 Nid amgylchedd ar gweithio i gweithio ar y 12 o gweithio â'r gwni Gwladeth Cymru ar gweithio canadau. Rydyn ni'n pethau cyddiol, bywch yn gweithio i gyrfa ar y cerdd, ac yn gweithio aeth ar gweithio o gŴio hyfforddiol mewn ddweud y cyddiol, mae'n gweithio i gailig ein cyddiad i gaelig yr gweithio. Mae'n dwylo'n falch am sullfa ar Yndi Gwitman. A'r Alexander Stewart yn gweithio llywydd ydw i'n gweithio i gyd. Patrick Harvie is pleased to see how it is able to attend as a substitute committee member on behalf of Andy Wightman. Welcome, Patrick. Thank you. We move to agenda item 1, non-domestic rates, but before we move to all relevance, I can invite Patrick Harvie to declare any reasonable interest relevant to the remit of this committee. Thank you, convener. I do not believe that I have any registerable interest relevant to this committee's remit. Okay. Thank you very much. The committee will take evidence in non-domestic rates from a number of stakeholders followed by a session by Ken Barclay and a colleague from the Barclay review, which has been tasked with reviewing the rates system. Today's session is a precursor piece of work to identify issues that our committee may wish to explore in relation to proposed changes of non-domestic rates following the Barclay review. I therefore welcome Jonathan Sharma, policy manager and co-sular, Stuart McKinnon, external affairs Scotland, Federation of Small Businesses, David Lawrence, director of Scottish Retail Consortium, Arthur McTaggart, President and Ian Milton, Vice President Scottish Assessor's Association and Graham Jones, chief executive Scottish financial enterprise. Welcome everyone this morning. Given the amount of witnesses that we have this morning, we are not going to have opening statements. We are going to go straight to questions, but the first question will be an opportunity for you to put something on the record in short order about how you might like to see the current system of non-domestic rates change within Scotland. You have all given written evidence. If there is a lot of evidence there, but if you have a particular key ask, you might want to put that on the record at this stage. What would you seek to change? Ken Barclay's current afterwards, of course, and then we could maybe get some discussion in relation to that. Perhaps, Mr Sharma, we might start with yourself. What would COSLA's key ask speed be? What would you like to see as one of the key outcomes of the Barclay review? COSLA has stated politically that we would be looking to see the return of business rights to local control. We believe that a full localisation of business rights would ultimately re-establish and maintain democratic local accountability of local government funding much closer to the local business communities themselves. That is our stated aim. What we would say in practice is that there are a lot of milestones to reach before we can get to that kind of return of full rates to local control. We very much see that as a direction of travel and what we would like to see is for that journey to develop and we welcome the Barclay review in regard to that, to ask the question what is the actual intention of business rights, why are we trying to levy them, what are we trying to achieve and about ensuring that that really is about recognising this is a local taxation, it is about establishing the local connection between businesses, between the democratic elected councillors and with the communities that are served by those councils and are also served by those businesses. We think that there is a very, very important synergy there connection that needs to be re-established in order to ensure that businesses understand why they are being charged, what they are being charged and that they are able to contribute to that, to be able to influence how that happens to them in their local environment. That is a fairly clear key ask and you are just expanding on your reasons in the case for why you believe that that should happen and that is on the record. I am sure that some of our witnesses will want to respond at some point in relation to how they feel about that. That is pretty clear, so I have cut you off there a bit just for time purposes. Mr McKinnon, what would your key ask be? Good morning. From the small business perspective, we would really like the Barclay review to do some short-term measures and some medium to long-term measures. Short-term measures would include making the business rights system more user-friendly, more transparent. We would like to see more frequent re-valuations. We would like to retain extra help for Scotland's small business community and we would like to address some concerns for businesses not helped by the small business bonus scheme. In the medium to long-term, we would like to see rate reforms which address issues related to the rise of the digital economy and also try to introduce an element of turnover into the business rights system. A lot in that, so a number of key asks, if you like, Mr Mellon. Mr Lawn's deal. Good morning. We are partly to blame for the creation of the Barclay review. Ken Barclay may have something to say on that later on. We instigated it. We organised the business community to voice the need for a review of rates. The Scottish Government listened to that, so we have very much welcomed the creation of the Barclay review. In terms of our asks, the word was used. We are wanting to see a system that flexes with the economy that provides for a more competitive rate system and a lower tax burden. We also want to see a more coherent approach. We are happy to expand on that. In terms of specifics, we have put on our submission to Barclay and met with Ken Barclay things around more frequent re-evaluations, which Stuart has already mentioned, reducing the period between undertaking re-evaluations and implementing them. The experts on the table will call that the antecedent period. We are looking for a timetable plan to reduce the rates burden, as I have mentioned, and, frankly, living up to some of the aspirations within the Scottish Government's economic strategy around having the most competitive business rate system in the UK. Things like the doubling of the large business rate supplement is something that we think flies in the face of that. If I may, we may come back on to this. The gentleman from Coasalom mentioned the relocalisation of business rates. We would take a different view on that and would be happy to come back to that later on. That might just be my follow-up question once we have heard all the key asks. Can I go to Mr Jones next if that is okay? I think that Scottish Assessors might have a more operational view of some of those key asks, if that makes sense. I agree with Stuart and David many of the points that they have raised there. Financial service in Scotland is made up of some of the biggest businesses in the country, and they are also made up of some very small businesses. I guess that probably the primary thing that we would be looking to achieve is to have a strong underlying economy, so that is something that we feel very passionate about and we would want to obviously work with colleagues on. Thank you very much. Is Mr McTiger or Mr Milford who wants to respond on behalf of the Assessors? Yes, I think that we can answer very quickly. I think that the main issue for Assessors at the moment is the lack of power to gather information. For a tax to be fair and equal and equitable, it needs to have a good information base. We need to have access to all the relevant information that allows us to arrive at an accurate and acceptable value for all property at the time of revaluation. I think that we have argued for a long time now that the powers that we have are not sufficient to allow us to gather information. I think that we have seen in the press and in some of the statements made for this hearing that the level of return in some sectors is actually quite small. If some consideration can be given to increasing or enhancing those powers, firstly, to gather the information, but secondly, to prevent appeals being heard unless that information has been submitted, then I think that that will go a long way towards adding to the fairness of the tax. That is an underlying principle and that is something that we always strive to achieve. I would also echo the add to the mentions made of transparency. We believe that we are transparent, but we could do more. We have said that we could do more, but we are currently at a breakpoint at the moment where we are stymied by lack of funding, which we fund ourselves, and other legislation that prevents us making certain information available—freedom of information, not sorry—dispotection and commercial confidentiality prevents a lot of the information that we hold being made available. We need to look for legal gateways to add to the information, but certainly we have a website that is visited by tens of thousands of people a month to gather information on the rates, rateable value and to link through to how rates are calculated and what they have to pay. We could do much more on that and be much more interactive, but I think that we need to consider how that is best done in terms of funding and the legislative background for that. Okay, that is interesting. That is the assessor site that I have used in my day job as a MSP on several occasions. It is pretty instantaneous and seems pretty up-to-date. Just before we go on and look at some of the calls over local democracy in terms of non-domestic rates, Mr McTaggart mentioned about not getting information. I think that the Federation of Small Businesses might have mentioned that in terms of informing the assessors of commercial renting. Is there a requirement to do that and to complete that particular part of the process under one third? Would that be one of the things that we are very good at? Yes, certainly. Where a property is let, the rate payer is obliged by a law to make a return to advise what that rent is and the details behind the lease. Beyond that, we look for information on building costs, cost of plant and machinery, the sale price of land and, in certain cases, we look at turnover for licensed premises, hotels and any of the larger subjects like utilities that are valued on receipts and expenditure. We will need to see the statutory accounts of those organisations. That information, we have a bit of legislation that is now 160 years old, and it is enforced by a £1,000 fine through the procurator fiscal. It is very hard to enforce that. We all know that the procurators fiscal have other business that is more pressing than doing this. The burden of proof that we require to establish before going to the sheriff court is quite high. We much prefer to have a system that was given more direct penalties in terms of the value or the ability to appeal if there was no return made, when a return could have been made. That is the important thing. Certainly, how would it anticipate that a number of the smaller businesses might not have a return to make, because they might not have property that requires an entry in the valuation, although they might work from home. Others might be owner-occupied, so there might not be a return to make. In that case, we would not expect to make a return, but there is sufficient let property for us to gather enough information to establish schemes of value. When we have gaps in that, it becomes more difficult to do that. It makes it unreliable. The Government wants out of our revaluation of predictability in terms of the tax take, and if that is put at risk by appeal reductions, that is something that we need to try and prevent. Just very briefly, I wonder whether it was your submission that mentioned that issue about only one-third providing that information. That could be because of challenges for small businesses to be able to do that. Is there a way of making the system easier for small businesses to give the required information to the assessors? Yes, so the data collection issue is not a new issue for this revaluation. We had exactly the same issues at the last revaluation, again, with the same problems in the same sectors. If we were looking to modernise the business rate system, we could merge many parts of the interface for the system, so you would pay your bill, submit your data, learn about Government policy, all in a single place. I would also make the case for data sharing between authorities, so could the assessors get information from regulators from HMRC to be able to come up with accurate valuations? I understand the assessor's case for additional powers to get rental data, but there are smart ways that we could approach that particular problem without that as well. That's helpful. Mr Milton, on which was the last comment. Very briefly, convener. This is an 1854 Lans Valuation Act. It only gives us a power to get information to make an entry in the valuation role. So if we come to wanting to make a different entry in the valuation role for a different property and we want to rely on some cost information that we could get from a newly constructed school or something like that, we don't actually have that statutory power to go and get that information. So to maintain entries in the valuation role and to defend entries in the valuation role, we don't have powers to request that information at present. And the other side of the coin is that a lot of the estate is unoccupied, a lot of the non-domestic property is unoccupied. So if we look at rents in my area, only 38% of properties are let, so I only issued forms to 38% of rateable occupiers. So, you know, a low 29% of Federation small businesses members making a return doesn't sound particularly unreasonable if you think that probably the starting point was about 38%. Okay, thank you, but that's helpful. Moving on, a few witnesses mentioned that they might have some concerns about NDR reverting to local authorities. Can I maybe pose the question this way and I'll bring Mr Sharma to give comments at the end of this, right, about if there's concerns, what are they? But rather than just saying no to that key ask, how could you be reassured and we work towards transferring those powers to local authorities? So what are the concerns around that and what reassurances would be helpful? Mr Lonsdale, maybe? Thanks, convener. We have