 Good morning and welcome to the 10th meeting of the local government housing and planning committee in 2021. I would like to ask all members and witnesses to ensure that their mobile phones are silent and that all other notifications are turned off during the meeting. Our first item this morning is consideration of whether to take items 4 and 5 in private. Item 4 will be an opportunity for members to reflect on the evidence that they have heard earlier in the meeting. All item 5 will be consideration of our approach to an inquiry on retrofitting housing for net zero. Do members agree to take items 4 and 5 in private? I see agreement there. Great, so confirmation to take those items in private. We've received consent notification in relation to one UK statutory instrument as detailed at item 2 on the agenda. It's the waste and agriculture legislative functions regulation in 2021. The instrument is being laid in the UK Parliament in relation to the European Union withdrawal act and has been classified as type 1. In addition to our consideration of this instrument today, it is also being considered by the Rural Affairs, Islands and Natural Environment Committee and the Net Zero Energy and Transport Committee. Do members have any comments? I see no indication for comments. Is the committee content to approve the Scottish Government's proposal to consent to the proposed provision being made by the UK Government in a statutory instrument laid in the UK Parliament? In doing so, does the committee agree to see further information in relation to how the Scottish Government would replicate the requirement that is applied to the European Commission for any amendments to the regulations using these powers to achieve a high level of environmental protection? Whether any regulations amending the requirements of the management of extracted waste Scotland regulations 2010 would be subject to the negative or affirmative procedure? Why do Scottish ministers consider it appropriate for new powers to be conferred not just on themselves but also on the Secretary of State, subject to a consent requirement? In what circumstances would the Scottish Government consider it appropriate for the UK Government to legislate in this area? Do members consent on the screen? I see a consent for us to seek further information. Agenda item 3 is an opportunity for the committee to take evidence to inform its scrutiny of the valuation and rating coronavirus Scotland Order 2021. This is the second of three sessions that the committee will be holding on the order. This year's programme for government sets out the intention to introduce primary legislation to prevent the use of the material change of circumstance provision in relation to Covid-19. The secondary legislation on the same matter, which relates only to the period since 1 April 2021, is being considered first, as it can be passed within a shorter timescale. While the discussion today is focused on the secondary legislation, the same principles and issues will pertain to the upcoming primary legislation as well. It is important that we take the time to fully understand and explore the issue. I begin by welcoming our first panel this morning, David Mayor, chief executive of the Institute of Revenue, Ratings and Valuation. Martin Clarkson, member of the Business Rates Working Group of the Scottish Property Federation. Pete Wildman, vice-president and Alistair Kirkwood, past president of the Scottish Assessors Association and Charles Golding, senior specialist valuation and investment advisory from the Royal Institute of Chartered Surveyors. We will move straight to questions. Witnesses, if you wish to respond or contribute to the discussion, please add an R to the chat box to indicate this. The blue gene chat function should not be used to write responses on questions as this will not be recorded. I will direct that to all members on the panel. The committee understands that many businesses, particularly small businesses, have been very hard hit by the pandemic and that the proposed order might feel like another obstacle to recovery. However, I also understand the perspective of the Scottish Government that market-wide economic changes to rateable values should only be considered at the point of re-evaluation to ensure fairness to all ratepayers, not all of whom have the resources for lodge appeals. I would like to ask the panel if they believe that the MCC appeal is an appropriate route for supporting businesses in the face of such widespread impact or whether they would like to see alternative forms of business support, which might be fairer or more effective. We will start in the order that I introduced everybody. David Mayor, if you would like to pick that up first, that would be great. Thank you very much, chair. The problem with this particular issue is that the appeals will affect the rate base. Of course, what you cannot do is deny the rate payer the right to appeal. By passing this particular regulation, it removes that right to appeal. Of course, that does weaken the position of the rate payer and it means that their bill will remain at the full rateable value. Having said that, if there is a massive reduction in values as a result of MCC challenges because of Covid, that will affect the level of rate income to the Scottish Government. Of course, the Scottish Government would have to seek alternative sources of revenue to make up the shortfall. As a result of those changes, there will be a barlic consequential of around £150 million, but that is nowhere near the value of the individual reductions in liability to the rate payers if they carry forward the MCC appeals. That is a very difficult situation because the rate payer needs to be supported through a very difficult period. Lots of businesses who have not received relief from the Government are trying to meet their full rate bills. Of course, they do not have the resources because they are not necessarily trading in their full effective way. One of the only ways they can reduce their outgoings is to have a successful challenge with the material change of circumstance. Of course, that has the overall effect of the reduction in income to the Scottish Government, which creates problems in other areas. It will leave section 95 officers with a very difficult situation with shortfalls on budgets. Thank you for that, and thank you for seeing both perspectives there. Martin Clarkson, would you like to come in? Do you have anything to add? Yes, I think that the question was centred around the forms of assistance in the context of MCCs and the Scottish Property Federation, who are representing a broad spectrum of property owners, occupiers and advisers. Clearly welcome the targeted relief that was granted most notably through the years of rates relief, through the retail, hospitality, leisure and aviation forms of relief. Clearly that is welcome. The targeted beneficiaries of that are well-intentioned, but the observation with the clear benefit of hindsight is that perhaps other occupiers, landlords indeed and other rate payers perhaps overlooked or fell through the cracks. That is one point on record in terms of the acknowledgement of the assistance that was granted. The material change of circumstances and appeals of MCCs are a cornerstone of the rating legislation across all of the UK. In seeking to cancel the right of appeal, as the previous speaker mentioned, it is really unwelcome. It defies the natural justice, and as I said, it is one of the cornerstones of rating legislation since its inception. It has knock-on effects in terms of those who did not benefit from the relief that we have mentioned, and it may have future repercussions even into the next revaluation if rate payers and landlords, occupiers, whomever are denied the right to at least have this tested. I have to say that, just in closing on this point, the assessors association under their statutory duty had an obligation to address the issue and could have avoided even the need for material change of circumstances and appeals, which are now partly stymied in the appeals and courts and tribunals process, but I will end there and allow others to contribute. Thank you very much, Martin. If anyone else would like to come in, could you indicate with an R in the chat and then I'll call you on this particular question? I'll move on or give you a moment for that. While we're doing that, I just want to note that Mark Griffin, who is a committee member, has given apologies. I