Why Scotland's high streets are dying while their European counterparts thrive
Two decades of SNP inaction, for fear of doing anything radical, has left Scotland’s retail sector in a dismal state but it does not have to be like this
“Rates revaluation” are dry words which strike fear into the heart of governments as elections approach. We are again entering that season with a crescendo of concern building over the impact of non-domestic rating revaluations on Scotland’s businesses.
And so it should. This is not an abstract issue but one on which many livelihoods depend. Nor is it a subject from which politicians can distance themselves by pleading it is all the work of assessors, independent of government, as is the stock response.
However the burden is divided, outcomes depend on the size of the pot and that leads us to the wider issue of how local government is valued and funded. For so long as that question is avoided for political convenience, the implications will never be addressed.
When Kenneth Barclay was asked by the Scottish Government in 2016 to “review non-domestic tax rates”, his remit was narrow. The system itself was not called into question and he was to report within “revenue neutral” parameters. The fear of radical change meant only tinkering could be contemplated.
Somewhere in the political memory, there is the shadow of 1987. At that time, domestic revaluations were, by some historic quirk, mandatory every five years in Scotland but not in England. The result was that the impact of revaluation hit the Scottish Tories like a sledgehammer in the run-up to a general election.
Those – myself included – who gained Tory seats were the immediate beneficiaries but longer term implications were more important. In panic, the Tories plucked the poll tax off the shelf, dusted it down and the rest is history including the political demise of Mrs Thatcher.
READ MORE: SNP’s panicked attempt to fix so-called 'tourist tax' shows how badly they govern Scotland
This led to the introduction of the Council Tax but such has been the fear of what significant reform might produce, it has remained virtually untouched ever since. The SNP came to power at Holyrood in 2007 on a promise to abolish Council Tax but, in practice, have not gone near it with a barge pole.
Similarly the approach to non-domestic rates has been conditioned by the dread of reform. They are subject to revaluations every three years and 2026 happens to be one of them. Draft numbers have sent organisations representing small businesses into panic mode and it is not difficult to see why.
Already, one restaurant in Edinburgh’s city centre received a rateable value increase of 54 per cent and promptly announced its closure, with immediate effect. A publican with two units in Glasgow has seen the valuation of one rise by 579 per cent, the other by 355 per cent.
The Association of Self Caterers report an average draft increase of 120 per cent with many “of up to 300 per cent”. And so on. As Fiona Campbell of that association said: “These are not incremental changes, they represent a financial shock that most small businesses simply cannot absorb.” The Scottish Retail Federation points out that the sector represents seven per cent of the economy but already pays over 20 per cent of non-domestic rates.
Swingeing increases will lead to closures, job losses and derelict high streets, not to mention a lot of noisy protests. Pressure on the current Scottish Government to offer a lot more than minor concessions in next month’s Budget should be maintained because, otherwise, any pre-election sticking plaster will simply mean kicking the can down the road.
This takes us back to the hazards of piecemeal government, devoid of any wider vision or original thinking. The SNP will have had 19 long years to undertake fundamental reform, look at alternatives such as a land value tax or import thinking from jurisdictions with other ways of funding strong local government. This is, after all, a completely devolved subject.
In the absence of any radical change, the same symptoms inevitably persist. For example, the dismal state of most Scottish town centres is not a new phenomenon but it is one which has got steadily worse over the past couple of decades. Business rates are a key factor though far from the only one.
As long as government operates within silos, that kind of challenge will never be addressed with creativity or cohesion. Yet when people are asked what their main “environmental” concerns are, they are more likely to answer “the state of the town centre” than the fate of the planet.
That could be an exciting challenge for a Scottish minister with a bit of smeddum, if they could concentrate on it for long enough. An interesting article by Ewan Macdonald-Russell from the Scottish Retail Federation made this point well. Currently, he points out, 2,400 larger shops in Scotland pay higher rates than English counterparts. So where does the investment go?
Then he adds: “Right now the planning and building warrants system isn’t fit for purpose. Businesses talk with exasperation about the long delays to get permission to refit or take over high street stores. This isn’t about the policy framework, it’s about delivery.”
In England, regional mayors have “convening powers to drive forward regeneration”. Where there is a concerted effort, high streets are far from dead. But to reach that point, there is a need to co-ordinate policies and incentives, rather than rely on isolated decisions – like revaluations – which ignore wider consequences.
For me, the starting point would be to study European counterparts which do not suffer from the same blight. Why are there so many more independent shops and bars in towns and cities of comparable size to our own? Get the answers and pilot them, even if it means foregoing short-term revenue to allow more small businesses to flourish.
We know what the status quo brings and will be perpetuated by the current revaluation. Why not at least try something radically different?
Comments
Want to join the conversation? Please or to comment on this article.