supported a degree of local flexibility in the rate system, so we have been great supporters of business improvement districts. The Scottish Government has introduced something called the business rates incentivisation scheme, and I think that's begun to generate £2 million or £3 million according to a spice paper that was published last month. That money has been generated for local government. We have been supportive of the power that came in under the Community Empowerment Act to give councils discretion to cut business rates in their areas. My understanding is that only two councils have acted on that in the three financial years since that power came into effect, but you may want to come back on that. So we have been supportive, as I say, of a degree of local flexibility, but I think that we would be very much against relocalisation of the poundage rate. Simple reason, we just think, business would be treated as a cash cow at the end of the day. I guess we would have more faith in their ability to take on control once again of the poundage rate if we'd seen greater use, for example, of this new discretionary local rights relief, or if we'd seen the money from that bris being put into, transparently being put into something to help the economy. So I guess those in favour of that need to actually make the case, frankly, and I don't think we've been convinced thus far. So no reassurances that you could be given, it's just I know? No to local democracy on NDR? I don't think it's a noted local democracy at all for the reasons I've just outlined, frankly, convener. Okay. I'm going to put other MSPs in the middle. Is there a chance for others to put some stuff on the record in relation to Mr McKinnon? We asked our members last year about what they thought about localisation, and a very small proportion of our members were in favour of it. Bluntly, as David said, because businesses fear that their bills will go up. You only have to look at the submission from the assessors to understand that we're dealing with an already complex system. So if we add to that complex system the possibility to 32 different poundage rates, 32 different relief schemes, we've got another thousand variations that could be added to a system that's already not well understood by the business community. See, that becomes very helpful, Mr McKinnon, because you're starting to put on record what the concerns would be to see how any localised system would need some safeguards within it to make it operate effectively. Anyone else? Mr George, do you want to add anything to that? It's really at a general level. I'm not an expert in the way that these gentlemen are, and they've done a very deep dive on this subject matter. From an SFE, from just an overall economic point of view, the issues that affect the clients and many of Stewart's members and David's members will be clients of Scottish financial institutions. So really it is the fact that, depending on what happens here, is that this will tend to inform investment decisions and lending decisions, so it drives SME customer behaviour. Okay, thank you. Mr Sharma will take you in and a moment to mop some of this up. Also, Mr McTaggart, Mr Milton, but I know that this is of interest to members of the committee, so I'll take Mr Simpson first. Thanks, convener. I just want to home in on this localisation question. Mr McKinnon, Mr Lonsdale, you appear to be saying, if I can just summarise your view, that you don't trust local politicians, you think they'll wap your bills up. Of course, they could put them down as well. So what is the problem you have with local politicians? Now back to your day, perhaps. Mr Lonsdale, do you want to come in on some of that? Don't have a problem at all with local politicians, but, as I said in my original answer, for the last 18 plus months, local authorities in Scotland have had the power to reduce business rates in the area. Thus far, out of the 32, only two have acted. So if there had been a greater take-up of that power, if there had been a greater and transparent willingness to cut business rates and reflect some of the arguments that you've heard from ourselves and the FSB and other organisations about what's happening in the economy, that would have provided a greater degree of faith that councils, in a sense, got it. As I say, we've been very supportive of various other aspects, business improvement districts and so on and so forth. At the end of the day, it's for those who think that this is important to relocalise the business rate to make the case and persuade people that it would be better under that sort of regime and we've not been persuaded thus far. In fact, you'll be listening to those comments, Mr McKinnon. You were named as well. Obviously, we're trying to relay what our members have told us. Perhaps the business community understands the pressure that local government is under and many of our members have a strong relationship with their councils as well, but they think that, given the choice between additional revenue and the strength of the local economy, they're going to choose revenue every time, specifically in comparison if they're forced to make a choice between increasing council tax and increasing business rates. I'm going to need a lot of members watching in on this. I promise that I will to other witnesses in. I promise you, Mr Gibson. Thank you, convener. I want to look at it from a different perspective. I represent North Ayrshire, and Elaine represents North Lanarkshire. Those are areas where much of the business spend does not go to businesses in those areas. Glasgow, for example, is a magnet, obviously, for my constituents, Elaine and others, as people go in and spend their money in the city. In the same situation, no doubt, it happens with Jenny's constituents in Fife. He'll go into Edinburgh. Surely, Mr Sharma, if we have a localisation of business rates, what would happen is that Edinburgh and Glasgow would become considerably more prosperous, and it would be to have a detrimental effect on areas such as North Ayrshire, North Lanarkshire and so on, unless another series of complex compensatory mechanisms were established. A lot of us are certainly pro-localisation. The issue for me is the practical application of such a policy because of the differences in terms of how money is actually spent in businesses across Scotland. Mr Sharma, do you want to respond to that? I can just get our heads up to Mr McTaggart and Mr Milton, because you want to make some comments in relation to the complexity of the management of the system, because you would certainly have a role in relation to some of that. Mr Sharma. I think that, just to make the general point, that is an issue that is fully understood within the local government community. Basically, what happens at the moment is that the Scottish Government carries the risk in terms of the business rates. Clearly, there are some councils that can generate business rates more easily, readily than others can. Clearly, what I tried to say in my opening speech was that what we are calling for is a direction of travel that takes us towards greater flexibility and then potentially ultimately to full localisation. We do welcome the local reliefs and take the criticism that councils have not necessarily taken up that power the way perhaps some of the business community might have expected. I suppose all I could say about that is that there is ultimately another issue here, which is about money. It's about what councils can afford to do and the business rates itself is a £2.8 billion sum of money. It's a very important sum of money within the local government funding framework. All of those issues, yes, there are complexities in terms of trying to take any of that forward, but there are steps that we believe that could be taken. The local reliefs is one of them, that's what I'm saying, and then there are other steps that could be taken around some flexibility around the poundage, for instance. We don't see that that would necessarily create disruption in such a way that would lose the face of the business communities. In Scottish assessors are fiercely independent and have to make whatever the system work well. Yes, we have to do our side of it, the assessment side of it, the property assessment side, obviously NDR is local taxation and as assessors we're local, we assess it locally, but that's just the starting point of the rating system, if you like. Localisation itself is really on the rating side rather than the property valuation and assessment side, but as somebody who's practised in local taxation and NDR for many, many years, it's clear to me that the challenge to any stakeholder and any system of taxation is stability. Stability in terms of income to whichever taxing authority requires that income be at local or central government, but also stability in terms of the tax payers, they need to have certainty and stability in their outgoings and also to be able to plan ahead and model their businesses. Mr McTaggart, do you want to add anything to that? Not really, I think that Mr Milton's covered that point. Mr Lawn's deal, do you want to add anything? Thanks, convener. I think Mr Gibson's actually put his finger on a very pertinent issue. We published a report, this report, at the beginning of this month. It alights on the fact that there's been a reduction in the number of shops in Scotland over the last six or seven years by about 1700 shops. We are anticipating that decrease in the number of shops in Scotland to continue and in fact accelerate and our study looks at where those shops are likely to—the reduction shops are likely to take place and it's more economically fragile and vulnerable communities. I think that there's an element in Mr Gibson's question, which is just be slightly careful what one wishes for in terms of relocalisation of the business rate. I think that he makes a pertinent point. Final supplementary on this from Elaine Smith and Patrick Harvie to take us on to the next section. Thanks very much, convener. I was listening with interest to my colleague Kenneth Gibson's question, which is something that has to be considered. I would normally be thinking that we should devolve down as much as possible. That would be something that I would naturally be drawn to, but it makes a good point about areas such as North Lanarkshire. If you look at somewhere like that, and if you specifically take it down to a town such as Coatbridge, if we turn it the other way round, it's not just about business but about how people view their local area, how communities view what's happening there and how they feel about that. If you take a town such as Coatbridge with all the empty shops, and recently a number of those are beginning to be subject to vandalism, fire, et cetera, that's not good for local communities, but the local council might be best placed to find solutions to that rather than central solutions. I have a couple of questions about shops closing in small businesses, perhaps not opening up. The first one would be, is there any point in looking at two different systems? For example, with the larger rates being subject to a more central control and to more redistribution, because I see something in the papers about the strategic growth for Scotland as a whole, and the economy as a whole, and for smaller business rates to be subject to more devolution, simply because would those just be considered cash cows, is the term that some of you used, or would local authorities be better placed to think, well, we need to encourage small businesses back into our town centres and to do that, maybe they would take a different approach. That's one question that I would have. The second question on that would be about empty properties and relief on empty properties, because a lot of the empty properties certainly in my area are owned by big, large companies, sometimes offshore companies, and therefore does the rates relief on empty properties actually act as some kind of disincentive for business? Does it allow properties to lie empty where they could actually perhaps be used, and is that something that local authorities might be better placed to make judgments on? What are the two-tier systems first, then? Two potential systems running in tandem, one devolved, one not, anyone to comment in relation to that? Mr McKinnon, then Mr Sharma. Obviously, the variation in small businesses is champion for local communities and small shops, and I think that while I can't see our members that run small shops feeling any different to the wider business community in relation to localisation. I would highlight, as David did, that the current rates relief powers have been underused, and it's something that the FSB is calling for in its local government manifesto this year, that perhaps more local authorities could use those rate relief powers to target target hard pressed key local high streets in town centre units. In relation to empty property, this is something that is very concerning for the Federation of Small Businesses. Over the past five to ten years, we have seen a number of high profile closures with large public sector and private sector organisations continually choosing to withdraw from our local, from small town Scotland. If we are going to inject new life into our town centres and high streets, we need a wide variety of different types of operators, retail and non-retail, and we need to make it as attractive as possible for public and private organisations to relocate their staff into town centres and high streets. Business rates is one factor, but we need to look at the wider property system. You are absolutely right that, in certain towns and high streets, a single landlord can have a big impact on the attractiveness of a place. Therefore, if that single landlord is getting rate relief on the empty properties, if they weren't getting that, they might be looking at the price of charging for rents. Would that maybe incentivise small businesses to open up in those properties? When the Scottish Government made its recent changes to empty property relief, we supported those changes on the basis that we would expect rents to drop because landlords are paying more in rates. Unfortunately, the wider changes that we are seeing in the economy at the same time, where we are seeing less property-dependent industries