see that Charles Golding and then Alistair Kirkwood would like to come in. Thank you for being here today. In giving my evidence, I just wanted to quickly start by saying that RSES membership is made up of a range of people from local government, from the Scottish assessors themselves and from people acting for rate payers and indeed rate payers themselves. There's not consensus in answer to many of the points that will be raised today, but in giving my answers to these questions, I'll speak to the public advantage in general that's embedded in our world charter. Specifically, in answer to the question, what we're looking for is a fair and equitable system, ultimately. It's unprecedented and as was mentioned, very difficult circumstances. Therefore, the reliefs that have been given to business are very much appreciated and we would like them to continue where appropriate be extended as well. However, we do recognise that it's unprecedented, certain circumstances and that we would like to maintain those rights of appeal in the system where necessary are for this not to be taken as precedent around other later appeals and matters as they go on. Many of our stakeholders have also suggested that appeals have been made with good intentions and good will and that they are appropriate to do so within the system as well, and that's something that we would look to. Finally, I'm sure that it's a point that we'll bring up later in the discussion today, but there are opportunities for reform within the system that we would like to address in order to make sure that in the future some of these problems will not rise in the same way where possible. Thank you. Thank you, Giles. I see that Alistair Kirkwood wants to come in. Thank you for the opportunity to present evidence to the committee. It's been much appreciated. I also like to say that I recognise that the world as a whole is affected by Covid. It's not entirely a matter for rating professionals, albeit that our comments will very much focus on the rating sphere. The first thing that we'd want to say is that we're dealing here with Covid with something that is wholly unprecedented. There's a range of reasons far more extensive, far more complexities than anything that the world has really dealt with, but the rating system in particular has dealt with in any way. I'd welcome the opportunity to go through some of those complexities and the implications of that. Clearly, one would not wish that a circumstance where appeals that have been lodged are ruled out, but we have to recognise the exceptional circumstances that we're in here, particularly with the various other reliefs and benefits that have been granted and will continue to be granted in one form or another. I'd like to focus on the opportunity at some point to talk about the nature of the property market and the particular circumstances around Covid-19 that presents unique challenges in terms of the property market. The number of appeals that have arisen as a result of that—I can expand on that to some extent—and the number of other issues about potential further appeals that could be lodged following any actions that are taken. Last but not least, there are a couple of points about the appeals into a new tribunal service with the effect that, from 1 January 2023, there is an issue there. Overall, in summary, the SAA's view is that there are particular complexities of the situation in which the rating system does not deal well with better and more targeted ways of applying relief and benefit to those businesses that genuinely require that relief and that benefit. They're not perhaps best served by the rating system becoming bogged down in arguing with us over the coming number of years. In terms of litigation, the focus on our view should very much be on the forthcoming revaluation 2023, allowing businesses to settle and adjust to the changes that have come with Covid, making sure that those are reflected and that the revaluation 2023 fits a solid basis for going ahead in the aftermath, if you like, of the Covid situation, rather than the immediate ups and downs that were experienced at that time. I'd happily pause there and welcome opportunities to come back in any of all those points. Thank you very much. I think that that's it. I'm going to move on to the next theme, which is the principles of taxation. Martin Clarkson, you've already come to this, but to continue with the theme of fairness, I'd like to ask for your views on whether the Scottish Government's proposal to retrospectively roll out appeals on the basis of Covid-19 once counter to the principles of fairness and certainty that underpins the Scottish Government's approach to taxation, or do you consider the approach to be justified by the unprecedented circumstances of the pandemic? Perhaps, Alistair, you might have addressed that to some degree too, but maybe we can hear from Charles and David. I think that there's a difficult balance to be struck between timing in order to get reliefs to businesses and in order to make sure that the system is effective in respect of Covid-19, whilst maintaining the valid rights of the appeal that is within the system. We would ask that that balance is considered in both the legislation itself and any application of it going forward. Thank you. Anyone else want to come in on that? David, yes, great. I think that denying the right payer the right to challenge their assessment is wrong. The retrospective effect of trying to bring this to take it right back is, in some respects, damaging the credibility of the rating system. Having said that, Alistair is quite right. We're talking about a short-term situation here. The Government's awarding of the RHLA relief has been very successful and welcomed by commerce and industry. One wonders whether this particular situation could have been dealt with again by reliefs centrally funded, so that the denial of the appeal right would have been cushioned by the award of adequate relief. The problem here is that you have a very large number of appeals. They are worthy appeals within the legislation as it stands at the moment. If that legislation is altered and repealed and that repeal is retrospective, you need to compensate those right payers in another way. The obvious way to compensate them is through a relief scheme, and that relief scheme needs to be targeted. Whether the Barnett consequentials will be sufficient revenue is a point of debate. When you're dealing with 49,000 appeals, I suspect that £145 million is not necessarily enough. I haven't done the detailed sums, but you need to make sure that you're relieving the rate payer of the burden of their rate bill if they've been unable to trade or operate. In the appendix to the report to the committee, there was a mention of car parks, for example. That's a major issue to car parks. They've effectively been rendered useless virtually by people not shopping, not using the car parks and so on. The important thing is to get the proper balance here. You've obviously got to support the rate payer, ensure that the rate payer is able to continue commercially, but at the same time ensure that local government doesn't lose any revenue. There is a very delicate balance for the committee and the Government to take. The previous contributor covered most of the points that I was hoping to make, but I would reiterate the point that retrospective legislation in any sphere, but most of all taxation, although it is not unprecedented, is very unusual and invariably extremely unpopular. It undermines the credibility, as David The Previous contributor said. It impacts hugely on businesses' ability to programme and budget effectively and efficiently and with any certainty. The whole concept of retrospective adjustments is unattractive and unwelcome. The rating sphere is a major cornerstone of legislation and practice for decades that is potentially under threat. Finally, the point that has been made in some preliminary submissions to the panel, the pandemic absolutely was unprecedented and is almost in every criteria the material change of circumstance event that does satisfy most of all the requirements. Getting back to that credibility point, the whole question is if the pandemic itself is not deemed to be a competent material change event, which we must address, then what is? Thank you for that. I see that Alistair would like to come in as well. I think that it would start by saying that no one would wish to see appeal rights disposed