 Good morning and welcome to the 11th meeting of the local government housing and planning committee in 2021. I would like to ask all members and witnesses to ensure that their mobile phones are on silent and that all other notifications are turned off during the meeting. Our first item this morning is consideration of whether to take item 6 and 7 in private. Item 6 will be an opportunity for members to reflect on the evidence that they have heard earlier in the meeting on the valuation and rating coronavirus Scotland order 2021, while item 7 will be an opportunity for the committee to consider its approach to scrutiny, communications and engagement for its work on NPF4. Do members agree to take item 6 and 7 in private? Okay, that's agreed. Thank you. The second item on our agenda today is an evidence session on the valuation and rating coronavirus Scotland order 2021. This is the committee's third session taking evidence on the order. I would like to welcome this morning Tom Arthur, Minister for Public Finance, Planning and Community Wealth, non-domestic rates policy from the Scottish Government and David Smith, a lawyer from the Scottish Government. We are going to take the evidence from the minister before moving on to a formal debate on the order. I would like to invite the minister to make a short opening statement before moving on to questions from members. Good morning, convener, and thank you to you and to the committee for the opportunity to give evidence today. The purpose of the draft valuation and rating coronavirus Scotland order 2021 is to ensure that, in calculating the rateable value of specified properties after it comes into force, no account can be taken of any matter arising on or after 1 April 2021 that is attributable to coronavirus. Since the start of the coronavirus pandemic, over 40,000 non-domestic properties have been appealed on the basis that there has been a material change of circumstances due to the pandemic. Typically, material change of circumstance has been used to reflect either physical changes to a property, such as an extension or a demolition, or certain major works in a specific area such as the tramworks here in Edinburgh. The Scottish Parliament amended the definition of material change of circumstances to exclude changes and a quote, in rent, in valuations generally, or in values generally, under the non-domestic rates Scotland Act 2020, with effect from 2 April 2020. The draft order under discussion today further clarifies this in relation to coronavirus. By specifying that in calculating the rateable value of any properties in the 2017 valuation role, no account can be taken of any matter arising after 1 April 2021 that is directly or indirectly attributable to coronavirus. This state is due to the fact that subordinate legislation cannot take us further back. Primary legislation is needed for that. We confirmed in our programme for government our intention to introduce a bill on this matter in year 1. The draft order only applies to the current 2017 valuation role, consistent with our view that any impact of Covid-19 should be reflected at the next revaluation. It also does not take into account whether a property should or should not be included in the valuation role. For instance, if someone started working from home as a result of the pandemic, that legislation would not affect whether or not their office space may be considered rateable. The intention with this change in definition was to remove general economic factors from the category of relevant factors to consider in the context of valuation. While appeals have been submitted for over 40,000 properties, this is less than a fifth of all non-domestic properties in Scotland and, as the Federation of Small Businesses pointed out, not many small businesses are amongst them. This may reflect our generous existing support package for small businesses, but it likely also reflects that well-resourced, professionally advised property owners and occupiers are more likely to know about material change of circumstances, provisions and probably therefore to have appealed. I am aware that some large firms under appeal have been successful during the pandemic. As highlighted in evidence last week, there is a disconnect between how Covid has felt to businesses and how it impacts rents in the commercial property market. This is a hugely complex issue and Covid-19 appeals could take years to resolve. The outcome is also uncertain. It cannot be assumed that appeals would be successful or that their outcome is fair. In light of this complexity and the provisions on the non-domestic rates Scotland Act 2020, it seems to me that the question is quite a technical and dry one. When is the right time for market-wide economic changes, including any effects of coronavirus, to be reflected in rateable values? We believe that the right time for these type of changes to be reflected is at revaluation. We have strengthened revaluations following the independent Barclay review of non-domestic rates to ensure that they more closely reflect market circumstances. First, we increased the frequency of revaluations from five to three years and reduced the time between the tone date and the revaluation. Secondly, with the support of your predecessor committee, we delayed the next revaluation by one year to 2023 and also brought forward the commitment to a one-year tone date. The tone date will therefore be 1 April 2022 for the next revaluation in order to give sufficient time for the property market to adjust post Covid. Covid-19 has had a major impact on the economy and we responded swiftly and on an unprecedented scale to support businesses through the pandemic. We introduced 100 per cent retail, hospitality, leisure and aviation relief in 2020-21 and we are the first Government to confirm a full extension of this relief for 2021-22. The extension of the RHLA relief into 2021-22 took the total level of support provided to businesses by the Scottish Government since the beginning of the pandemic to £4.5 billion, including £1.6 billion of Covid-related reliefs. That demonstrates that the Scottish Government acted quickly to