and the public sector also reduce its estate, that means that there is still a significant oversupply of property in a lot of places. You talked about the digital toll economy, Mr McKinnon. Is that having an impact on small town centres, but could you expand briefly on that? Yes, absolutely. Probably SFEs and David's members are making similar decisions. They are going more of our customers are doing more of their business online. Therefore, we are going to close some of our estates. Bank branch closures is a key concern for us. Similarly, you are seeing the public sector doing the same. You saw the police station counter closures, where the decision was made that they are being underused and let's close our estate. It is the digital economy that is a factor here. How we adapt our systems and processes to make sure that Scotland's small towns and other places that are really important to us are still vibrant is a key challenge and is something that we all need to look at. Property tax and property regulation is something that we will need to adapt in the future. Mr Sharmer, the original question was to perhaps systems in relation to NDR depending on the size of the property and tackling empty properties, Mr Sharmer? I was really just going to say briefly that in terms of talking about a direction of travel that that's the kind of idea that we would think ourselves that could you look at just how you shape the rate system so that potentially local government could have control of certain aspects of it. I think there are risks within all of that. Equally, there is a key point about this. It was mentioned that small businesses do have a lot of contact with local economic development departments and I think that that is the kind of innovation that we would like to explore. It is what we have spoken to the Scottish Government to say that there are different things you could do here to move towards full control. It is about getting that flexibility back so that councils could be using levers around that and I do take the point that the local reliefs is one of those aspects but ability to be able to manoeuvre around the rates itself, the poundage is also quite important to us. As I say, there are risks in just taking all the big money bits out of that but I'm not ruling that out. I'm going to take a second. Mr Lloyds will indicate that you wanted to make a comment there. Just about obviously in terms of town centres for example, people are in a sense if not voting with their feet, at least voting with their keypants and their smartphones so there is this major structural shift in the retail industry. About a quarter of non-food retail spend is now done online and our own figures demonstrate that about one in 10 shops in Scotland is empty. I think that there is quite a lot being done to support public policy, a more supportive regime for town centres so you've got a lot of private public sector collaboration. You've got the town centre first principle so Stuart talked about public bodies thinking about locating in a town centre if they're going to make some changes. There's obviously been an amount of investment in the public realm but for us the missing ingredient of all of that is really the cost and ease of doing business in our town centres. Certainly when I go out and speak to our members and retailers in Scotland it's business rates that come to the fore each and every time. Both these issues, a two-tier system if you like and rate relief for deal with empty properties, really fall outside the assessment, the valuation and assessment area. But as a valuer if we want to, mentions being made to the possibility that some measures could lead to rents coming down and occupation going up, well if we want to make sure that they fall in rents is picked up we need to make sure that we have regular evaluations to pick those changes up and that's my only point. Thanks very much convener. I wanted to just follow up briefly on the localisation before moving on to other issues and perhaps just observe very quickly first that I lost count in the first 10 minutes of the number of references to business rates and I think only one witness so far Mr Milton has used the term NDR. I worry that there's a slight danger that we forget that it's not only businesses that pay non-domestic rates, you're sitting in a building that pays nearly £7 million in NDR. Businesses do pay it but it's not a tax on their business, it's a property tax and there are many other non-business organisations that pay NDR. On localisation I wonder whether we should be surprised that the power, the discretion to reduce business rates at local level hasn't been very much used in much the same way that I don't think we should be surprised that the original power of the Scottish Parliament to vary income tax within very tight limits wasn't used either. It's the lack of an ability of our local council to set that change into a wider context. Surely if we want local councils to have the flexibility but not only to see that that drives them toward regarding one group of payers as a cash cow, as Mr Lonsdale put it, we should be ensuring that they have genuine flexibility as is normal in so many other European countries on a range of different financial measures, not only on one. If local government wanted to reduce the business rate poundage at the moment they would either need to hike council tax and that's within a rate capping system from national government on council tax or they would need to start increasing fees and charges for people who very often low income people who have highest demand on public services. Shouldn't we be looking at a wider fiscal decentralisation in order to ensure that local councils are able to exercise genuine autonomy rather than simply being forced to use what limited autonomy they have in a predetermined way? I want to go first on this one. No one's catching my eye here. Mr Lonsdale, you smiled, right? Well, I think a lot of Patrick Harvey's contribution there was obviously a statement and then a question at the end about wider fiscal devolution and obviously we would look at any practical proposals that came forward with an open mind as we did with the commission on local tax reform that reported about 18 months ago which was looking at the council tax and potential replacements for that and they came out with a number of suggestions including a local sales tax which it wouldn't surprise you to learn, convener, that filled our members with a degree of horror having a second form of VAT. We'll be open minded if there are other proposals coming forward from that. We're here today to talk about business rates or non-domestic rates and obviously you've got Ken Barkley after us and as I understand it he's been tasked with looking at improving the business rate system or the non-domestic rate system in Scotland, not at wider basket of powers. Obviously that's something for the political parties in Parliament. I think we have Patrick, whether or not Ken Barkley was looking at how NDR fits into the wider gambit of powers and taxation that exists and I don't think he is, we're just double checking that but anyone else wants to make a comment in relation to that before Mr Harvey comes in with his next question? Mr Milton. Just very briefly, you've got local assesses across Scotland and certainly I as a local assessor in Grampian have worked with the local authorities in my area on for example bids and also on an interesting project when they were looking at tax incrementing financing so there's a wealth of property valuation expertise that can inform decisions that have been made on that sort of area but I suppose your point is wiggle room. It's very specifically NDR, we were just checking the terms and reference for the review. Patrick. Seeing everything in context. Moving on to the issue of reliefs and exemptions. As you know I'm here in lieu of my colleague Andy Wightman and Andy was telling me about a visit to a local business in his region which is benefiting from the small business bonus scheme. They're under that £15,000 threshold so they're happily enjoying that relief from paying non-domestic rates but the shop next door is vacant and the landlord has advertised it at the previous rent plus what would have been the non-domestic rate knowing that any future tenant would benefit from that. Is there a danger or do any of you see evidence that the small business bonus scheme in the way that it operates rather than the principal but in the way that it operates is in danger of driving up rents and therefore not passing on the benefit that's coming from the public purse to small businesses or other organisations paying non-domestic rates but rather to landowners, landlords, some of whom are remote and not actually contributing actively to the Scottish economy. Mr McTaggart. I think that it's absolutely right what Mr Harvie says that there are no philanthropic landlords out there if they see a chance to increase the rent because the tenant's making a greater profit on his business because he's paying less by way of rates payment and they will take that opportunity. This is not a new phenomenon. This happened a number of years ago and we had enterprise zones and these were not around the country and the rents in there clearly showed that the lack of having any rates to pay did increase the rents that were paid by the tenants. It's also become evident in a number of streets where charity shops stretch the street where there are charity shops and because they don't pay rates because of a charitable relief, they can put more towards rent or the landlord thinks that they should put more towards rent and that does happen. It's becoming quite clear now that we're into a number of years of small business bonus scheme that certain properties where the small business bonus scheme is in play for the size of shop or office that's there, then the landlord is seeking through rent reviews to start to take a share of that saving and I think that that's the way landlords operate and I think that that's the danger of it and I think it's become apparent in some shops and some offices at this revaluation that the rate of increase in value for these premises has outstripped perhaps those within shopping centres. I think that's my view. There are obviously a number of variables that play in any analysis but that I think that's one clear and consistent trend that we've observed in analysis. Patrick, is there anything that you think Mr McTaggart can be done to mitigate against that happening? Is it one of those unintended consequences that's always going to happen because of the nature of that relationship? Yes, I think that it's the balance you have to strike in having a basket of reliefs and when you do get a complex array of reliefs, it does complicate the letting market and it makes it gone away from, a purity is not a word, you want to perhaps use a letting market but it does take away from that and there are, it does add other variables but I think that's a political decision as to whether you want to have a rates relief but I think that you do need to be aware of having a basket of reliefs of the consequences that will have on any property market. One option for example might be that it's not a simple monetary cap in terms of rateable value that there are other criteria that determine eligibility that would leave a landlord not having the confidence to know whoever rents my property will be getting the small business bonus so I know they can afford to pay a bit more rent that there would be some flexibility there. Other criteria could be in relation to the type of business for example the Lothian assessor has confirmed that of the 1153 self-catering properties in their area 92% will pay no NDR at all many of those properties may be owned by wealthy people perhaps living out of the country you know on high incomes I think many people would question whether those kind of people should be entitled the same kind of relief as somebody who is genuinely running a small business who is based in Scotland or based in the area so some of these other aspects about how such a relief scheme should be designed could limit the unfairness that is at risk of arising. Other criteria rather than a automatic entitlement to small business bonus as long as you're below the threshold and just to correct it's below the threshold across a range of your properties that local authority areas if you get two properties and it takes you above the assessor's value you wouldn't qualify for a small business bonus so quite often properties are businesses of two, three, four wouldn't qualify for a small business bonus. Conditionality on small business bonus any thoughts on that Mr McKinnon? Yeah okay well I think we've come across very little evidence of the phenomena that Patrick Stewart described about landlords hiking rents as a consequence of the property being eligible for the small business bonus but we would agree that there needs to be valuable work done about ensuring that the property market works for smaller businesses that don't have the resources of their larger counterparts. I think it just to stand up for self-caterers for a moment I think many self-caterers would say that they run valuable small businesses especially not just in Edinburgh but in our rural north where they provide where many people have a variety of different incomes they do a little bit of self-catering they maybe do a little bit of something else they tag together enough to keep themselves going and I would dispute I would say that many people who run self-catering apartments or cottages or whatever would say that they do run small businesses and therefore they should be entitled to that sort of that sort of relief but perhaps not all. Well I think if we're going to talk about the issues around conditionality and how you would build additional criteria into the system and manage it effectively so rather than get into the merits of some self-catering businesses and others perhaps we could focus on the system. There is some conditionality at present obviously if you have a large number of properties that your aggregate RV knocks you out of the small business bonus. I think more generally we regard the small business bonus as a tapering of the existing system that it results in about £200 million of notional lost