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£400million north-east business rates raid could cost Mackay budget support

Finance Secretary Derek Mackay
Finance Secretary Derek Mackay

Derek Mackay has been warned a £400million rates raid on businesses in the north of Scotland could lead to his budget being rejected.

North-east MSP Mike Rumbles has told the finance secretary the huge increases “will be just one more reason” to reject the SNP’s tax and spend plans.

The warning was delivered as new figures revealed firms across the north will be hit with bills totalling £444million.

About £200million will come from businesses in Aberdeen, and another £90million from corporations in Aberdeenshire.

Mr Mackay has ruled out government intervention to help firms hit by rocketing rates in the north-east – but has said he will work with councils to deliver relief.

He made the comments after a visit to the north-east, where he held talks with concerned business leaders.

But, in a letter to the finance secretary on the eve of the first Budget vote today, Mr Rumbles said: “I was pleased that you met north-east businesses to discuss the issue.

“I am, however, frustrated that you seem to be passing the onus of resolving the issue on to local councils, rather than deal with the matter yourself.

“It has become abundantly clear that councils are concerned that their funding is being cut.

“Though they will retain the council tax and business rates they collect, the reductions to block grants will leave north-east councils in the position that they can no longer provide vital services to their communities.

“I know that unless you take action to resolve this issue it will be just one more reason to vote against the Scottish Government’s Budget as it stands.”

Alexander Burnett, Tory MSP for Aberdeenshire West, also said his party would not support a Budget which would mean firms and individuals being taxed more than those in other parts of the UK.

He said: “Companies across the north and north-east have already been hit for millions by the doubling of the large business supplement.

“Many families also face a council tax hike while the SNP has failed to pass on a UK Government increase to the 40p income tax threshold.

“The punitive increases in non-domestic rates will simply be viewed as yet another levy on business at a time when our economic growth is lagging behind the rest of the UK.”

A Scottish Government spokesman said: “Councils have the power to reduce business rates locally, following the Community Empowerment Act, and we are already in discussions with Aberdeen city and shire with a view to exploring options before the Budget Bill process concludes.

“More widely, Finance Secretary Derek Mackay is in active discussions with other political parties about the Scottish Budget.

“He is considering the detail of the propositions that have been received to date and will continue to take forward constructive discussions on our budget plans.”

MSPs will vote on Stage One of the budget today. While it is thought the SNP could strike a deal with the Scottish Greens, it is not certain that will continue through to the final vote. In 2009, the Scottish Greens initially offered support to the SNP minority government’s budget, only to back-out at the 11th hour.