Say NO to the SNP's Swim Tax

Say NO to the SNP's Swim Tax

by Murdo Fraser
article from Friday 15, September, 2017

ON TUESDAY the Finance Secretary, Derek Mackay, announced the Scottish Government’s response to the Barclay Review of non-domestic rates. This was long-awaited by those in business, particularly in sectors like hospitality that have seen massive hikes in their rates bills following the revaluation which came into effect earlier this year.

There was much to be welcomed in what Mr Mackay announced. He picked up a number of the recommendations from the Barclay Report that were well received, including a move to a three-year cycle for revaluations (rather than five years), introduction of a new rate relief for day nurseries to help facilitate an expansion of the sector, a new 60 per cent rate relief for hydro schemes, and the standardisation of bills.

There were two other significant changes proposed by Barclay that the Finance Secretary indicated he would be taking forward. Firstly, the introduction of a new “business growth accelerator”, whereby new properties would pay no rates for an initial twelve months, and indeed Mr Mackay went further than this to announce that new properties would only be entered on the valuation roll once they were first occupied. This addressed a real concern in the business community that the removal of empty property relief by Mr Mackay’s predecessor, John Swinney, was acting as a disincentive to the development of new business premises.

Secondly, the large business supplement, which Mr Swinney had set at a rate double that applicable in England and Wales, is to be reduced, although no set timescale for this has been agreed. It was not lost on many observers that all Mr Mackay was doing in these announcements was reversing decisions taken by his predecessor, which have now been shown to be damaging to our prospects for economic growth.

In relation to the hikes in rates applying both to the hospitality sector, and to office premises in Aberdeen and Aberdeenshire, the Finance Secretary announced that there would be an additional cap of 12.5 per cent (in real terms) applied for the next financial year. Allowing for inflation, this would mean that businesses in this category would see a maximum rise in rates bills of around 30 per cent over a two-year period. Whilst this is welcome respite, it is not a permanent solution to the problem.

But not everything that the Finance Secretary said was to be welcomed. The Barclay Review had recommended the removal of certain rates exemptions for charitable bodies, including independent schools, sports clubs, and local authority ALEOs (arms-length organisations), the last being those quasi-public bodies set up to run the likes of swimming pools, leisure centres, gyms, museums and libraries. Barclay recommended that these premises should be levied business rates in the same manner as any private sector businesses. 

The consequence of such a move would be that these ALEOs would either have to go back to their “parent” local councils and ask for more funding (highly unlikely to be granted in the current financial climate), or alternatively they would have no choice but to hike their user charges. So those using gyms, sports clubs, or taking their children swimming, would see substantial increases in costs.

As I pointed out in the Parliament Chamber on Tuesday, this seems to directly contradict the direction of government policy in other areas, including the need to encourage active lifestyles and combat obesity. How making it more expensive for people to go swimming or become more active would help create a healthier population, is lost on me.

There are serious potential consequences, too, for independent schools. In areas such as Edinburgh and Perthshire, these are an important part of the local economy, supporting hundreds if not thousands of jobs. An increase in rates bills would inevitably lead to fees going up, which could well have the unintended consequence of making such schools even more exclusive.

And, of course, not all independent school are there to provide general education for parents fortunate enough to be able to afford an alternative to state provision. Many are there to provide specialist support to children with additional needs, including severe disability, or conditions such as autism. The imposition of rates on schools like this might well threaten their financial viability, which in turn would end up putting a greater burden on direct local authority provision of support for such children.

It is clear that the consequences of such a change simply haven’t been properly thought through. The Finance Secretary seemed to recognise the danger, announcing on Tuesday that these recommendations required further consideration and engagement, and that he would consult on changes in these areas prior to announcing implementation later this year.

Whilst a pause for thought is welcome, when I challenged him on the issue Mr Mackay stopped short of ruling out the imposition of rates on sports clubs and swimming pools. It must therefore remain a real prospect that the SNP plans to introduce a “Swim Tax” hitting children and parents across the country.

The Scottish Conservatives have made it clear that we will vigorously oppose these plans. The consequences haven’t been properly considered, and they fly in the face of everything we are trying to achieve as a country in terms of promoting active lifestyles.

While there is much in what the Scottish Government announced on rates that is welcome, this week’s announcement shows, once again, that this is an SNP administration increasingly losing touch with the people of Scotland. It is hard to imagine that, in its early years with Alex Salmond as First Minister, the SNP Government would have allowed the notion of a Swim Tax to gain any currency. That Derek Mackay has failed to close this down, despite being given the opportunity, demonstrates that this is a government which has lost its way.

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