support the business community when it needed it most. We have been able to support businesses through the pandemic, but we must bear in mind that we must also continue to fund the public services on which we all rely. In closing, I would return to my opening comments that this draft order seeks to ensure fairness for all Scottish ratepayers, whilst maintaining the integrity of the non-domestic rate system, as well as the stability of public finances. If this instrument is not approved, the non-domestic rate system and therefore public finances will carry significant long-term risks for years. On that point, convener, I will conclude and I look forward to any questions that the committee may have. I will start with a theme around the Government's rationale for the measure. As the committee's members and the panel will be aware, we have already held two evidence sessions on this order. The majority of stakeholders who have provided evidence have expressed concern over the principle of changing the rules around appeals midway through the re-evaluation cycle. I would like to ask the minister more about the rationale for the measures. Does the Scottish Government consider coronavirus to represent a general economic circumstance in relation to MCC appeals? Or has the pandemic had such a varied effect on different sectors that those differential impacts must be taken into account? The rationale, as I referenced in my opening remarks, is about clarifying the measures in the 2020 act. As the committee will appreciate, normally what material change of circumstances considers is quite specific, delineated local cases, perhaps arising from roadworks and impacting individual properties. That has to be seen in the context of the broader principles that underpin the non-domestic rate system. In Keaty, that is a regular cycle of re-evaluations. It is at re-evaluations where broader market-wide changes should be considered. It is important to understand that context because we have moved from a five-year cycle to a three-year cycle and we have also reduced the tone date to one year. That provides a more appropriate means of assessing any changes that take place as a result of market-wide effects. I hope that that explains the position. To reiterate the point, what this order seeks to do is to clarify and make clear what was intended with the measures introduced through the 2020 act. We are going to move on to the second theme, which is about the principles of taxation, and Miles Briggs is going to ask the questions. I want to ask a couple of questions about the principles that the Government has approached taxation on. Do you believe that it is appropriate to, retrospectively, alter the basis for taxation, as those amendments will do? On balance, we believe that that is justified and necessary. It is in the public interest. What the order aims to do is to prevent the inappropriate use of material change of circumstances provision. It is about ensuring fairness for all ratepayers and, importantly, protecting revenue for local authorities to fund services in which we rely. As the committee will be aware, the intervention is not unique to Scotland. There are similar measures taking place in Wales. Indeed, the UK Government is taking similar measures in respect of its responsibilities over the non-domestics rate system in England. Thank you for that. Do you accept that that goes against the Government's approach to date, which has looked at certainty and wider stakeholder engagement around taxation? Is that purely because of the circumstances of the pandemic, or is that the direction of travel ministers are looking at? The member will be aware that the Government has consulted on a draft framework for tax and engagement is one of the key principles underpinning our approach. Cabinet Secretary, ministerial colleague Mr McKee and myself have had extensive engagement with business since their respective appointments following the election in May. As I made reference to earlier, the UK Government is taking a similar measure, which was announced in March, which would have indicated the direction of travel. The Scottish Government indicated what our intention would be in June, so that intent has been clearly communicated. We have had extensive conversations with business, but I have to be frank and say that it is not a matter that has been routinely raised with ministers. I think that that has perhaps also been reflected in the evidence that the committee has taken over recent weeks. We are going to move on to theme 3, around the parliamentary process with questions from Megan Gallagher. Thank you, convener, and good morning, minister and panel. Before I get into my questions this morning, I would like to refer members to my register of interests as I am a sitting councillor in North Lanarkshire. One of my first questions relates to the consultation process, because some of the views expressed by stakeholders suggested that there has been insufficient consultation on the regulations. One panel member in a previous evidence session said that, for businesses, what is proposed has probably come as a bit of a surprise because they believe that there has not been sufficient opportunity to engage in the process. I would like to hear the minister's views on that. I would really, in response to reiterate the points that I made in my previous answer to Mr Briggs in which there is ongoing engagement between ministers and business representatives, both individual businesses and representative bodies. That is a routine feature of the engagement that takes place within the finance and economy portfolio. There has been that opportunity for discussions, and, as I indicated, it is not an issue that has really been raised in any significant way. I think that that has been reflected in some of the contributions that were made in previous evidence sessions to the committee. I would highlight the point that there is an ongoing process of engagement that takes place, which provides a forum for businesses to raise any particular issues that they wish to have with ministers, including on that particular matter. If I could ask a supplementary