revenue in an overall system which takes in £3 billion a year. From our perspective if you got rid of it or introduced some conditionality it would only potentially reduce the bills of large businesses by a percentage point or two and I'm not sure that's anybody's intention here you know it's I'm not sure what problem we're trying to solve. Additional comments on that. Mr Simpson, what's the supplementary about any additional comments from our witnesses first, Mr Lonesdale? Thanks convener I guess I don't want to say that you know we were supportive of the principle behind small business rates relief albeit our own research shows that about three quarters of employment within the retail industry in Scotland is with firms that don't benefit from small firms at rates relief. I guess the wider moralistic point to pick up on Patrick Harvie's previous question is around you know the expanding sort of number of reliefs that there are and hopefully Ken Barkley in his review will have a look at that to see whether they're all still value for money, whether the rationale still remains relevant. I think the finance secretary is actually talking about expanding the number of reliefs so that's an interesting point in itself. More fundamentally looking at some of the figures it looks like about the value the total value of reliefs is about a quarter of the 2.6 or 2.8 billion that Mr Sharmon was mentioning earlier on so that's you know the reliefs a greater or never greater proportion of the overall tax take and that suggests to us that you know there are lots of sort of sticking plaster has been applied to the rate system overall and that's why we're glad that Ken Barkley is looking at it. No comments on that. Before I take, could you understand what you follow up on that Patrick? I'd have just one other question for the assessors association if that's all right on exemptions. That's fine and we'll come back to give him a moment. The reintroduction of NDR on sporting and shooting estates under the land reform act is effectively the ending of an exemption. Forestry and agricultural land is also still exempt from NDR and there's been criticism of this for decades from the Layfield Committee, the Merleys Review, the Scottish Affairs Committee and the Land Reform Review Group over many many years. Isn't there a case for saying, first of all I'd like to know how the reintroduction of the sporting and shooting rates is going, the implementation of it, but isn't there a case for saying that even if there is a policy intention of a 100% relief scheme per agricultural and forestry land there is a case for putting it on the valuation role in order that we know the cost of the public purse of that relief scheme. At the moment it operates effectively as an entirely uncosted 100% relief scheme. That's absolutely right. That is in our submission that we feel that the valuation role should be all-encompassing. The valuation role as it stands at the moment is perhaps the most complete document that covers land and property's occupation and use within Scotland. When added to the council tax valuation list then there's no doubt about that. You're absolutely right that the largest deliberate emission from the valuation role is agricultural lands and buildings and forestry. There are other smaller exemptions such as public parks. Obviously domestic property is good at its own valuation system. I think that that's right. I think that being able to value that property and to quantify the amount of relief that has been given I think is in the public interest to do that. I think that's something that politicians would need to have at their fingertips in order to ensure that the distribution of relief for whatever it is adequately or properly calculated. To turn to the second point, the return of shootings and deer forests, that work is under way. We've been working with Scottish Government, Scottish Natural Heritage and other organisations to obtain current information on the use that's put to various sporting lands, if that's the phrase I can use, so that we can understand the layers of use that are on it because there are different species that are led to different tenants and they will exercise a sporting right over that. We've also got tenant farmers who have a common law right to kill vermin to protect their crops and we need to understand better what's happening there. That information is now being gathered. We are formulating a scheme of value and it remains our intention to have those values published by 30 September this year. You didn't know what the likely yield is going to be? I think that it's possibly too early to say because that calculation is still being carried out. I wouldn't like to speculate on what the figures would be without having a chance to look at the more recently received information that arrived as recently as last Thursday, a large proportion of that. We will certainly work towards that and we will work with the various interested parties such as the Scottish Land and Estates, Forestry Scotland and so on. I want to take us back to where we started, where the convener asked for your ideas. All of you really have been speaking about the non-domestic rate system as it exists and your thoughts around that system as it exists. None of you seems to me have come up with a reinvention of a system. I'd be interested to hear if you were to reinvent the system, what would you do? You'd all be basically satisfied with what's there and it's just a bit of tinkering here and there. Yet, Mr McKinnon, in your submission, you say that the system is difficult to navigate. It should be more user-friendly. Mr Lonsdale's submission calls it unwieldy. If you were to come up with some radical ideas, not what we've got now, but if you could do something different, what would it be? Is that your real secret that he asks that you refer to Mr McKinnon? Obviously, our submission is trying to be deeply practical. What can we actually do here? I think that, from our point of view, that's why we've focused on the worst parts of the system from where we see it at the moment are operationally and administratively. It's very clunky and there's plenty of opportunity to use technology to use better co-operation between public bodies to drive efficiencies and to make the system better for end-users. I suppose that, as an organisation, we've thought both in Scotland and elsewhere, we've thought very hard about what an ideal system would look like that would both adapt to changes in technologies, changes in people's working habits. I think that you probably need the resources of government to design a new perfect tax system. Ideally, we would like to see a system that had a factor in it that measured businesses' ability to pay. One of the things that we saw at this revaluation and, at the last, for firms outside the scope of the small business bonus—small hotels, for example, nurseries—there are businesses that operate from high, very high value premises that seem to be getting a tough end from the current system. We would also like to see a means to encourage businesses to invest in their properties as well. One of the peculiar things at present is that, if you say that you install energy efficiency measures into your business, you will see an increased bill in the next revaluation. Those sorts of things seem to perverse incentives in the current mix. Cymru was mewn i gynnwys. I want to take Mr Simpson's offer, if you are being bold and what your real key ask would be. Mr Milton first. You are competing with each other for him. This is Mr Milton first, yes. Well I was just going to add some of questions Mr McKinnon has made in answer to Mr Simpson, as there may be some answers MrFinally a13, but essentially it ac yn dwylo'r grefiau Cennagau, yn edrych yn mynd i ddim yn yw'r grefiau Cennagau, yn y gallu'n ddigwydd wrth i ddim yn yw'r grefiau. Rhaid i gyd gyda'r ddau? Mae nhw'n gwybodaeth, rhaid i gyd yn gwybodaeth. Rwy'n bod hyn yn mynd i ddim yn gwybodaeth, mae'n ddigwydd i Lles-Hessar, mae'n ddigwydd i ddim yn gwybod y Llas-Hessarol yn y cwylfaen i gynhyrchu i ddweud, ni'n dweud arweinydd Ysgrifennid yw'n gwybod yw'n enghwyng dydyn nhw. Traiwyr is always looking at a basket of activity, not just commercial but public sector as well across the whole economy and a taxation system needs to address all the various aspects and interactions of I suppose non-domestic life if you like. circumstances so property tax seems to be quite a good idea but property doesn't move property in Scotland stays in Scotland so raise 2.8 billion or thereabouts from property assessment or property tax you have to look at a basis of evidence because every property tax needs to be based on good evidence so it's transparent. In that case most non domestic property or gwahanol yn eich cyfnod yn cael ei gwahysgwyr yn ymweld. Felly, rydyn ni'n dweud yn ymweld ein cyffredinol. Felly, rydych chi'n gweithio'r ffigurau yn y cyffredinol, ond rydyn ni'n llefyn argylchedd, ac rydyn ni'n rai'n gweld yn y cyffredinol yn y cyffredinol, yn y cyffredinol yn ei gweithio'r cyffredinol. Rydych chi'n gweithio'r cyffredinol, yma, rydych chi'n mynd i cyfredinol, gyda cymaint gyd yn yr hyn amser a roeddi'r gyfysg fyddion gyd gan hyn yn ymgyrch, i gyfarwydd am ymgyrch arno, ac yn ymgyrch am gyfysgol cynghori hon. Aled yn Ystryd, wrth gwrs, o deithas cyrraedd ymgyrch, sef sy'n eu syniadol o'r ysgrifennu, ac yn roeddi, dim yn mynd ymgyrch. Mae'r rôl cinnwysó'r cerddiau heb yn ymgyrch, mae'r rhagwmiadau cyfrifoedd yn gwylltio'r cyfrifoedd yn cyfysgol cyfrifoedd, gyda ni'n ddymesu clywedau, osbrydau, Universtau, gychwynig, felly golliau, allan anри, allan o'r ffodol. Ond rydyn nhw'n gweithio gydigon nhw'n gweithio i gydigon nhw'n gweithio'n gweithio. Roedd yr sain parwyn sy'n gweithio i ddweud o'r ddiogelau. Ond rydyn nhw'n gweithio'n gwahanol i'w clywed â mynd i gwaith cy widelliannol y model, yüz yn cael ei cyflwynt hynny. For example, if you take on risk and take on debt as a business operator and decide to expand your business by expanding your property because it's a property-based business that you run, maybe the hospitality industry or somewhere else, then the first thing that will happen is that your rateable value will increase because the value of your property has increased. Maybe that's something that could be looked at. It certainly was looked at in the domestic when we had domestic rates. Improvements to an individual's dwelling were delayed as far as a rates collection side of things until next April. Now, there are other options, maybe the next revaluation. There are certainly policy areas that could be looked at, which as a lands valuation asset I can see are opportunities, but I'm obviously working within the existing legal framework. I just want to make clear that we're not remotely satisfied with the rate system as it currently stands. We've done a lot of work on this issue in the last couple of years. One aspect of that early on was taking the temperature of a lot of different policy makers from around Scotland and indeed other parts of the UK, including the political parties. There really has been remarkably little appetite for doing anything other than having a rate system or a property system for the reasons that others in the panel have just talked about. The other thing I would suggest that we bear in mind, I wouldn't underestimate the sheer amount of work and effort that's gone into getting to the stage where we actually have an independent review of business rates and an opportunity to improve the system in Scotland. Obviously, as I said, we've talked about pretty substantial changes around flexing the system and making it more competitive, moving away from, frankly, some of the ad hoc supplements and levies that we've seen in recent times, which I think when you stand back and have a look at it isn't good for Scotland's reputation, isn't good for business investment. There are some meaty things that one can do, but there are also some quite simple things that one can do to improve the system and make it more investment friendly. Anyone else before we move on? I'll just talk about the small business bonus scheme. I was struck by the Federation of Small Businesses report that said that, without it, one in five small businesses would close their doors, and most of those were either cut back on staff or investment, so I think that shows the value of that. I want to talk about the clonkate administration. In paragraph 26 of Mr Lonsdale's submission, I noticed that he says, "...retails of any scale often have short premises across several or indeed many local authority areas, which means that they have to deal with several different billing authorities. The number of billing authorities could be reduced as could the number of assessors." He points out that there are 14 assessors in Scotland, yet in Wales and England, a single assessor undertakes the assessment process in turn, providing greater efficiencies and consistency. I wonder if we can ask our assessor colleagues why they do indeed believe that 14 are necessary for Scotland, but only one for England, for example, and would they support a reduction to only one assessor as we have in the other nations of the UK? Certainly. The position in England and Wales is that HMRC provides the property assessment aspect of local taxation, and they do that through the valuation office, which is part of HMRC. They do not have quite the same resources of HMRC behind them, but they do not have the same information available, for example, prior to tenant and occupier information that assessors have in Scotland. Assessors in Scotland go back a long time, and just because it goes back a long time does not mean that it is wrong, but it does not mean that we can modernise as well, and that is what we have been doing over the many years and the many reorganisations of local government. The issue for whether you have 14 assessors, 15 assessors or 10 assessors or whatever is not really the issue for me. The issue is that we have a local taxation system that is delivered and supported through the Scottish Assessors Association. The issue of efficiency and effectiveness is one that needs to be looked at closely, because land valuation assessors in Scotland do not just do land valuation for non-domestic property, they also do the valuation role. For example, in