of in unjustified circumstances. The point that we need to make is how exceptional the circumstance is in terms of property markets. It is exceptional across the whole world, but in terms of property markets, how exceptional it is. The difficulties that property market has in reacting to that type of circumstances and the particular challenges that will be faced in trying to address that through the appeal system. The first point is about the nature of the property market. Rental values reflect rental values that are as simple as that. Rental markets are not fixed quickly or readily. Generally, the property market reflects changes over a period of time, and it can be slow to react to short changes and difficult for the property market to react to temporary and inconsistent changes in economic circumstances. To explain that a bit further, the process is that the business will consider the implications of the changed economic circumstances and adapt to its business model, but it then has to go through a process of translating that into its understanding of what impact that has on the rental value of its property. It then has to negotiate that rental value with a landlord, who is clearly looking to maximise his return. That needs to be translated into a hard and fast lease agreement, if you like—an adjustment to a lease agreement. That generally takes months, if not longer, of years for those transactions to be resolved, and once that can be resolved, the rating values can come along and assess what the impact has been on the rental values of properties and reflect that into rating assessments. The Covid pandemic in particular had a whole range of complexities that we have not seen before. The whole situation has been particularly fast-moving, particularly complicated and particularly inconsistent. We had initially a national lockdown, but then not every business was closed. We had some shops that were allowed to trade, if they hadn't been a fruit shop at a take-away. We had other fashion shops and book shops that were required to close altogether. Lots of industrial premises stayed open throughout the period, but some didn't. The offices, largely those that were used for essential services, were remained open and others were closed. That was at the first stage of lockdown. After lockdown, we had a series of different changes in different parts of the country at different times, representing different levels of restrictions. Those were in place for a certain period of time, they were lifted and they were taken away. The other complication is that the relief structure and the grand structure affected different businesses to different extents, so some businesses would have benefited greatly from a particular form of relief and other businesses wouldn't. Again, that was not necessarily driven by the type of property that was being occupied, but driven by the nature of the business itself—the extent to which it benefited from the furlough scheme. That is a very complicated picture. Particularly when it is fast moving in that fashion, it is difficult to see how that can be translated into rental agreements between landlords and tenants in terms of agreeing a figure to reflect those various step changes to the process. For those reasons, the SAA would consider that a better way of reflecting that is to go ahead with the 2023 revaluation and allow the markets to have stabilized, steady, taking account of the various factors that have changed over that period of time. Ensure that the 2023 revaluation goes ahead and that that would allow a stable process, which, hopefully, reflects the various difficulties and the changes that are being brought about by those difficulties. However, it is very difficult to see how those individual changes deadline or restriction that is being lifted or being applied can be translated into particular rental values and then translated into rental values. We have quite a few questions to get through and probably about half an hour left. It has been really great to get that overview, which has been quite helpful. However, we might also, in our questions, draw some of those things out as well. If you do not mind, at just an interest of time, I will move on, but you can maybe squeeze more of that in if you do not see it getting drawn out elsewhere. Is that okay? All right. I would like to call on my colleague Paul McClellan. He is going to—actually, I will just give you a little overview. We have got four more themes that we are going to cover, so we are going to be looking at the parliamentary procedure, workload issues, the impact on local government revenues, which we have already begun to touch on a bit, and then other types of support. I would like to call on Paul McClellan, who is going to pick up the theme of parliamentary procedure. Paul McClellan. Thank you, convener, and welcome panel. Before I start, I refer everyone to my register of interest. I am serving councillor on easel than councillor at the moment. As the convener said, it is on and around about the parliamentary process. There are two parts to the question. The first one is whether it is considered that there has been sufficient consultation on the proposals and if you feel that you have had sufficient opportunity to comment on these. Whether you think that there would be more opportunity for stakeholders to feed in views if the changes have been introduced by a primary legislation. Alasdor, you will probably come to yourself first of all to comment on that, and then I will open up obviously to Aaron in the chat. I think that just as Zarian said, just as briefly as you can, please. Indeed, thank you. Essay is not aware of a formal consultation, but the essay has been in contact with the Scottish Government, a particular local government taxation team of the Scottish Government, the officers throughout the pandemic. We have fed our views on these various matters to the Scottish Government over that period of time, but there has not been a formal consultation. Nevertheless, I believe that the essay's views have been reflected by the officials concerned. Alasdor, thank you for that. In terms of other stakeholders, are you aware of, if I mentioned the point about if it introduced by a primary legislation, do you have any thoughts or comments on that at all? Yes, clearly we understand that there is a bill to follow and there will be further consultation on that. I understand that this is a process taken in England in terms of an order in the first instance followed by a substantive bill thereafter. I am not sure of the rationale for that, and to be honest, I am probably not the best person to comment on that, so I do recognise the circumstances, but I do not have any particular position to take on that. Does anybody else want to come in? I am not seeing any other Aaron in the chat books at the moment. Okay. Thank you for that, Paul. I am going to move on now to the theme of workload issues. This is going to be both Miles Briggs and Eleanor Whittam coming in, but we are going to start with Miles. Thank you very much, convener, and good morning to all the panel. I wanted to ask a few questions with regard to the workload on assessors and valuation committees. First, I wondered whether you could outline to the committee your thoughts on the potential implications for workload, specifically around assessors and valuation committees, if we allow for coronavirus-related MCC appeals to go forward and what the potential implication on the system would be. I will maybe start with Alasdair and then come on to Charles. If anyone else would like to come in, can you put an hour in the chat? Thank you. I will try not to extend the time too long. I should start with the appeal volumes, perhaps, in the two weeks leading up to the end of March, just after the Prime Minister's statement to the country. Assessors received something like 47,700 appeals on the basis of Covid-19. We received another 44,600 appeals during the following financial year on the same basis. I suggest that if the general plan does not proceed as outlined in the order, we would receive the same volume again, another 48,000 appeals. I would accept that a number of those properties will be the same property that has been appealed on three occasions during each of those years. That takes us on total to something around 130,000 appeals that we would need to deal with. To put that into perspective, at the 2017 revaluation across the country, we received just under 80,000 