Official Report 505KB pdf
Non-Domestic Rates (Valuation Roll) (Modification) (Scotland) Regulations 2022 [Draft]
Under agenda item 3, the committee will take evidence on the draft Non-Domestic Rates (Valuation Roll) (Modification) (Scotland) Regulations 2022 from the Minister for Public Finance, Planning and Community Wealth. For this session, Mr Arthur is joined by Anouk Berthier, who is non-domestic rates policy lead in the Scottish Government, and Susan Robb, who is a Scottish Government lawyer. I welcome the witnesses to the meeting.
I invite Mr Arthur to make a short opening statement before I open up the session to questions from committee members.
The draft instrument is purely technical. It is intended to assist councillors in administering business growth accelerator relief.
BGA relief, which is unique in the United Kingdom, provides 100 per cent relief on new properties for 12 months after they are first occupied and 100 per cent relief for 12 months on property improvements. In order to facilitate the identification of eligible properties by councils, the Non-Domestic Rates (Scotland) Act 2020 requires that the assessor put a mark on the valuation roll to flag new and improved properties.
We keep all our reliefs under review. In response to stakeholder feedback, BGA relief has been expanded a number of times since the Non-Domestic Rates (Scotland) Act 2020 was passed. The draft instrument that we are discussing merely takes that into account and aligns the definition of new and improved properties in the act with the properties that may be eligible for BGA relief from 1 April 2022. That will enable local authorities to distinguish the properties that are eligible for the relief.
The regulations specifically clarify that property improvements include a concurrent change of use in the property and improvements associated with the installation of certain plant and machinery, including the installation of solar cells or solar panels.
Business growth accelerator relief is a flagship relief that has been praised by the business community. It was even highlighted in response to the UK Government’s recent review as a policy that should be replicated in England. I note for the committee’s benefit that the UK Government has chosen to replicate it with a relief only for property improvements from 2023. Business growth accelerator relief in Scotland has been available not only for property improvements but for new builds since 2018.
I hope that members will support the regulations.
Thank you very much for outlining the purpose of the Scottish statutory instrument, minister.
As no one has any questions for the minister, I thank him and his officials for the evidence.
Item 4 is consideration of the motion on the instrument. I invite the minister to move motion S6M-02982.
Motion moved,
That the Local Government, Housing and Planning Committee recommends that the Non-Domestic Rates (Valuation Roll) (Modification) (Scotland) Regulations 2022 be approved.—[Tom Arthur]
Motion agreed to.
Item 3 is to take evidence on the Non-Domestic Rates (Valuation Roll)—I am sorry. That is not the right agenda item. I am glad to see that Graeme Dey has managed to join us.
The committee will publish its report on the draft regulations after the meeting. I will now suspend the meeting to allow a changeover of supporting officials before we move to agenda item 5.
11:15 Meeting suspended.Local Authority (Capital Finance and Accounting) (Scotland) (Coronavirus) Amendment Regulations 2022 [Draft]
Item 5 is to take evidence on the draft Local Authority (Capital Finance and Accounting) (Scotland) (Coronavirus) Amendment Regulations 2022 from the Minister for Public Finance, Planning and Community Wealth. For this item, Mr Arthur is joined by Scottish Government officials Elanor Davies, who is head of local authority accounting, and, once again, David Smith, a lawyer. I welcome our witnesses to the meeting. Before opening up to questions from the committee, I invite Mr Arthur to make a short opening statement.
Last year, amendment regulations were laid in response to the financial pressures faced by local authorities as a result of the pandemic. The Scottish Government worked jointly with the Convention of Scottish Local Authorities to identify ways for local government to address the funding pressure. The amendment sought through the Local Authority (Capital Finance and Accounting) (Scotland) (Coronavirus) Amendment Regulations 2021 allowed a local authority to reduce the amount of any of the statutory repayments that it was due to make to the statutory loans fund in either the financial year 2020-21 or 2021-22, but not both. That would reduce the expenditure of a local authority in that financial year, thus creating additional financial capacity to meet Covid-19 costs.
Given the on-going challenges of responding to the pandemic, COSLA requested a further one-year extension to that flexibility to allow a local authority to reduce repayments to the statutory loans fund in 2022-23. Again, councils can make use of that flexibility only in one financial year. Most councils did not utilise that flexibility in either 2020-21 or 2021-22, but they have indicated that they may choose to use this flexibility in 2022-23.
Under normal circumstances, that is not something that ministers would support. Requiring the repayments to be made in the financial year when they are due is prudent financial management. It ensures that both current and future taxpayers are charged for their share of the capital expenditure costs of assets being used to deliver services. However, these are not normal circumstances, and it seems right to allow the flexibility to be extended through the amendments made in the draft regulations before you. We have made it clear to local government that the flexibility should be used only as necessary to address funding pressures arising from the pandemic, and it may not be used to grow reserves.
The 2021 regulations include a provision to ensure that future changes to loans fund accounting arrangements can be delivered through statutory guidance, rather than requiring further amendments to regulations. That change, which was due to come into force on 1 April 2022, is to allow future harmonisation between accounting standards and statutory arrangements. In order to facilitate the extension to the loans fund repayment flexibility, the draft regulations defer by one year the effect of that provision in the 2021 regulations.
Separately, the draft regulations change the audit completion deadline for local government 2021-22 annual accounts, as requested by Audit Scotland, in order to address the continuing challenges resulting from the delay in auditing the 2019-20 and 2020-21 accounts. Both Audit Scotland and councils are keen to return to the original statutory deadlines for 2022-23.
In summary, the draft regulations provide a financial flexibility that has been asked for and will be welcomed by local authorities. The extension of the audit deadline will alleviate some of the strain on council staff and auditors.
I encourage the committee to support the instrument.
Thank you, minister, for laying out the purpose of the draft amendment regulations before us. Members have no questions for the minister, so I thank him and his officials for their evidence.
Item 6 is consideration of the motion on the instrument. I invite the minister to move motion S6M-02977.
Motion moved,
That the Local Government, Housing and Planning Committee recommends that the Local Authority (Capital Finance and Accounting) (Scotland) (Coronavirus) Amendment Regulations 2022 be approved.—[Tom Arthur]
Motion agreed to.
The committee will publish its report on the draft regulations after the meeting.
Non-Domestic Rates (Coronavirus Reliefs) (Scotland) Regulations 2022 (SSI 2022/47)
Non-Domestic Rates (Levying and Miscellaneous Amendment) (Scotland) Regulations 2022 (SSI 2022/48)
Non-Domestic Rates (Relief for New and Improved Properties) (Scotland) Regulations 2022 (SSI 2022/49)
Non-Domestic Rating (Unoccupied Property) (Scotland) Amendment Regulations 2022 (SSI 2022/51)
Item 7 is consideration of four negative instruments. There is no requirement for the committee to make any recommendations on negative instruments. Does the committee agree not to make any recommendations in relation to the instruments?
Members indicated agreement.
We agreed at the start of the meeting to take the next item in private. We have no more public business today. I thank everyone for joining us.
11:22 Meeting continued in private until 11:33.