my area I deal with 26,000 non-domestic assessments. I deal with 270,000 domestic assessments, which is increasing by about 2,000 a year on the domestic side. On the non-domestic side, there is a continuing rollover of new properties, alteration conditions that need to be managed and assessed using local knowledge. So, you really do need a local assessor there to be on the spot and to provide that. Now, they don't have that in England and Wales, and I'm not sure how, for example, the ratepayers in the north-east of Scotland would have felt with this revaluation this time round had they not had a local assessor to speak to directly. And same for politicians as well, to be able to come and speak to me and discuss the local evidence and the local expertise that we have. So, from a point of view of having a local assessor, what we have is, I provide the services over three areas. So, I provide, if you like, a joint service over three council areas working closely with the billing authorities, excuse me, and the industry. We can offer a tailored service. Now, in terms of what does the SAA do? Well, the SAA makes sure that we pool our resources in terms of valuation practice and procedure. We work together on governance, the 14 assessors work together on governance. There's no point in reinventing the wheel 14 times. So, we, and you've seen that with our website that we have. We also do central collection of data, central negotiations whenever we can do, and also central representation, which is why you have myself and my colleague rather than 14 here today. So, that's on the public side of things. But behind the scenes, there's an awful lot of work that we do. We have national specialists, just like they have in England and Wales. We have national specialists and we use those resources. So, for example, if I have a plant machinery specialist who actually spoke to the Barclay review, that specialist has also been working in Orkney and Shetland assisting the assessor there with gas plant terminals and that sort of thing. We also have a contingency arrangement that we share, which is formalised from a resilience viewpoint, and we harmonise with the valuation office. I can see that time is running out. Please continue. I'm just saying it's a very comprehensive answer. Yes. The SAA, through its executive committee, will harmonise with England and Wales, Northern Ireland and Southern Ireland, because the rating system extends not only without the wider British Isles but also overseas as well. So, we have a model of local delivery, but with national coordination. In terms of local accountability, which you would lose if you went to a national body, you'd lose that. At present, we have local valuation appeal committees that deal with the local assessor. Rate payers deal with the local assessor, and I mentioned politicians. With this revaluation, I've provided well over a dozen briefing sessions to groups like Aberdeen City and Shire Hospitality Association, the fish processing industry in the northeast, business associations in Huntley, in Verruri, in Elgin, Chambers of Commerce, all these different people. I think we know more than a comprehensive answer, and you're perhaps adding to what is a comprehensive answer. Mr Gibson, do you want to follow up? Sorry, Mr Mullen. Just very briefly before I let Mr Gibson back in. Were you wanting to add something? I was just going to say that there's one thing that's unique about the Scottish system, and that is that your assessors are also the electoral registration officers. We've pioneered huge amounts of consistency working through our electoral registration. There's a huge synergy between putting property in the valuation role, the valuation list, and also people on the register, which means that, according to electoral commission research, the electoral registers in Scotland are more complete than anywhere else in the United Kingdom. When you look at some of the key areas, like private rented, where streets are head, in England it's about 56 complete registers for private rented sector. In Scotland it's 70%, so we're significantly ahead. Really that's a synergy of our local sort of locally based assessor dealing with property and people. Mr Gibson, that is indeed a very robust response to my question. Basically what you're saying, Mr Milton, is that the Scottish system is completely different then, and to compare England and Scotland would be like comparing apples and oranges, and furthermore that you believe the Scottish system to be better. We certainly don't work in silos, absolutely. Mr Lonsdale raised the issue in your submission. Do you have any further response to what Mr Milton said? One thing he did not comment on was the issue of businesses having to deal with different billing authorities. I'm just wondering if you want to touch on that in your response. I think Mr Milton made a number of good points, and we've suggested that this is something that ought to be looked at, and obviously we're conscious that the Scottish Government has in recent years taken quite a bold approach in terms of fire and police, and has consolidated a number of fire and police boards into one in each case. There's obviously an appetite there within the Scottish Government in recent years to look at reform in this way, and this may be a candidate that we think is worthy of consideration. My mind is open to any modernisation agendas that we can deal with, because it's in my interest to make sure that we get the right sort of result in terms of a delivery of service that's modern and effective. But fire and police, for example, reorganisations, were completely different, because the assess service is completely professionally orientated in delivering services. What I mean is that I don't really have a back office, I don't have payroll, I don't have HR, I don't have accountancy, I don't have audit, I don't have procurement, I don't have health and safety, whilst all of those services are part of what I have to operate under and do operate under, I purchase those on the back of a local authority that lies in my area, and I pay very little for it, it's extremely good value, because they're already providing procurement and HR and personnel and payroll for their own local authority. So, to add another 76 employees full-time equivalents, which is what my service uses to service those entire three authorities in electrical registration, valuation assessment and domestic banding, is very small indeed. I hesitate to say the amount, but it's well below 100,000. I think we'll most definitely move on now. Time is against us. Deputy Minister Elaine Smith, I want to just two seconds, because after this question we're going to have to close this evidence session, so if you're sitting there and there's something that you wanted to say you've not had the opportunity, catch my eye at this point and get your say, because we're about to move on in the next few minutes. Elaine Smith. Okay, thanks, convener. I just make two points, because I want to go back to Graham Simpson's issue that he was discussing earlier with the panel, but on what Kenneth Gibson was exploring there, Mr McKinnon in the submission said on page 14 that the Scottish assessors could be asked to provide an annual report to the Scottish Parliament. I wonder if Mr McKinnon, if you could tell us why you think that would be valuable. I think, you know, this year's revaluation is a good example of why we think that there should be a better relationship struck up between the Scottish Parliament and assessment. I think we talk a lot, there's three parts to the rate system, there's the Scottish Government policy, there's local government and there's the Scottish assessor. I think in the past there hasn't been as much scrutiny of the methodology and the practices of the assessors as we would like. I think I would just reflect on the previous discussion about clonky administration. Just to give you an example, if you're a business in Scotland at present, to really understand your bill, you could look up the Scottish Government website to understand rates policy, then look up the Scottish assessor's website to understand your valuation, then look up your local government website to understand whether any local reliefs exist. Then you may need to print off a paper form to apply for said reliefs because there's been so little digitisation on that front. All of that points to a system that is less than efficient. In the past we've suggested that, yeah, I would accept that Scotland's radically different to England. Why can't we start with a blank sheet of paper and give it to Revenue Scotland? We were asked earlier, if you were given a fresh start, where would you start? Let's give it to our new tax authority and let's get them to do every part of the system on a national basis. I would completely accept that there's still a place for local engagement. I don't see why you can have local engagement and successful business-facing digital public services. I don't think that those things are mutually exclusive. I think that it's perfectly possible for the assessors to continue to do the other parts of their jobs. I understand that non-domestic rates are only small parts of all the functions that they do, but from the business perspective, things like the local valuation appeals committees are baffling and backward. I think that Mr Milton, Mr Mac-Taggart, would you like to respond to the baffling and backward valuation appeal committees? Valuation appeal committees are really essentially nothing to do with the assessor. The valuation appeal committee structure is a very old structure, agreed. It's manned by volunteers. The person responsible for working out the disposal programme for revaluation appeals at this revaluation are the individual chairs of the individual valuation appeal committees. These are volunteers giving up their own time. The Tribunal Scotland Act 2014 has gone through Parliament and currently all local tribunals across Scotland, whether it be valuation appeal committees or whatever, there's a programme of moving these forward into the new framework. The baffling side of appeals will all be addressed, I am sure, through that. The programme I understand from Scottish Government is around about 2020-22. As an assessor, I am in the same position as a rate payer, really, in that I am party to that process. The Scottish Valuation Advisory Committee was a committee that, when we look at oversight of assessors, was in existence many years ago and assessors would report to that committee on an annual basis and usually it would be through the SAA. However, that was abolished in one of the, I hesitate to say, bonfire of the quangos, because I'm not quite sure whether it was a bonfire of the quangos, but certainly that was a committee that fell by the wayside for whatever reason at that time. At present, we report to Government on our progress and that we agree our progress with for the revaluation, but there's certainly reporting options available and I know that obviously with the Scottish Fiscal Commission coming up, then I am sure there will be more opportunities for us to explain to policy makers and Government and regulators what we do, how we do it and why we do it. Elaine Smith, I'm going to have to just because a time wrap up very shortly. Do you wish to roll together any additional thoughts you have before I let our witnesses back in and I'm going to close the session? I do want to ask, I think, about an important issue falling on from Graham Simpson. I mean, probably we can come back to this issue of reporting to Parliament, I think, and how that might be done. The issue that I want to come back to is on the ability to pay because, again, it's Mr McKinnon that I'm picking on. On page 10 of the submission, Mr McKinnon says, many businesses feel a property value-based tax rather than one based on sales or profit is unfair in arbitrary. So I was just interested in some comments on this, some further comments on this, because if you're looking at profits or ability to pay, how do you then look at hospitals who are non-profit making, for example? So how would that fit in? And also would that not then be perhaps an argument if it was small businesses we were looking at for a more localised system? So, for example, individual circumstances might be able to be taken into account. An example springs to mind is maybe a family butcher who's been in a main street for generations but has been affected and perhaps temporarily by something like from the past, the Mad Cow disease, as it was called. So something like that that might be temporary but so some reliefs might be of a temporary nature. It would be a local area that might be more placed to do that. So I think the question is, if it were to change and simply just a property-based valuation to something based on sales and profit, how could that be achieved and what advantage would it be and where would disadvantages be? So if you want to comment on that, Mr McKinnon, and then I'll give every other witness an opportunity to say whatever you like within reason, of course, and I'm going to close the session. Mr McKinnon? Yes, I think that comes under the medium to long-term aspirations for the business rate system and I think that any reforms would have to be phased in. So I suppose what we might imagine is that you would see data provided to, let's say, HMRC in this case, giving an indication of either the turnover or the profitability of a business. And that providing a partial factor into the bills of a business, that you would combine that with property data to come up with a bill. Now that is not something that would happen overnight and would take a very long time and it would need to be comprehensible to rate payers. I think from our perspective that would be better done on a national basis simply because of the complexity of data sharing between these sorts of authorities. Just reflecting on this discussion about non-domestic business rates, I think you're absolutely right to highlight the public sector in the system. I think that the public sector being in the system is peculiar. We know for a fact that many public sector organisations lay a huge number of rate appeals to reduce their own tax bills, which will then be funneled back to them in the end, and that all seems like sand in the gears