appeals. At the 2010 revaluation, we received 71,000 appeals. At each revaluation, it takes normally two to three years to dispose of that 70,000 or 80,000 appeals. In relation to the complexity that I alluded to earlier, I would suggest that those are more complicated appeals to deal with than normal revaluation appeals. I certainly do not see any shortening of that time to deal with those appeals if anything, they are going to be more complicated. I would expect them to require quite a considerable amount of litigation. There are some fairly complex aspects of law that will need to be addressed. Overall, a lengthy exercise to resolve those appeals indicates that, if values are reduced, as certainly a number of people would expect values to be reduced in some sectors, if assessors are required to go back and increase values again, that opens up another set of legal dilemmas and, potentially, another set of appeals and challenges, in that respect. As I said, I can happily go into the complexities of those legal issues and the processes, but in some way that is the position. Clearly, it would present an understatement to say that it would present challenges in completing those appeals and delivering the 2023 revaluation. I am going to be pausier not to take up too much of the committee's time, but I will happily go into any of those points if that is of assistance. Sorry, Miles. If we have time at the end, we might come back for that, but I see that Pete Wildman would like to come in as well. If I could really thank you for the opportunity to speak. I would echo a lot of the points that Alasdor has made. The focus really needs to be very much on the 23 revaluation and delivering that and delivering that seamlessly and to a good standard. The volume of appeals will inevitably take a lot of resource from assessors, and, as Alasdor explained earlier, in many ways, rating relief is a quicker and more targeted approach than a long, complex, drawn-out appeal process that could risk delaying the 23 revaluation, which will then see all the trends that have happened over the past seven years reflected as a revaluation rather than just one little point in time. That is really the point that I want you to make. Thank you very much for that perspective. Charles, I think that you want to come in as well. Yes, on the purest reading of this, where the legislation is not to go through, then equity and justice and the appeals proceeding would be the fairest option, but we are in the economic market and system realities that exist because of Covid-19, and, therefore, where the impact of the appeals would be to such an extent that it affects revaluation and the process of the system itself, then, as has been set out by other members, that is less to the public advantage. What we ask for is that Government agencies are able to, as quickly as possible, set out how appeals will be dealt with, either with the legislation or without, and how the process will look going forward in that regard. Thank you, Charles, and Martin. You would like to come in as well. Yes, thank you, madam convener. I have a very brief point. Not to deny the scale of the appeals that Alison Allan outlined, but just for the benefit of the panel members, those were necessitated really through the statutory timetable that we have to work with in Scotland. That work predicated the bulk and timing of those appeals, without going into the technical niceties of it. They were ultimately protective appeals, particularly the very first ones, where we were really at the start of the whole pandemic. Understandably, businesses were slightly panicked by the whole situation. If I can speak solely with my adviser hat on for a second, we, along with many others, had a duty of care to business clients. We would have been remiss if we had not lodged those appeals because the rating system or at least it did allow those FCC appeals to be lodged because, at that point of time, no-one could have predicted how the pandemic was to play out. Finally, on Alison's point of technical point again, if the rate of values were to, hypothetically, if they are going down and then have to go to be being stated or increased, I think that the wider world would welcome that because that in itself would signal the end of the pandemic, because that would be the only trigger for that to happen. I am not fearful of that scenario at all if that was to occur between now and the next week's evaluation. No, thanks, convener. Both my questions have been answered, so I'm happy to hand over to Elena. Thank you very much, convener. Before I get started, I would like to declare my interest as well that I am a current serving councillor in the East Asia Council and former member of evaluation joint board. I would like to direct my first question to perhaps Pete Nallister, from a Scottish Assessor's point of view. Would additional resources be required in order to process those claims? What impact would there be on other areas of work? Obviously, we know that there are other appeals happening and work related to the next evaluation cycle. Also, perhaps to Martin David and others from the property perspective, whether workload consideration should be a valid consideration in deciding whether to allow those appeals. I don't know if we want to kick off with perhaps Pete Nallister. I think that one of the issues for assessors is that those appeals, as Nallister has outlined, are complex matters and are dealt with by charters and surveyors. Assessors are struggling to recruit qualified staff. Therefore, simply saying put more resources in could be a real challenge to find suitable qualified people to take on this additional workload and to deliver the revaluation workload at the same time. The focus for us should be on the revaluation because that delivers benefits to all ratepayers as all properties are revalued as part of that process. Thank you very much. Alistair, do you have any further perspective on that point? I would like to echo that point, if I may. We are moving into a system of three-yearly revaluations in any event. The whole point of three-yearly revaluations is to be more reactive to the market. That process is to kick off with the 2023 revaliation. That is a welcome process. To achieve that, we had been staffing up to move towards three-yearly revaluations. We have found some very acute difficulties in recruiting staff to serve that purpose, which is a challenge, if you like, already in that respect staffing-wise. Not through resources, I have to say that the Scottish Government has provided resources to appoint staff, but just the number of people available to take up those posts or willing to take up those posts. We have not been able to fill those posts as yet. Therefore, I cannot say that additional resources are not necessarily the answer to that problem. The problems here are a bit more deep-seated. There will be complex appeals, there will be litigation involved, and they will go on for a considerable length of time, regardless of the staffing resource. Those are the two challenges that I have presented by this. Thank you very much for that, Alasdair. Perhaps now, if we go to David, should workforce considerations form part of the decision-making process as to whether or not we would allow or disallow those MCC appeals? I do not think that workforce issues should be taken into account. I think that you are looking at that, as I have said, before undermining the rating system. However, what is the best solution for this particular problem? Is the best solution to allow the MCC appeals to go forward or to effectively stop them by legislation and replace them with an adequate relief scheme? We are implementing the recommendations of Barclay in relation to three-year revaluations. What you are doing here by allowing those appeals to carry on, perhaps not replacing it with a more effective and targeted relief scheme, is putting the revaluation at risk. The points made by Alasdair, particularly in relation to the impact of the outstanding number of appeals and the consequential effect of those, and reversing those appeals possibly within a timescale that leads up to the next revaluation. I would like to remind committee that, in fact, the antecedent date is 1 April 2022. We are now in November 2021. Time is short. It is impossible, I suspect, for the assessor to deliver those necessary legal precedents that have in regard to the antecedent date and dealing with the appeals in parallel. To me, it