THE UNOCCUPIED PROPERTIES Bill is the latest and perhaps, to date, the most worrying product of an unfettered majority SNP Scottish Government.
The Bill contains proposals to cut non-domestic rates relief on empty properties from the current maximum limit of 50% to just 10%. Put another way, in these dire economic times, businesses with empty properties will now be faced with having to pay 90% of the business rates on that property. This, according to the Walter Mitty School of Economics adopted by the SNP majority government, will be an incentive to bring empty properties back into use.
No formal consultation was carried out by the Scottish Government. Nor did it consider a Business Regulatory Impact Assessment (BRIA) was necessary and the views of a host of witnesses from the business world who gave evidence to both the Finance Committee and Local Government and Regeneration Committee and who are opposed to the Business Rates Relief proposals were all ignored.
Instead the government is determined to press on, persisting with the myth that slashing non domestic rates relief will incentivise businesses to rent out their empty properties and raise a maximum revenue of £18m for the Scottish exchequer.
This is economic madness which singularly fails to acknowledge the simple truth that the vast majority of properties are empty because of, as the CBI, SCC, FSB and many others have all stated clearly and unambiguously, lack of demand.
If, even after these dire warnings from the businesses world, the SNP government still requires to be convinced of the absolute folly of this proposal then I suggest it look no further than Maxim Park (pictured). This state of the art prestigious office development ideally located, just off the M8 and between Glasgow and Edinburgh, was opened in 2009 by no lesser a personage than the First Minister himself and hailed by him as an important driver in the Scottish economy.
Since then, despite aggressive marketing and advertising, occupancy rates remain depressingly low and currently stand at just 5% – soon to be 15% when SEPA move in. Only three of the ten blocks have been completed, the others remain shells with floor plans available for potential clients. Why? Well to paraphrase former US President Bill Clinton … it’s the lack of demand stupid!
Against this background it is surely a sad irony that three years on the First Minister’s own policies are jeopardising this superb facility’s viability.
By upping the stakes and potential liabilities for those considering taking on unoccupied properties the SNP is effectively killing off any prospect of attracting speculative development and tenancies.
The Business Centre Association noted speculative developments are already “being shelved” and the Scottish Chamber of Commerce (an organisation which represents over 10,000 Scottish businesses) said the proposals will “stifle speculative development”, echoing the comment from the Scottish Property Federation that a rates relief cut will be a “significant deterrent” to investors.
It is clear, therefore, that the proposals’ impact on regeneration will be significant and this in turn has a knock on effect on economic growth.
Nor does the misery end there. Throughout Scotland town centres are in decline as businesses grapple with a potentially lethal cocktail of challenges ranging from the economic downturn, competition from out of town retail units, online shopping and town centre parking charges.
Now on top of these factors which have all contributed to the decrease in footfall and which in turn threaten the viability of our town centres, businesses are having to contend with an additional business and town centre tax, in the form of reduced rates relief on empty properties! If the Local Government Minister and the SNP Government have their way, and with majority government they will, this measure will effectively be the last nail in the coffin for town centres.
Furthermore, the Financial Memorandum that accompanies the Bill highlights the Government’s failure to grasp even basic abacus economics. The projected £18m of savings assumes a wildly optimistic 100% collection rates but the Memorandum does not even attempt to spell out how that outcome could change if the assumptions are varied.
In addition to this the Scottish Chamber of Commerce and many business commentators see the adverse consequences of the Bill, which include forcing ever more struggling businesses into administration, as compromising the Scottish Government’s ability to deliver these savings.
Quite simply this Bill is based on a work of fiction and fundamentally flawed as evidenced by its basic premise that commercial property is empty through choice. Rental income is the lifeblood of the property owner’s business and for the Scottish Government to continue to use its parliamentary majority to force through this Bill on the assertion that properties are deliberately being left empty is both staggering in its audacity and lays bare the democratic deficit at the heart of Scottish politics today.
As a member of the Local Government and Regeneration Committee I know that time and time again the Committee heard that the underlying reasons for empty commercial properties were a fundamental lack of demand and the current economic climate.
This is the wrong piece of legislation at the wrong time. It is for this reason and all the arguments set out above that I could not support the Local Government and Regeneration Committee’s report on the proposals (which endorsed the general principles of the Bill). I therefore lodged my formal dissent from its conclusions on non-domestic rates relief and indeed the proposed reduction on council tax discount for empty domestic properties as well.
The sad reality is, however, that with the advent of majority government it is only media scrutiny and adverse publicity that can put pressure on the SNP to abandon this disastrous policy which is indeed, to quote the CBI, “a tax on distress.”
Margaret Mitchell MSP is the Conservative member for Central Scotland