of the system. Broadly, I would make the case for as much of the public sector to be removed from the system as possible. Thank you. I'll just go left to right as I'm looking just now at Jonathan Sharma. I think just to sum up really, I think we do recognise that there's more that can be done to improve how the business rate, the non-domestic rate, sorry, is administered, but I think what I would say there is that if councils were local taxation authorities rather than just simply billing authorities, that some of that might flow through from that, that you would see a different kind of relationship, I think, with businesses. Just one other thing, just on the small business bonus scheme, I think the thing to say there is that if that was localised, that would be a perfect example of how you could make much great use of the relief powers that councils have, so I just wanted to throw that into the middle. Can I just check, Mr Sharma, localised and ring-fenced? You wouldn't suggest that the money would just begin to local authorities who then wouldn't have to spend it on small business relief? Would it have to be ring-fenced, Mr Sharma? I mean, you'd have to look into what the actual technicalities of that are, but it's just the thought that I had that if we're trying to move towards a more flexible and local system, then one of the things you could look at is localising the small business bonus scheme. I think you'll appreciate maybe concerns over ring-fenced in that area, just when you mentioned that, but an interesting idea, Mr Lonsdale. The retail industry is going through pretty profound changes. There are a number of other sectors that have gone through that as well, and obviously people are, in a sense, as I said earlier, voting their feet. They're shopping online. We're seeing incredibly tough competition out there for pretty limited spending power that's available at the moment. Public policy is actually making, you know, having shops and employing people more expensive, and we see that through things like the national living wage, the apprenticeship levy, statutory pension increases, business rates and so on. So I think my plea, I guess, to the committee and to the Parliament would be to be cognisant of that in a sense that it's actually accelerating some of the changes that we're seeing. So, you know, when retailers and other businesses are looking to invest, they're seeing people and property become more expensive, and they're seeing the digital capability being improved and enhanced, and also, in relative terms, become cheaper. OK. Thank you, Mr McTaggart. Yes. What I would say is that assessors don't make the market, assessors follow the market, and to allow us to follow the market accurately, we need access to as much information as we can possibly get, as quickly as we can get it, and we also need to carry out regular revaluations, whether these are five or three years. That's a matter for debate and perhaps some research. In that way, we can accurately reflect how the rental market and the property cost market has reflected the economic conditions that have gone before, and we've heard a lot about reacting to the market. To give you just to close with some examples, in my own area, Brehead shopping centre, which must be known to a few, retail value has declined by 20 per cent. In Greenock shopping centre, the retail value has declined by 67 per cent, so if retail value has declined, then it's reflected in the values from 1 April 17 in my area. To contrast that with telecommunications for Scotland, which I also deal with, the values for two largest telecoms companies have increased by 400 per cent and 300 per cent, so we can see that value is moving towards the internet and away from retail. OK. Thank you, Mr Milton. Very little chair. I would just say that NDR is a tax on the occupation of property in its present format, and what I said at the start, stability for government, local or central, for income, stability for the rate pay or the tax payer in terms of knowing what's coming. That's a challenge, I think. Well, I think it's been a very interesting and informative discussion. I've learned a huge amount of detail here today, so I've found that very, very helpful indeed. I think there's a couple of things that really chime with me. Simplicity, clarity, certainty, certainty is desperately important in terms of business planning. It's very, very difficult to plan an expansion, a growth, another acquisition or whether you keep your business open or not unless you have that. So they really chime with me. I also think that the points that David and Stuart raised is that globalisation, digitalisation is not going to go away and these are the things that are driving and having an enormous impact on our high streets. Something that Stuart said, because this is really looking at part of what I call the overarching strategy and solution perhaps about how we might deal with this, is the fact that maybe the high street is not going to be occupied by retailers and there have to be non-retail businesses as well as retail businesses that are on our high streets. I think it would be good to do a deeper dive in understanding what are the characteristics of those businesses because every town, and I grew up in Scotland in a small town in the north of Scotland, always has a couple of really strong anchor businesses. Now what makes them successful? What allows them to continue to grow and expand and whether the various economic storms? So I think understanding that's really important and then probably, and it goes into our schools and into our colleges, is understanding how do we stimulate economic activity in our local communities so that when somebody is looking at leaving school or they're coming back from university or whatever it is, that they might consider setting up a business, a small business of their own, rather than going to work for a larger company or going south of the border. So I think, from my point of view, it's back again to what's the overarching strategy for stimulating economic growth in Scotland. Very, very helpful. It's been a pretty long session, but a very worthwhile session for the committee. We will speak to Mr Barclay shortly, as you know, and we will follow the review and the publishing of the outcomes of that review and decide how we as the committee wish to take forward our scrutiny of that process. That hopefully won't be the end of our relationship with the witnesses here today, so if there's something that goes into your head that you don't think comes out in evidence that you want us to follow up on at a later date, do contact the clerks of the committee and we'll certainly take that forward. I'm going to suspend briefly just now, but thank you everyone for coming along this morning. Okay, welcome back everyone, and we're still at agenda item 1, and we move to panel 2. Can I welcome Ken Barclay, chair and Marianne Barker, secretary of the Barclay review of business rates. Thank you both of you for coming along. My apologies that that previous evidence session overran, but I thought it was important to allow the witnesses as much information on record as they could. Mr Barclay, I wonder if you can make some opening remarks and then we'll move to questions. Thank you, convener, and thank you for inviting me here this morning. I was asked last year by the Scottish ministers to bring forward some recommendations. Sometime round about the middle of this year, but no specific date was suggested that seek to enhance and reform the Scottish business rate system or non-domestic rates to better support business growth and to reflect a changing environment economically and in the market, whilst maintaining the level of revenue or tax income necessary to provide public services locally on which the businesses that operate in these areas rely on. I'm assisted by Nora Sr, David Henderson, Isabel Dynverno and Professor Russell Griggs to that end, and I did listen with interest to the earlier session and will reflect on a few of the things that were said and the comments that were made and to make sure that when we make our recommendations to government that we take account of the issues that have been raised this morning. However, you'll appreciate at this stage that we're in the process of this review that decisions have yet to be made. I can't confirm what we will recommend to government later on in the summer. You'll also appreciate that some of the businesses that have been sent in to our request for information have made those comments and wished to keep them private. However, what I can do is I can outline some of the work that we've done so far. We've called for evidence and last year we received 156 written submissions and myself and the group have individually and collectively attended various board meetings, roundtables, events where the non-domestic rates have been discussed. We've taken oral evidence from around 40, maybe slightly more than 40 individuals, and we've been meeting businesses around the country over the last month or so. I was in Inverness last Friday talking to businesses there, and we had a business meeting yesterday in Edinburgh. I would stress that no decisions have yet been made, but I'm happy to take questions and particularly listen to your points of view to make sure that any recommendations that you feel that we should be looking at are taken into account. Thank you, Mr Bartley. I appreciate that there may be some constraints on how much information you can give us, but I'm sure that once the MSP is asking the questions anyway. I'll move on to our deputy, Eileen Smith. Thank you for attending this morning to speak to the committee about the review. Can I start with what I might call the terms of engagement of your consultation on the review? The question that was asked is, how would you redesign the business rate system to better support business and incentivise investment? As we were trying to tease out earlier in the evidence session, it's non-domestic rates rather than simply business rates. I wonder why the question was framed in that way and how wide your review will actually be. You're correct in your observations around the remit. It was to enhance and reform the system to better support business growth. What the Scottish Government is seeking to achieve is growth in Scotland, and if we can facilitate growth in Scotland by some of the recommendations that we make, then those recommendations would be welcome. I recognise that many of the properties that are in the valuation role do not contribute to society but do not contribute to economic growth per se, but it's around the issues of coming up with ideas and recommendations that will help with economic growth in Scotland that we are focusing our efforts. It's very much not a review of non-domestic rates. Your review is not a review of the non-domestic rates system. Yes, I think that I would say that it is a review of the non-domestic rates system. Although focused on specifically on economic growth and business rates? I think that there are many issues that will impact both on businesses and the public sector that are part of the non-domestic rates system. There are many properties that are not on the valuation role that will be impacted by any recommendations that we make. For example, if we were to take account of some of the recommendations that we heard earlier, for example reducing the time between valuations, then clearly that would have an impact on other properties that are not necessarily businesses per se. I'm not sure that I'm entirely clear, but I'm sure that other colleagues want to ask questions and we might come back. Can I just check for a little bit of clarity on that? We heard in the last evidence session that it was perhaps peculiar that some NDR pairs were the public sector, so schools, hospitals, that kind of thing. If they get a bill, they might dispute that bill, they might appeal it and get the bill lowered, but then effectively the money goes back to the local authorities anyway, it all stays within the public sector. Would you give consideration to exempting certain public buildings from the NDR system in the first place? It might make it a lot more efficient. I think that Sand in the Gears was the expression used by one of our witnesses. I get that it's not that straightforward because, for example, community leisure trusts run a commercial operation as well as a public service. There are commercial considerations as well as core quality public services that are being provided, but is that consideration the review will give? We will, of course. Equally, if you were to look at this building that was referenced, there will be elements of this building that are able to be let out to private individuals and private companies and they would pay something for that. If you look at many public buildings, they are able to get revenue in from other sources. If you look at other public buildings, there is an ability to be able to raise revenues outside of the core of what they are trying to achieve. There will be consideration to that, Mr Gibson. I was going to move to you with the next question, so Kenneth Gibson will take you at this point. Sorry, I didn't want to interrupt you. That seems a bizarre answer. I don't really think that police stations and fire stations, for example, raise much. I don't really think that hospitals would raise much either. Surely the point that's been made was a point that I was wanting to make also as it seems a bit odd for the public sector to raise over a billion pounds from itself. Effectively, it's been allocated through a local government budget or even to the Scottish Parliament, allocating £7 million to itself. If we're going to have a system that Mr Jones in the previous section said should be simplified, clarified and made more certain, then, as colleagues are leading to, we should really try to remove the public sector completely from this entire system so that it does become more of a business rate system. I think that's something that everyone would understand. The other point that I was wanting to add once you've asked the question on that is regarding the issue of relief, so I wonder if you can respond to that first question. The first question. I mean, I think what I would do is I say, look, that we haven't concluded, so therefore it may