looks like an enormous task, and I am not in the same position as the assessors. I have the advantage of being the chief executive of a professional association who can comment on those issues. I just believe that it is a massive mountain for the assessor to climb. Thanks very much, David. I see in the chat that Charles would like to come in, please, before I hand back over to the convener. Just to say, as we talk about some of the technical rating and process issues, the main contact that I get are from ratepayers, tenants themselves, who perhaps do not understand necessarily those process issues, but ultimately seek the right answer and a fair rate of payment. Therefore, the compromise is needed, but we must explain how a relief system will work and, if appeals are not allowed, how that is therefore fair and equitable with the other measures that are put in place. Thank you. Before I hand back to Ariane, I see that Martin has an hour in the chat. Martin, if you want to come back in very briefly, because we have only 10 minutes left. Very briefly. Clearly there are resourcing issues on both sides of the divide, if you like. In every respect, on almost a human level, if you like, I am sure everyone in Scotland would rather we weren't having this discussion. The resourcing issue is twofold. That may be a prelude for the final section, but I will pick up on the last point. If ultimately the MCCs are to be retrospectively removed, I think that that is a very reciprocal revisiting retrospectively of the release landscape and that, with the benefit of hindsight, must be open for discussion. Thank you very much, Martin. I am back over to you, convener. I will move on to Megan Gallagher, who will pick up on the theme of act on local government revenues. Thank you, convener, and good morning to our panel. Before I start with my questions this morning, I have a register of interest that I would like to declare, as I am a serving councillor in North Lanarkshire. As the convener said, I would like to touch on local authority revenues this morning. I know that David and others have touched on this particular subject area already, but I would like to ask the panel whether allowing for appeals which would reduce non-domestic rates income and would require the Scottish Government to compensate local authorities is an effective use of public funds. If I could start with David, please, and then I would be happy to open the floor to other answers. Assuming that the appeals are allowed, it would be a loss of revenue to local authorities, and that revenue would have to be replaced. There is no choice. The alternative would be to reduce services, and that would be the last thing that anybody involved with local government would want to do. The reality of the situation is that the rate payers are suffering the legal, legitimate way when the pandemic started was to make MCC appeals. For very good reasons, we now find ourselves in this situation. There is a move to remove that right to protect the funding of local government. All I would say is that protect the funding of local government by doing this, but at the same time ensure that the rate payers are properly rewarded to recognise the fact that their businesses have been in decline and have not been able to trade or whatever effect the pandemic has had on them. Just make sure that it is a balanced effect. The other long run issue that can be dealt with by others on perhaps the next panel is that if you have a relief scheme, you must give clear guidance to local authorities on how to distribute that relief. It is critical that you distribute the relief fairly across all local authorities as well. That is a massive issue. I think that you would have to certainly have some form of consultation on ensuring that the relief is distributed fairly, but to me that appears to be the only way forward to protect both the rate payer and the funding of local government. Thank you, David. I do not see anyone indicating to come in in the chat bar, but if I could maybe bring in Martin, please, if Martin has got any additional comments to make. I echo the previous contributor and reiterate the last point that I made. If ultimately the MCC appeals are to be cancelled, the door has to remain open to some retrospective revisiting of reliefs, whether that is more targeted relief or more blanket relief across the board. Without getting political at all, the understanding from the Westminster budget situation is that consequentials took towards Hollywood will be a repercussion of that. Therefore, the expectation is that there is more funding available. It is clear that that is up to the Scottish Government to target that funding, but one avenue could be retrospective reliefs in lieu of the material change repeals. I do believe that my second question has been picked up on as well by both of the answers that have been given. If there is no other comments, I am quite happy to hand back over to you. Thank you very much, Megan, and we are going to move on to theme 6. That is other types of support, and that is going to be picked up by my colleague Willie Coffey. Thank you very much, convener, and good morning to everyone. We have mentioned a couple of times already other forms of support and relief, and we know that the UK Government announced back in March a £1.5 billion fund for further release for business rates. Scotland's share of that being around £145 million that was mentioned earlier. We recognise that we have not seen any of that money yet, but do you think that the method of distributing that support in a more targeted way by our local councils is a better way to help than to engage in an MCC appeals process? I will initially ask Alasdair or Pete for a view, and then I will come to David Martin and Charles for the first time. If I can come in there, thank you very much. I agree with that basis that there is a better way of allocating this. I have talked about the complexities and difficulties of the property market. Reflecting the changes in the property market are not necessarily applicable to those who require the most benefit. The property market, as such, is a very imprecise way of targeting relief. The previous history of the reliefs that have been given have been very targeted and very effective. I would suggest that that is a better way to approach the matter. I will come back in for anything else if you want me to clarify. We heard last time that SMEs tend not to use the appeal process compared to bigger businesses, so there might be an imbalance in the benefit that is received through an appeals process. That targeted fund, when it arrives, might be a better way of sharing it a fairer way, perhaps, of distributing that support around Scotland's businesses. Perhaps Martin, David, or Charles could comment on that aspect, please. Sorry, I was just waiting for a prompt relief, but there are other sectors that perhaps were not so obvious. As an overriding sector, landlords who fell through the cracks in terms of grant aid and Covid relief that was otherwise denied—again, just because of the technicalities of empty reliefs—are no less deserving. The balance of the difficulty there is what the perception might be in redirecting additional relief in those directions. I am not saying that it is a bad thing, but the whole landscape would have to be considered very carefully, but all in favour of it. Thank you very much for that. Is there anyone else who would like to come in on Willie's questions? Just to say that, with some of the issues that the devil is in the detail, to a certain extent, assumptions around the occupation of properties by particular sectors of business or size of occupation do not always play out. Relief is to be targeted, but to look at the impact of Covid-19 within individual sectors and markets and make sure that relief is appropriate to that. I appreciate that watching the earlier session on the hospitality and leisure reliefs, which were widely accepted there, but also had some feedbacks in those markets around specific aspects of the market where reliefs were not necessarily granted because of the technicality of property arrangements, and therefore looking at how targeting works is essential in terms of an expanded relief programme. Thank you for coming in with that important point. I do not see anybody else who wants to come in. We have a little bit more time, so I just want to come back to Alistair, because I cut you off in the flow of laying a foundation for us. Is