere in Scotland, resulting in rates in Glasgow being much higher than elsewhere in Scotland and far higher than they should be?

Mr. Macdonald

My hon. Friend knows that the same system for deciding rates applies in Glasgow as elsewhere. The pooling system is designed to be fair throughout Scotland, as is the distribution system, which allocates the amount that Glasgow receives from non-domestic rate income.

Mr. Gorrie

As the business rate—and local government finance generally—is key to any consideration of local government in general, will the Minister consider reversing the Scottish Office decision not to include local government finance in the remit of the committee, headed by Mr. McIntosh, which is studying the relationship between the Scottish Parliament and Scottish local government?

Mr. Macdonald

The hon. Gentleman can make his own submissions to that committee. We thought it sensible to include local government finance within the general review that we are conducting anyway as part of the comprehensive spending review. It would have been absurd to exclude local government finance from that review, which would have destroyed any notion that it was comprehensive.

Mr. Doran

Does the Minister accept that the equalisation of the business rating system can cause local problems? In my city of Aberdeen, for example, it is estimated that £30 million of business rates is lost to the city in that process. Of course, that has caused immense strain on this year's local budget.

Mr. Macdonald

As my hon. Friend suggests, there are different views on the principle of equalisation. That is why we are considering the possibility of some localisation of business rates, but we have come to no conclusions as yet.