well be that that's where our recommendation will land and that's under consideration as to how wide we, what recommendations we ultimately make to ministers as far as public buildings are concerned. So, yes, we'll take that on board and we'll make sure that we give that the full consideration that it deserves. In terms of relief, actually, one of the points that was made again by people in the previous session, a number of them actually talked about reliefs being a sticking plaster. Basically, you think of it as a dyke, and there's a leak sprung, so you put a finger in here and you put a finger in there, and these fingers are now amounting to £100 million every year. In your recommendations, are you looking to make recommendations which would effectively, if possible, remove or at least minimise not only the number but the extent of reliefs so that we don't have to have that every time as a valuation, which of course our witnesses' argyge should be more frequent? So, we're certainly taking frequency into account, and many people have said to us that it is too complex and that it's difficult to understand what reliefs may be available to them, and therefore it's incumbent upon us to make sure that if there's a way of simplifying reliefs that we do, make sure that we do so and make recommendations to that end. Okay, thank you. Okay, Patrick Harvie. Thanks very much, and good morning. I suppose I'm still just a little bit curious about the way this thing has been framed, as Elaine was saying. It's not just that the front cover says that it's a review of business rates, which is an inaccurate description of the system, an inaccurate name. There's only even one question in the review. How would you redesign the business rates system to better support business and incentivise investment? Do we take it that your review isn't at all interested in the impacts on other NDR payers or on the other consequences of any changes beyond the consequences on businesses and investment? No, I think it would be fair to say that we will be acutely aware of any recommendations that we make and the consequences of those, and therefore if there are implications for the public sector, then clearly we need to be aware of those. Any questions about that? There's only one question in the review, and it's about supporting businesses and incentivising investment. Why not ask other questions about those other kinds of consequences that will flow from any changes you recommend? I'm sorry, I'm not quite with you when you say there's only one question in the review. The question that we asked and sought for evidence, I didn't quite understand what you were referring to. The group has also met with various different bodies and that's not the only question that the group has asked. As the engagement that Ken outlined at the start, they have met with a range of bodies and have asked a range of questions. That was simply one part of the process. Those that you've proactively gone out and reached out to have been asked a wider range of questions than the public? Yes, so the various engagement that the group has asked a range of different questions of different bodies, that was simply one part of the process. It does seem to me that members of the public who might want to respond to this publication, which has come from the Scottish Government about your review of what are being described as business rates, might want to know what those other questions are, that you're exploring with whether it's the CBI or whether it's chambers of commerce. Shouldn't other people know what those other questions are and have the chance to contribute? Often questions, as in these evidence sessions, will arise from things that other people have said. There's not a definitive list of questions that's been asked of everyone, so in the oral evidence sessions that Ken mentioned, often one particular body might make a particular point, which was then led to questions to other bodies. There's not a definitive list of questions that have been asked of everyone. It's been very much based on different people's experiences and expertise in the rate system. The questions have been formulated around that. It does still seem as though those who've been invited in are part of a retro discussion and members of the public are not. Can I ask what proactive steps you've taken to ensure that the organisations you are engaging with are not just representing business interests, but are representing the interests not only of other NDR payers, but of other people and organisations within society who may be affected in other ways by the recommendations that you eventually come through with? I'm afraid I'm going to have to refer to my official on that one again. The review group also has a mailbox. We have had representation made from individuals, certainly people who don't have businesses, and they have been met with as well. People have emailed in when they found out they've often read press coverage. We've had various emails in from individuals and businesses who maybe didn't know about the original call for evidence, but have then since become involved. They've often been invited where possible to attend meetings with the review group so they can make their views heard. So there have been proactive steps to bring in non-business voices into your discussions? Yes. For example, the voluntary sector are not businesses, but they have been involved in the discussions with the group. Finally, I wonder whether your review is looking at all at the questions of scrutiny. Non-domestic rates are the second biggest tax-generating instrument available to the Scottish Government. The level of parliamentary scrutiny has generally been relatively low since devolution began. There have been very few full debates about non-domestic rates. There's also this year been some controversy over the lack of transparency in relation to the way that the Scottish Government uses the NDR pool. Has your review touched on the issues of transparency and scrutiny, and is that going to feature in your recommendations? It's critically important that everyone who pays business rates understands better exactly. Non-domestic rates? Non-domestic rates. It's critically important that those pairs of non-domestic rates understand better how the assessment is calculated. It's critically important that those properties that pay non-domestic rates fully understand exactly how the calculation is undertaken and what it is that they're paying for. It does still seem that you're very focused on those paying rather than the wider public interest. The purpose of a tax is to raise revenue to meet public needs. You seem very focused on the payers rather than the wider public interest. Can we just get some certainty around the engagement that the reviewer is having? I think that's at the heart of what Mr Harvey is referring to. My question was about a potential reform to the system that would exclude public sector organisations from liability under NDR either fully or with a degree of conditionality. That could involve the NHS. It could involve a huge amount of the local authority estate. It could involve the police and you go on the fire service. Have you had discussions with each of the bodies and organisations that I've just mentioned, for example? Give us a degree of assurance that you're proactively seeking their views on something that you're hopefully going to be making a recommendation on. The bodies that you've mentioned have not yet been engaged in the process and clearly we will need to give consideration after today to make sure that if it's felt appropriate we should do so. I think that that would be helpful. Where appropriate, I think it would be helpful if you were perhaps able to write to our committee. It's appropriate because there's confidentiality within the Barclay review, but write to our committee with additional information about what the engagement strategy has been with non-commercial organisations in relation to reform of NDR. I think that's something that we'd all like to see. If you heard the earlier evidence session, there was a key ask by the Scottish Assessors Association in terms of having more powers over compelling businesses or pairs of non-domestic rates to provide relevant information, including rental incomes, but other information as well. They feel that there's a deficiency in the level of powers to compel that they have. The Federation of Small Businesses said that less than one third of small businesses provide information in relation to rent. They stated that there's barriers and challenges for small businesses in getting all the information to the assessors easily and readily in a speedy, accessible format. It was a meeting of mind somewhere down the line between the assessors who need more powers of compulsion and small businesses who want to make it easier to provide that information. Is that something that you're specifically looking at, including the powers of compulsion to commercial organisations and all pairs of non-domestic rates in relation to giving more powers to assessors? The short answer is yes. We understand that many small businesses find the process more difficult than they would like. Therefore, making it easier for them to understand what it is that they're paying is critically important. However, it's important that the assessors get access to information and we are giving consideration as to how they would be able to access more than the 30 per cent to which they refer, including the powers of compulsion and perhaps additional consequences, including fines. We are giving consideration to that, yes. Graham Simpson. I wonder if you can give us a flavour of those other questions that you've been asking witnesses that you've met beyond the initial question, which, as we've seen, is not accurate anyway. For the variety of sessions that I described, the thing that we've been keen to understand is do people understand what it is that they're paying and how it's calculated. Is there enough transparency in how the valuation is determined? Are they aware of what reliefs are available? There's a range of issues that we're discussing. When we've gone through and spoken to the dozens of rate payers that we have done, the themes are reasonably consistent and are pretty much around those issues. Your initial question asks people how they would redesign the system. Can we assume that you will come up with recommendations, which are a redesign, or will it be broadly what we have now with a bit of tinkering? It's too early to say what those recommendations will be, but certainly we've looked at a huge body of evidence and taking account of those recommendations, plus the expert advice that we've been given, then we'll make recommendations on the back of that. It's too early to say whether it's, as you describe it, tinkering around the edges or a complete redesign. I haven't got a great deal of time left if you're going to report in the summer, so it's not really that early, is it? I think it's too early for us to be saying at this stage what our final recommendations will be. In this parliamentary process that our committee is involved in can help shape some of those final recommendations. I'm just wondering how you view the role of the assessors in terms of their view, your undertaking, where you see that going. One of the things that came out from the assessors this morning, as you have heard, is that they say that they need modern powers and modern information, in particular greater access to data in order to be able to deliver more effectively and more efficiently. What kind of work has been done in terms of the assessors in looking at their role? We've spent time with the assessors. We've listened to the recommendations that they've made. I think that we've highlighted it this morning already when the conveners mentioned additional powers. They've been very clear in the recommendations that they've made to us as to what they would like to see and much of it has been highlighted in the earlier session. You'll probably have heard a very robust defence of the assessors from Mr Milton this morning. In terms of the issue of about 14 assessors in Scotland compared to one in England, he pointed out quite clearly that the roles and responsibilities are different. The Scottish Retail Consortium didn't seem particularly convinced. The reason for that possibly was about billing. I'm just wondering if billing across different assessors is against something that you would be looking at. Again, it comes down to this efficiency. For example, if a retailer has money, we get five outlets. Would there possibly be a recommendation? Given that all goes into a central pot anyway, the money raised, perhaps where headquarters were in Scotland or where the largest outlet would be, the billing would go to them or something like that, rather than five individual billings, is there any scope for looking at more efficiency in terms of the delivery of billing? That is all about the simplification aspect that seems to frustrate many of the people who actually pay those rates at the moment. The answer to your question is yes, we are. We've given quite a bit of consideration to digitising the collection of bills and how we might best go about that to simplify it, make the ease of collection and hopefully make collection rates better than they currently are. At the end of February, specifically 23 February this year, our colleague Mike Rumbles MSP called in the chamber for your Barclay review consultation to be reopened. He had specific reasons for that, and it seemed to attract some sympathy from the minister responsible. I would like to ask what is your view on the consultation being reopened, perhaps specifically around Mr Rumbles' reasons, but given that the committee this morning has asked a number of questions about the remit, the terms of engagement and the fact that the initial question just focused on business, which might have put people off responding to the consultation in the first place, because they might not have seen how they fitted with that consultation. Communities might have felt that they could not respond when they might have had ideas for the local communities rather than just around business and business growth. So, with both those in mind, Mr Rumbles' comments and what we have heard in evidence today