there anything there, Alistair, that you were wanting to get across that you felt has not come across through the questions? I emphasise the complexities of the appeals and I really cannot understate that that will be a long and difficult process to resolve those appeals if they go ahead. The second point is the point that one of your previous contributions to the earlier session said. There is no correlation between those who may have received a reduction rent to those who necessarily need the support of Government. Equally, there is no correlation between those who would have lodged an appeal and those who would need support from Government. Those are the two points that I want to get across, but I am happy that the thrust has been covered in the other questions. Happy to expand on anything if it is of assistance. Thank you very much. I am just going to go back to my colleagues and see if there is anything from committee members that we want to pick up on. It is a little trickier here, but if anyone in the committee wants to come back on anything, please put an R in the chat, otherwise we will move on. No, okay. I just want to say thank you very much for joining us this morning and bringing your perspectives. It has been actually very useful contributions for our scrutiny sessions and I am going to now suspend the meeting to allow change over all the witnesses. Thank you. Welcome back. We will now hear from our second panel, the evaluation and rating coronavirus Scotland Order 2021. I welcome to the committee Jonathan Sharmer, policy manager from local government finance, and Kevin Fraser, principal officer of local tax from Perth and Kinross Council. We are going to move straight to questions. Witnesses, if you wish to respond or contribute to the discussion, please add an R to the chat box to indicate this. The BlueJeans chat function should not be used to write responses on questions as they will not be recorded. I am going to start just to let you know that we have a range of themes that we are going to cover this morning, starting with Scottish Government's rationale for the measures, moving on to principles of taxation. We are going to cover parliamentary procedure followed by workload issues, then the impact on local government revenues, and then other types of support. Some of that may come out earlier in the discussion, but I just wanted to give you an overview of what we are hoping to cover together this morning. I am going to start. It is a question that I asked to the previous panel, and I will ask the same question. The committee understands that many businesses, particularly small ones, have been very hard hit by the pandemic. The proposed order might feel like another obstacle to recovery. However, I understand that the perspective of the Scottish Government that the wide market economic changes to rateable values should only be considered at the point of revaluation to ensure fairness to all-rate pairs, not all of whom have had the resources to lodge appeals. If you believe that the MCC appeals are an appropriate route for supporting businesses in the face of such widespread impact, or whether you would like to see alternative forms of business support that might be fairer and more effective, I will start with Jonathan. I will start by saying that COSLA does understand the rationale for the Scottish Government's policy intention in proposing the change in the regulation. We accept that there are exceptional circumstances here. Clearly, something has emerged in terms of the rating system that feels distorted. In that regard, it does seem a sensible response to act the way that the Scottish Government is. We clearly would be extremely concerned with the appeals to be successful and to continue as to the impact that that would have for local government finance. However, we do absolutely understand the challenges that businesses have faced with the impact of Covid-19 and the lockdowns. Local government itself has faced huge challenges during that time. What I would say is that local government has played its part in delivering substantial business support to businesses and makes relief. It is continuing still to be providing some support. We are more than happy to have a little bit more discussion about that, and I will probably just leave it at that at the moment. Thank you, convener. Just through the echo of what Jonathan said about the rationale and understanding of the rationale, it is just a highlight that, if appeals are not to go ahead, there needs to be some additional support, ideally delivered by local authorities who are close to the ratepayers to replace it. I will move on to principles of taxation. Continuing with the theme of fairness, I would like to ask for your reviews on whether the Scottish Government's proposal to retrospectively rule out appeals on the basis of Covid-19 runs counter to the principle of fairness and certainty that underpin the Scottish Government's approach to taxation, or do you consider that approach to be justified by the unprecedented circumstances of the pandemic? You touched on it, but I will keep with Kevin and then we will go to Jonathan C, as you are already up on the screen. It is a tricky balance. You have a tricky balance between fairness and certainty. You could probably argue that allowing access to appeals is fair, but the impact on local authority finance, because you do not know the amount of that, those appeals may lose from the public purse, and it goes against the certainty. I wonder whether managed, costed appeals or other support gives them more certainty than allowing appeals to continue. On the fairness one, I am probably leaning the other way, so it is a tricky balance. Johnathan, do you want to come in on that, or we can move on? Yes. I am happy to echo what Kevin said. The real point to make here is that the measure is really about protecting public finances. That is the key to this. Yes, that is an absolute balance between public finances on one side and the fact that businesses are suffering on the other. Clearly, there are areas where businesses may feel as though they have continued to suffer and not been able to access some of the supports that have been available over this last period. We welcome further discussion with the Scottish Government about what measures could follow on, should the measure come into place and be closed off. Great, thank you for that. We are now moving on to theme 3, parliamentary procedures, and my colleague Paul McClellan will pick that theme up. Thank you, convener. The convener said that it is surrounding the parliamentary process. There are two power questions. The first one is whether you think that there was sufficient consultation on the proposals and if you had an opportunity to comment on the planned changes. The second part is whether you think that there would have been more opportunity for stakeholders to feed in views if the changes had been introduced via primary legislation. I do not know who wants to answer that first, Jonathan. Yes, thank you. I think that, in terms of the second point about the primary legislation, I am not really an expert in that regard and I would take advice from others that perhaps Kevin has a view on that. In terms of the parliamentary process, the consultation, I would not say that we have had a specific consultation around the measure, but I am aware from Scottish Government officials that, for instance, they have been speaking clearly to the likes of the assessors, but they have also, I know, engaged with councils directors of finance, so I think that that is helpful to have had that and clearly me coming in to speak to the committee. I have had some input from directors of finance in order to bring a view to that. For instance, we have not really taken up political positions, Cosler, in regard to this, but I think that what I am really relating is the views that we are getting back from our membership and particularly from the finance. For that, Kevin, you are not an awful lot to add. I apologise again that, like Jonathan, it is not an area that I have had enough involvement in, and I have certainly not been involved in much of the debate regarding this at the moment. Just like Jonathan has said, there has been plenty to play, plenty of discussion, but there is potentially an avenue for greater consultation, but again, that is not something that I am able to give too much more on, I am afraid. Okay, Kevin, thank you both, thanks, convener. Thank