question about the proposed primary legislation, what plans are in place for consultation on proposed primary legislation that, if passed, will introduce similar changes to the appeals process for the period prior to April 2021? Well, the member will appreciate that there is a commitment within the programme for government, and the bill will be introduced in line with normal process and procedures. As a piece of primary legislation, it will go through the standard procedures in Parliament of free stages and there will be opportunities. The bill will be ultimately for Parliament to determine how it wishes to scrutinise the legislation, but, as it is a piece of primary legislation, the options that normally apply to primary legislation will be available for the Parliament to decide on. We are going to move on to the next theme, which is about workload issues. I am going to start with Mark Griffin, who is joining us online. Mark, would you like to ask your questions? I just had a question about workload. If this order was not to pass and coronavirus-related MCC appeals continued, just to ask about potential implications for process and existing appeals and future appeals, and whether that might also have an impact on preparation for the next valuation? Thank you very much. I am conscious that the committee has taken evidence on. You appreciate that, as for the minister, it would not be necessarily appropriate to comment on the individual operational aspects of how assessors conduct their business, but I will perhaps ask a nuke to come in to provide some more detail. I would just echo the minister's thoughts that it would ultimately be for assessors, valuation appeal committees and possibly the Land's Tribunal for Scotland, for instance, if cases are referred to determine how they organise their workload as they are independent. The committee, I think, did speak to the Scottish Assessors Association about this last week, and it appears to me that they were clear that this would certainly be perhaps quite challenging if these appeals were to continue and to go ahead in terms of workload. I would just echo that point, although it is not appropriate for me as a minister to comment specifically. I have read through the evidence that was provided last week, and I think that it will help the committee to reach an informed and rounded view on the matter. Thank you. Mark, do you have another question? No, no follow-up. Thanks, convener. Thank you, Mark, and I'm going to go to Eleanor. Thanks, convener. Good morning, minister, and good morning to the panel. Before I ask my question, I, too, would like to refer to my register of interests as an existing councillor in the searshire. Following on from my colleague Mark Griffin's question, it's just to ask if the order wasn't passed, would the Scottish Government provide more resources to support Scottish Assessors consideration of these appeals, which we know could multiply if the order was not passed? Should we look at workload issues when we're making this decision? Should that impact on the decision that we make today? Thank you very much. As you'll be aware, we do support assessors in carrying over a job on that particular matter. I'll ask a Nic to come in just to provide some more detail. The Scottish Government, since I believe 2019, has, via local authorities, as is normal, agreed with COSLA funding for assessors in relation to the badly implementation of the badly review. I think it's safe to say that officials have a good relationship with the Scottish Assessors Association in the sense that we would expect them to speak to us if there were any issues in that regard. As I say every year, we have that discussion in relation to the implementation of the badly review, so the Scottish Government has supported them in the past few years in implementing this review. In terms of any implications, it's not for me to speak on behalf of assessors, but I know that the articulated review is quite clearly in what potential implications could be a previous evidence session for the committee. On my second point about whether workload consideration should be a valid consideration in deciding whether to allow coronavirus-related appeals, do you have any thoughts on that? As I said, it stated that our intent in this order is to clarify what is in appropriate use in the review of material change of the circumstance. The intent was set out in the 2020 legislation. That order clarifies that. To reiterate the point that I made previously, mark wide changes of circumstance are better considered in the context of a revaluation, whereas material change of circumstance is normally more for very specific delineated local circumstances. With regard to the motivation and purpose and the thinking of Government behind the introduction of the order, I hope that that clarifies what it is that we are seeking to do. Matters for assessors who operate independently are for them to determine. I'm going to move on to our fifth theme, which is around local authority revenues. I'm going to invite Paul McClellan to introduce that. Good morning, minister, and panel. Can I also refer everyone to my register of interests? I'm a seven councillor on East London Council. Minister, I think that you've touched on this already just to see if you want to expand on this. Obviously, whether the proposed measures were primarily about protecting public finances and whether allowing for appeals would reduce non-domestic rates income and require the Scottish Government to compensate local authorities would be an effective use of public funds? Well, it would not be appropriate for me to speculate in hypotheticals as to what the outcome of any appeals may be, but I'm sure that, given the information of safe as regard to over 40,000 properties on appeal, I think that the member and the committee will be able to infer the potential of the order of magnitude and the impact that it could have. There is a case of fairness for rate payers, and that's why it's appropriate that this is considered in the context of a revaluation. There is a need for greater certainty around public funds, because where there's