Speech in the Scottish Parliament

28 October 2010

I have had the joy of interacting with rating revaluations over more years than I care to remember.

I was once a regional council finance convener when councils set both business and domestic rates.

I was the convener of a valuation committee for a period of time and I even sat on the Scottish Valuation Advisory Council, for my sins, which was one of the high points of my 30 years in public life.

Indeed, I was also involved in the matter as a minister.

Revaluations are always complex matters.

The principles of business valuations are very complex indeed.

There are winners, from whom we hear little, and there are losers, from whom we usually hear a great deal, understandably.

This year, there are a substantial number of losers, many of whom are losing significantly.

As Derek Brownlee said, the principle of a revaluation is that it is revenue neutral.

The yield remains the same but the distribution between the sectors will vary and shift.

In the context of local government finance or public finance generally, coping with significant redistribution effects is a common thing.

It is not at all unusual.

The issues at present are clearly significant for those who are involved.

The principle of transitional relief to dampen the full effects of implementation is well established in public finance—in rating matters and in grant distribution matters more generally.

The principle is simple.

There is no detriment to the final outcome.

The losers still lose but the full effects are mitigated, which gives them time to plan,

manage and to adjust for the change that is necessary.

The key question for a minister in any given year when the matter pops on to their desk—it is not terribly welcome when that happens—is whether the scale of the changes is sufficient to warrant a transitional relief scheme or whether the impact is so small as to warrant moving away from the well-established principle of having a transitional scheme, as Andy Kerr said.

It is clear that some businesses are facing very large changes at present.

In that context, it is not clear to me why the minister would reject a transitional scheme.

If the minister thought that the scale of the changes was not sufficient to warrant a scheme, that judgment is flawed, because it is clear that the scale is very significant indeed.

As members have said, businesses in my region face increases of up to 200 per cent.

The interaction with the wider small business scheme is a complicating factor, but there are still major issues for businesses in my region to contend with.

Jeremy Purvis talked about the tourism and hospitality sector, which is a sector in which competition with businesses south of the border is important.

However, south of the border, the same types of businesses are getting a transitional relief scheme.

That is a significant issue.

A wider point raised in the motion and in the Conservative amendment is about reviewing the principles behind the valuation scheme.

I caution substantially against rushing into that.

It is a simple fact of life that no system, however we construct it, will suit everyone.

I caution against the belief that a review would lead to a fairer system.

That is why the principle of appeals in the system is important, but it is also why the principle of a transitional relief scheme is important.

Such a scheme allows the smoothing out of the inevitable fluctuations that occur in revaluations.

It helps preserve a broad consensus in our society that a difficult and turbulent system that has peaks and troughs in its effect on people can be managed fairly in the interests of all those who are involved.

That is why the minister should think again about the matter—to help restore belief in the system.

The minister told me that yesterday he had the joys of changing nappies.

I suspect that changing nappies might seem less messy than fiddling about with an emergency transitional relief scheme, but I encourage him to tackle both those issues with equal gusto in the coming days.

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