you, Paul. We are going to move on to the theme for workload issues, and that is going to be introduced by Miles Briggs. Thank you, convener. Good morning to the second panel. I wanted to ask a question with regard to the practicalities of reviewing valuations each time coronavirus legislation and guidance is amended. I just wondered in terms of your experience, if you had anything you would like to add on that. The previous panel, I do not know if you had a chance to listen to that, heard that there was likely to be 130,000 potential appeals around this, so I just wondered your views on that. Yes, I think that Kevin will be able to give a bit more around what the workload is, but I did hear some of what the assessors had said this morning, and really talking about something like a four-fold increase in appeals. Appeals, I know, are a tricky area anyway, and they require a lot of workload to be able to deal with, and they happen over an extended period of time. This is only going to serve to add substantially to that, and I think that potentially that could become quite unmanagable. Again, it is referring back to whether there are alternatives to be able to support businesses, and I think that that is probably the way we should try to go in all of this. I thank you for the opportunity to hear the previous session, and I am grateful for that opportunity. The workload will be phenomenal for the assessors and the volume of appeals. From a local authority administrative process, appeals come through ordinarily through existing valuation appeals, rather than MCC appeals. The process with that for the local authority is not too in-depth. We get the information from the assessor, we amend the account, and we send it a new bill. The work for the local authority on a case-by-case basis for appeals is not significant. It would really be a case of volume, more than anything else. Again, appeals used to come with interest on overpaid rates, so that is gone because the interest rate has been zero for a significant amount of time. Processing appeals from a local authority is not a huge workload burden, but it is not the same degree that it would affect the assessors and the appellants putting through the appeals and the appeal panels, etc. That would be where the bulk of the workload would fall. Miles, do you want to come back in? No, both my questions have been answered there, convener, so I have to... Thank you. We move on to Alana Witam. Convener, and welcome to the new panellists. The question that I have is arising from the evidence that we heard in the last session, and it directly relates to local government. One of the panellists said, should MCC appeals be disallowed, we may need to revisit and go back and look at the reliefs and supports offered at the height of the pandemic to businesses. My question is about the knock-on effect through local government workforce pressures that we know have been huge over the past couple of years. Do you think that that would be an issue if we had to go back and revisit the reliefs and the support that we have already given out? The second question is, do either of you think that workload pressures should form a part of the decision-making process that we are undertaking at the moment? Johnathan, you want to start, and then over to Kevin Banks. Thank you. The workload pressure around... I have been involved in quite a lot of the business grants support to... I will keep calling in the support, but it is the grants to businesses. I have been able to observe just the sheer amount of commitment and workload that has surrounded those. For us, for local government to revisit that, I think is a substantial ask, and it would have to be resourced. We know that the Scottish Government has responded in looking at having more simplified ways of delivering the business support, so there are opportunities to do things a bit differently than the last time it was done. I suppose what I am saying is that it is not necessary whether local government will come to deliver that if that is required. The best way to do that is for local government and Scottish Government to be having as early a discussion as possible about what support we are going to bring over the next period. Clearly, things have not worked themselves out as quickly as we would have hoped. That is where I place this. We need to sit down with the Scottish Government a lot more on this. We have not heard anything about their proposals going into the next Scottish budget. That discussion is there, but it needs to develop a bit more. Kevin Stewart, do you have anything to add to that? Yes, just to add on the retrospective element of it. The grants were a huge amount of work that local authorities did, and I think that they did very well. I think that the issue of retrospective again is understanding where the gaps were. I am doing a bit more work to understand where the gaps were and what types of business we feel were adequately supported. I am trying to do a bit of work on that to minimise the amount of resources that is required to do it, and to look at specific schemes, rather than opening up on perhaps a discussion level. Thank you very much. I am happy to hand back over to you, Seth. Thank you, Eleanor. We are going to move on to theme 5. Megan Gallagher will pick up on that. Thank you, convener, and good morning to Jonathan and Kevin. I would like to touch on issues relating to local authority revenue. In particular, given that we are now looking at the local government side of things, what specific issues might arise from local government finances now or in the future if there was a significant reduction in non-domestic rates income as a result of successful appeals? If I could start with Kevin, please. If the appeals were to be successful and to be allowed, I think that it is quantifying the impact of that and the sheer fact that the drop in income for Scottish Government and then the knock-on to local authorities would be completely unknown. I think that that would be the biggest challenge and the biggest difficulty. Again, as previous panel members have said, services have to be provided and they cost money. It is a balance of reduced income, means reduced services, potentially. It is just the case of getting our balance right and supportive. In terms of local government budgets, should there be a significant impact on the non-domestic rates income that counts for, it is about £2 billion. It is big money for local government. The way that it works is that, in the shorter term, the Scottish Government would have to bear the risk of that. It would have to adjust the general revenue grant, so that councils receive any kind of drop in the rates that they are collecting. However, ultimately, it is a question of the Scottish budget and what the priorities are. For instance, there are some fairly large sections of the Scottish budget that are, I suppose, being fenced in a way, for instance, health. If the Scottish Government has to continue to honour those, then if there are cuts to their budget, they have to find their way somewhere, and local government is the biggest party that is likely to encounter that. It potentially would work its way in a longer period of time, but it would be substantial. If time allows it, convener, I would like to ask a really quick follow-up question, if that is okay. It is to ask Jonathan and Kevin whether the reduction of non-domestic rates income and the requirement for the Scottish Government to compensate local authorities as an effective use of public funds. It is just on the back of the answers that you gave there. I would be interested to know if you believe that it is an effective use of public funds. I am happy to start with Jonathan this time, please. I probably could do with all the rest of the day to discuss this, but the non-domestic rates work the way that it does at the moment. Councils collect it, and then the funding comes via the local government settlement. In that regard, there is a commitment from the Scottish Government to bear the risk of that. From our point of view from local government, we have talked about on many occasions with the Scottish Government, and we have positions around seeking greater physical empowerment at the local level. Obviously, with that, you get risk transfers. What we have called for around non-domestic rates is simply to be able to have a discussion about what the art of the possible could be if local government was to have some of the powers or