uncertainty on the outcome of appeals, that can lead to uncertainty for public funds as well. So, there's a balanced approach in that and so fairness for rate payers and yes, about protecting public funds as well. Thank you. We're going to move on to theme six, and that's with Willie Coffey, the other forms of business support. Willie, would you like to ask your questions? Thank you, convener. Good morning, minister and panel. Minister, as you know, the UK Government also plans to rule out this MCC process that we have in front of us today, and on the back of that, it announced back in March a £1.5 billion scheme to support businesses, Scotland's share of which would be around £145 million. My first question to you is, have we received any of that money yet? Willie, did you hear that response? I'm sorry, I didn't hear a single word of it. The minister's mic is dropping in and out. Can you hear me now? Okay, Mr Coffey. You had asked if we had received any of the money and I gave a monosyllabic response, no, we've not received any. I followed up by saying that my understanding is that no businesses in England have yet received any of that money either, and we do not have any certainty over when we are likely to receive that funding from the UK Government. Okay, if and when it does finally appear, minister, what's your view on that mechanism being applied, rather than the mechanism of the appeals process? We have heard some evidence at previous committee sessions telling us that SMEs, in particular, very rarely appeal or are successful in their appeals because of the difficulty in the process, minister. We sometimes find that SMEs can lose out in the appeals process, but it was stated in evidence given to us that this mechanism can in fact be much fairer and reach many more local businesses if local government is at the heart of the distribution of these funds. What's your view on that aspect of it? I think that Mr Coffey articulates the matter very well. Through an appeals process, there is great uncertainty, there is uncertainty over timescales and there is uncertainty over outcome. As Mr Coffey will be aware since the start of the pandemic, the Scottish Government has supported business through a combination of reliefs and grants in the region of £4.5 billion. I think that there is also an important point to be made that we cannot assume that the link between rental value and the economic circumstances of an individual business is clear cut. In regard to fairness business grants, the support that we have provided previously, that model is far more effective and there can be far more certainty with it. It is certainly the approach that we have undertaken and it is the approach that we would continue to inform how that money that we will hopefully eventually receive from the UK Government will be deployed to support businesses. The Scottish Government has done any preparatory work in anticipation of those funds coming to us, Tom. You will be aware that, during the pandemic, we had many local businesses looking for help and assistance who sometimes fell through the net. I can think of the wholesalers group, Tom, who technically had been able to trade, but had nobody to trade with. They felt particularly disadvantaged after many other local businesses. Have we looked at that aspect of it, should some of money come this time round, to make sure that those who need help locally can get that help when it comes? I think that Mr Coffey raises a very important point. In responding to that, I would actually refer to the answer that I had given earlier on about the process of engagement. That engagement is continuous and that is obviously very important because it gives a forum in which businesses and representative organisations can raise specific issues in the context of the pandemic and support required. That collectively helps to inform the position that we will take as a Government. As I am sure that Mr Coffey appreciates, because of the uncertainty around timing of when we will receive that funding, it creates barriers in relation to preparation because when we receive that funding it can be difficult to anticipate what the broader context will be when that funding is received. We continue to have engagement in dialogue with businesses and that is important in understanding what the needs of businesses are and that will of course inform future decisions that are taking. We heard about some difficulties locally where the local authorities felt that there was no flexibility for them or no discretion for them to assist companies that perhaps did not fall within the guidelines and scope of the various schemes. Would there be any intention to try to afford the local authorities a little bit more discretion and flexibility? Could any further support funds arise just to give them the ability to look at the local situation that they have and make sure that local businesses get the help they need? I think that it's an important point that the member made. As he will appreciate, it's not been possible to support every business and every organisation that we would, of course, have like to do. The combination has been able to administer it. There's also just the ultimate limitation on resources available to deploy. We have, throughout the course of the pandemic, over the past 18, 19, 20 months now, listened and reflected and learned. That has informed how future iterations of support have been provided and has saved us on-going dialogue and those are matters that we will reflect on. I'd just like to pick up a little bit on that theme. I'd like to ask Minister for your views on the ideas of devolving power to local authorities to set, collect and offer reliefs for non-domestic race locally, not only in relation to coronavirus but in general. Of course, we have provisions under the 2015 Community Empowerment Act, which allow local authorities to set their own local reliefs. There will be further devolution of empty property relief from 1 April 2023. We have taken action over recent years to give greater flexibility to local authorities in regard to NDR, but we also have to be cognisant of one of the key aspects of