and what you yourself have heard from the committee asking questions, would you be amenable to reopening the consultation? I wonder whether that is a question for the minister to whom I will be reporting. I am specifically asking you, as the person who is doing the review and has called for the consultation, do you think now at this stage that it would be helpful to your work? It may be a decision for the minister, but we cannot get in about exactly the evidence that you have received for various reasons, but do you, as the person doing that work, now think that that might be helpful rather than a review at the end of the day that may not cover all of these aspects properly? I think that it would be entirely appropriate of me to take on board the recommendations that have been made from this session this morning and to determine whether or not we can accommodate those recommendations within the timeframe that we are working in, if we can, we will. If we need more time, we should consider whether we need more time. If the committee were to recommend that it might be an idea for the consultation to be briefly reopened, is that something that you could accommodate within the timeframe, or would you need more time? I put it. Although we did open that consultation period for a set period of time, late submissions were accepted. Indeed, businesses have wanted to engage with a review group that has continued, even if they have made submissions after that consultation closed. Although it referred specifically to business rates, we did get a number of submissions from people that don't pay business rates or were exempt. For example, the NFU made a submission, and agricultural land, as Mr Harvey pointed out earlier, is exempt. They recognised that that question could still apply to them. However, sorry, convenant, to jump in again, there may have been groups, people, et cetera, out there who did not feel it appropriate to put their bit in on the consultation because they were put off by that. So, whilst it's nice that the odd group did think that they could go a bit wider than what you were asking, it may have put other people off. I mean, I also often find, in my previous experience as a civil servant, working with the non-domestic rate system, often the use of the word, non-domestic rates, businesses sometimes don't think that applies to them. So, equally, if the question posed about non-domestic rates, there are businesses who think that that doesn't apply because they recognise the term business rates because that's in more common use. Can I just give a clarity around this? I'm a member of the Scottish Parliament for Glasgow, Mary Hill and Springburn. NHS Greater Glasgow and Clyde have recently got a new chief executive, Jane Grant, been appointed. If NHS Greater Glasgow and Clyde the next few weeks wish to make a detailed submission to the Barclay review, will it be accepted, analysed and considered? Yes. Okay, and would that go with the same for any other organisations in a similar situation? Yes, and anyone who has approached the review group asking to have their views heard has always been accepted. Okay, and I suppose the other question on that would be, there may be a discussion between the Barclay review and ministers in relation to timetable for publishing findings, conclusions and recommendations. But again, this committee will have to discuss what our views are after our evidence sessions, but we would rather get it right than fit in with a timescale because we have to fit in with a timescale. I think that we are moving towards a position as a committee where we want a more proactive approach from the Barclay review to those organisations. I see nodding heads from fellow committee members, whether we talk about accepting late submissions or reopening the consultation. What we're talking about is proactively getting out of speaking to these bodies, Mr Gibson. Yes, sorry just to support what you're saying there, convener. First of all, I don't really agree that businesses don't accept that NDR and business rates are the same. I think that they're well aware of what these terms mean. My concern is that in terms of non-domestic rates, if nearly half of it roughly is from the public sector, then there has to be a lot more waiting towards the public sector in terms of organisations who are contacted directly. Otherwise, we'll end up with a view and report that is distorted and doesn't reflect the true position. I think that's something that members of the committee would like to see. My fellow committee members have the opportunity to add to this before I move to another section. Mr Harvey, did you want to come in then, Mr Simpson? It was just very, very briefly. I welcome the fact that you're saying that you're still open to submissions, if I understood you rightly, from all comers. It does seem odd to me then that the paper that was published in July last year says that comments should be submitted by 7 October 2016. Why set such an early closing date for submissions when clearly it's possible to continue to have submissions open for all of this time? What will be the closing date? I'll have to give consideration to the observations that you've made this morning. We'll have to give people time. All I can say is that let us take away what you've said this morning and then determine what would be an appropriate time to allow people to respond. It's really just to reiterate the points that have been made. If you're going to do a review of the non-domestic rate system, it has to be the whole system and not just focus on one aspect of it because if it is, you leave yourself open to huge criticism that you've not done a thorough review. If this committee was to do a review like that, it would be lambasted and rightly so. We would have to take views from across the Scotland and across various sectors. I think that you really need to be opening it up again so that when you produce your recommendations, the thorough people have confidence in them and that it's not just narrowly focused on business because the system is not just about business. I see a nodding head from Mr Barclay there. I think that that was a statement, Mr Simpson, as much as a question. Some of the things that the reviewer is looking at, we heard from the Federation of Small Businesses this morning in relation to how relief systems work and small business bonus and valuations all been fully property based and they were floating the idea of some connection with profitability or turnover or what have you. I'm not particularly convinced by that myself because I'm unsure how you distinguish between one business that is poorly run, poorly managed and with a poor business model and another business that is vulnerable, fragile, essential to community and needs support who both may have similar data in terms of profitability and turnover but are very different in nature. I'm not sure how you build that in so anything you want to say in relation to whether you're wedding the review to still be completely property based and you've already mentioned it's about linking to economic growth. We are focusing on economic growth. Can I ask what economic data you'll also be looking at in terms of economic growth and will those results be published? I'd like to address some of the concerns that the Federation of Small Businesses had with the caveat that I've put in but given the fact that this is an economic growth, will there be data that will be published that this committee can analyse? So we can see when the recommendations come in, we've got a baseline to look at to see whether the recommendations if and where implemented are actually successful. I think it's critically important that any recommendations that we make that result in a change to the tax are fully costed, fully understood and the economic justification for those recommendations can be made and therefore they need to be open to the scrutiny which you describe. So that will be part of our ultimate findings definitely. In terms of Federation of Small Businesses, we are still considering whether or not this is simply just a property tax or whether in fact it could be another form of tax. Indeed, most of the time that we've spent so far has been gathering information. We have now got about 60 different lines of inquiry that we've got open so we really haven't closed down virtually any of the issues that have been raised when we've gone through this consultation process. So yes, we are still considering whether or not you can have a property tax and some element of profit tax from a business that is a non-domestic rate payer. But would you take on board my concern about how to distinguish between a business that is poorly run with a poor business model, providing a poor service that is non-essential, getting additional tax relief compared to another business that economic indicators might trigger all the same criteria but is an essential business to a local town centre or a village or on Maryhill Road or Springburn town centre in my constituency, there are essential businesses that need support that on those indicators might get additional relief but so might some poorly run businesses elsewhere. How can you square that circle? A difficult question to answer at this stage. I think if you get down to looking at individual businesses then there are individual properties because this is a property tax that is currently established then it would be very difficult for us to be able to determine what was perceived as being a critical business versus a non-critical business. I think that the implications of any recommendations that we make clearly have to be thought through and the unintended consequences of that need to be considered in any recommendations that we make. As we heard from the Scottish assessors this morning about the certainty, reliability and visibility of a property tax. You can't hide the property, that's a key strength of it. Are we talking about any future reforms being a property tax plus something else rather than moving away from a property tax? Could it be concerned if it was ditching the concept of a property tax altogether? I'd come back to the fact that we haven't determined that yet but we are still considering whether or not it would be appropriate to supplement a property tax with something else. I think you've answered the question when you said supplementary, that's helpful. Usually I've got committee members trying to catch my eye for questions. I have a tumbleweed moment currently. I'll ask another question then, Mr Barclay, because I think that it's important that, whether we're underwhelmed or otherwise, we just did a 90 minute session with other witnesses who did raise a number of key points. A representative from COSLA here today is talking about a direction of travel in relation to not just assigning but giving power over non-domestic rates to local authorities and deciding the number of examples of very slow but incremental direction of travel so far and they would wish that to continue. Will the Barclay review be looking proactively at how we can't just assign more taxation to local authorities but actually give them more powers in relation to non-domestic rates? The answer to the question is yes. Yes, we are still considering that. We equally heard views from the other people this morning that were opposed to that view. There is a lack of consensus around that issue, but we are still giving consideration as to whether or not we should devolve for the persons' further revenue-raising to local authorities. That's helpful. When I specifically asked about giving more power to local authorities in relation to the question that I posed was, I appreciate that there may be concerns by some of the business organisations, but surely safeguards can be built in. A small business started to allude to what some of those safeguards might look like, but other individuals were opposed to it. Would you be looking towards a degree of additional power to local authorities but building in some safeguards along the way? I am conscious that, no matter how we cut that up, it was the assessor who said, what we are really talking about is how we raised £2.8 billion in non-domestic rates. That's what we are talking about. So, when larger retailers talk about the large business supplement being impacting upon them, when we are talking about £2.8 billion, what we are really talking about is other businesses having to shoulder some of that burden. We can't spend the same £2, so I suppose that I would like to seek a reassurance that there is going to be an equitable approach to how we treat small businesses as well as large businesses who are clearly clamouring in relation to the large business supplement and wanting some mitigation in relation to that. Any mitigation in relation to that, I wouldn't want to put on the shoulders and the burdens of some of our fragile small businesses. How do you square that circle as well? I think that there are a number of areas that we will be looking at where we feel that we can raise tax, and there will be a number of areas that we feel that we can relieve current pairs of tax. The net effect needs to be that it will be £2.8 billion that you have highlighted. I take on your point, but we haven't determined yet whether or not the recommendations that we will make will result in any final changes to any of the tax pairs that we are looking at. The final question then, because I spoke about the direction of travel in terms of more powers to local government, do you agree that there should be a direction of travel towards more powers for local government? We haven't determined that yet. Not even conceptually or philosophically or whatever, just not got a view on that. We haven't yet determined whether that would be the right way to go forward. Add to that, but is that something that you are specifically looking at? Absolutely, yes. I don't have any other bids for questions. I thank Ken Barkley and Marian Barker for coming along here this afternoon. I know that there is a bit of a delay before you got to give your evidence, but thank you for your time and we look forward to getting you back once the recommendations are published. I think that that would be a helpful thing for the committee to do, perhaps more questions at that point. Thank you very much and we now suspend.