perhaps all of the powers returned to them. However, that is a much longer term area of work and huge amounts of things to consider where that to happen, because you are effectively transferring the risk away from the overall. I do not know if that quite answered your question, whether it was the public person that was the issue. No, thank you, Jonathan. That is certainly useful in terms of allowing us to understand the effectiveness of the appeals process, and if I could bring Kevin in, please. I agree with what Jonathan said. One other point is that if your income stream reduces from one stream such as non-domestic rates, you either reduce services or you find the income from somewhere else. I am worried that the risk might lead to potential increases in council tax and all the difficulties that that would entail. Thank you, Megan. I have a supplementary question on that. Jonathan might have started going in the direction of answering my question. In the Scottish Government's shared policy programme with the Greens, there is a commitment to devolve responsibility to local government to set non-domestic rates. I would like to ask for your views on that idea in particular. Do you believe that it would resolve in increased revenue for local authorities and would local authorities have the capacity to take on this additional responsibility in due course if we were to go over to devolve that responsibility? Let's start with Jonathan and then ask Kevin to come in. I suppose that's the gist of the kind of discussion that we would be looking to have. Clearly, we recognise that there is that commitment. I think that until you have had the discussion, start to work out what the pros and cons are of doing things. One of the things about setting non-domestic rates is that it brings a degree of democratic accountability at the local level. It does that with the business community, which we obviously who elect local councillors is the communities that do that. Sometimes it feels that we don't have that kind of connection with the business community. I think that it would do that, and it would allow for local responses so that you are not necessarily having a standard rate across the piece. I appreciate that there are arguments about local authorities and everything else. Those are the sort of discussions that we think would be beneficial to have and to see whether there is a better, more effective, responsive way of using the right system to effectively support businesses as well as to take money from them. Thank you, Jonathan. Kevin, have you got anything to add to the question? Very little, I'm afraid, but just to mention that we know that the empty property rate and the charges for empty property rates will be devolved to local authorities from 2023. That would give us a chance to explore and probably encounter some of the issues that would apply if it was to be taken wider and through the time in non-domestic rates. It would need to be some kind of equalisation scheme between local authorities that are much in business and those who may have less of a commercial profile. We are going to move on to the sixth and final theme. That is other types of support, and my colleague Willie Coffey is going to ask those questions. Thank you very much, convener. Good morning to Jonathan and Kevin. It was to touch base with you on the question that I asked in the previous manner. The UK Government had announced in March of this year a £1.5 million scheme, a Religious Scheme Scotland's share of that being £145 million. We haven't received the money yet, but could I ask you your views and principles? Is that a better way to try to target support for local businesses compared with the appeals process and the EMC process? We heard in the last session that sometimes the bigger companies, bigger businesses tend to benefit better from the appeals process, and conversely we heard that SMEs tend not to. They either don't appeal at all or they are not successful. What is your view on the approaches that might be in front of us to choose from? Jonathan, go ahead. I think that there was a bit of unpinning in pinning of your video, but if you just go ahead that would be great. I said my best bit there, but I was trying again. We touched on the business support that local government has delivered and is effectively still continuing to deliver. I would probably say there that it is whether we can move on a little bit from the reactive type reliefs and supports that have been provided over the period that clearly there was a reason why that had to happen. However, if we are wanting to move into a way that we can support businesses into recovery, there is a range of ways that that could be done. I think that local government is well placed. We do have economic development teams and being able to empower them to be able to work with businesses. In that way, yes, it would be much more targeted. We all recognise that it was quite blanket in terms of the support that was provided and, in some cases, it was not always taken up as well. Going forward, it is much more into the kind of how do we support recovery and how do we tailor support to businesses in a much more effective way? There are a couple of bits and pieces there. One of the issues with SMEs not putting in the appeals is that a lot of them are fully protected at the moment from rates reliefs, so they are just looking at what they pay rather than the rateable values. That is probably an issue inside. However, I think that the support, if you do it through relief schemes instead of through material changes and circumstances, you can target it with those who are in greatest need. It is more certain that you can put the criteria up straight away so that people will know if they are going to be entitled or not rather than having to go through an appeal process. It is potentially more likely to be quicker support and uncertainty. That is the clear thing good for businesses to know if their relief is there for them and if an application process would be quicker method of getting that support than an appeal. The only other thing I would say would be timing. If we are to be bringing in support schemes for local authorities, our main play would be to set up and deliver the clear detail at our main play. Thank you for that. I will follow up very briefly. In the submission to the committee from the wholesale sector, they were in a cocktuna rock and hard place during the pandemic, in that they were legally able to trade and perfectly able to trade, but they had nobody to trade with, and they make the very valid point that in the absence of any clarity about the relief scheme that I mentioned a moment ago from the UK and then the Scottish Government, they would prefer I think the appeal process to remain in place, because I think they were fearful that we might fall through the net in receiving any support through our relief scheme. Do you have any views on that, particularly in relation to that sector, the wholesale sector? I will probably let Kevin cover it mostly. We need to have that discussion with the Scottish Government about whether there is going to be more support where it needs to go. The Scottish Government themselves have been seeking to address the gaps, if you like, and potentially there are still areas that we would benefit, but I will come back to the point of what is the benefit that we want to offer businesses, and it may not just be that sector. That may be a much more tailored, much more economic development-focused approach, so I will probably repeat myself a little bit about that. There are obviously two options. There is the option of amending or introducing new relief schemes, so that sectors that we feel are unjustly omitted from previous support are included, and there is also the way of doing specific grants as an option alternative to pick up some of those issues. However, it is important to look at who has been missed out of the support and make sure that there is enough discussion and understanding, so that fully rounded support can be given to everybody who needs it. It is very helpful, Kevin. Back to you, convener. Thank you, Willie. We have exhausted our questions and really appreciate your coming to join us, Jonathan and Kevin, to give us your evidence. It has been very helpful for the committee to hear your perspectives. We are now going to move into private. As previously agreed, we will now consider items 4 and 5 in private. I now close the public part of the meeting.