business, which is for stability in the system. We have obviously had a significant period of change with regard to the implementation of Barclay. There is a need for that implementation to be fully completed. As I said, we have the existing flexibilities to accessible local authorities around relief, as a consequence of the 2015 Community Empowerment Act. The third item on our agenda today is consideration of motion S6M-01401, in which the local government housing and planning committee recommends that the valuation and rating coronavirus scale will be reduced. I would like to invite the minister to speak and move the motion. The question is that motion S6M-01401, in the name of Tom Arthur, be approved. Are we all agreed? That will be noted in the committee's report confirming the outcome of the debate. We will pause briefly while we change over and bring in other people for evidence. We have just heard that the cabinet secretary will not be here for 10 minutes, so we are going to use that time to do agenda item 6. She is just getting her coffee. She can hear me. We are going to move into private. The third item on our agenda today is an evidence session on the relevant adjustments to common parts disabled persons Scotland amendment regulations 2021. I would like to welcome this morning Shona Robison, Cabinet Secretary for Social Justice, Housing and Local Government. We have Craig McGuffey, lawyer and Naeem Bhatti, head of fuel poverty and housing standards unit at the Scottish Government. We are going to take evidence from the cabinet secretary before moving to a formal debate on the regulations. I would like to invite the cabinet secretary to make a short opening statement on the regulations. Thank you very much, convener, for inviting me to present the relevant adjustments to common parts disabled persons Scotland amendment regulations 2021 for your consideration. If approved, those amended regulations will enable disabled people who live in housing with common areas such as communal access or gardens to make relevant adjustments to those areas with the agreement of the majority of owners. Within clearly defined timescales for each part of the process, the legislation is the first of its kind in the UK. On 21 February 2020, a legislation came into effect that enabled disabled people to make adaptations to the common areas in a property with the consent of a majority of the owners rather than the consent of all owners. Since the regulations came into force last year, feedback from stakeholders prompted us to revisit the regulations and amend them to include more structure around timescales for each stage of the process. The amendment regulations presented today have specific timescales for each of the stages of the process, providing clarity for the owners and the disabled person. Of primary importance, the regulations provide disabled people with a clear and workable method of securing the agreement of other owners to reasonable adjustments being made within common areas. Amending the principle regulations ensures that the legislation is aligned to our original policy intent that the disabled person can carry out adjustments to the common parts of a property in which they have an interest, provided that they make an application to all owners of the common parts and obtain the consent of a majority of the owners. I'm happy to answer any questions on the instrument. Thank you very much for that. Do any committee members have any questions? Good morning, cabinet secretary. Good morning to the panel. I want to ask a question specifically about advocacy for individuals and whether that has been considered, especially when we are looking at individuals who need that support around advocacy to make those changes? In terms of the support that is available for disabled people, a number of organisations provide support to them, such as Cairn Repair Scotland, local authorities as well, under the schemes of assistance. Given that, before disabled people are able to take forward any adjustments, an assistance is normally done, so that is part of the process for them to do that. I think that it's not advocacy per se, but in terms of assistance in funding of the works, it's very just worth putting on record that, obviously, the person could choose to pay for the adaption themselves, but they can also apply for grant funding from the scheme of assistance that local authorities provide as long as it's assessed by a suitably qualified professional, such as an occupational therapist, so that guidance around funding opportunities would be provided through the local authorities. Maybe we'll have to just put that on the record. Thank you for that. Do you know from the scoping around this how many applications local authorities are likely to see and the additional work that might present to them? Is there been any assessment of that? We don't hold that information individually, because the process is that the individuals will apply to joint integration boards and the local authorities and they will assist those applications and provide assistance to them, so they will be ones who will be assessing those applications, but we don't hold that information centrally. Thank you. Anybody else have other questions? Colleagues online? No questions? No further questions? Thank you very much for giving that evidence and we're now going to move to the fifth item on our agenda day, which is consideration of motion S6M-01817. That the local government housing and planning committee recommends that the relevant adjustments to common parts, disabled persons, Scotland, amendment regulations 2021 be approved. I invite the cabinet secretary to move the motion. I move formally. I would like to invite members to indicate if they wish to speak. The question is that motion S6M-01817, in the name of Shona Robison, be approved. Are we all agreed? Agreed. We're all agreed and the committee's report will confirm the outcome of the debate. Thank you very much for joining us this morning. As agreed earlier in the meeting, we will consider item 6 and 7 in private. I now close the public part of the meeting and we will move into private.