 The next item of business is a statement by Tom Arthur on delivery of the agreed recommendations of the Barclay review on non-domestic rates. The minister will take questions at the end of the statement, so there should be no interventions or interruptions. I call on the minister around 10 minutes please. Presiding Officer, I am pleased today to provide a statement on the implementation of the independent Barclay review of non-domestic rates. The Barclay review was commissioned in 2016, with a remit to explore how the rate system could better support business growth, long-term investment and reflect changing marketplaces. I would like to thank Ken Barclay and his colleagues, Professor Russell Griggs, David Henderson, Isabel D'Inverno and Norris Senior for their work on the review. The report, published in August 2017, made 30 recommendations. The majority of those were accepted by the Scottish Government, and I am pleased to report that all the agreed recommendations have now been implemented. To deliver that, we engaged, consulted and worked closely with local authorities, assessors and businesses. We introduced primary legislation, the Non-Domestic Rates Scotland Act 2020 and the range of statutory instruments, as well as administrative changes. I would like to highlight this afternoon a number of the key policy changes that stemmed from the Barclay review. Supporting business growth was core to the remit of the Barclay review, and we have implemented recommendations to improve economic performance and encourage investment. The business growth accelerator relief is the only relief of its type in the UK aimed at supporting property growth and property improvements. We introduced this in 2018, and this year alone, the relief is forecast to save rate pairs £15 million. To better incentivise the reoccupation of empty properties and therefore support our town centres, we expanded fresh start relief to cover all property types. We further extended it this year, making it available to properties with a rateable value of up to £100,000. Specifically for the renewable energy sector, we commissioned an independent review of small-scale hydro schemes, the Treton review. Following publication of that report in 2020, we provided more certainty for investors by guaranteeing until 2032 60 per cent relief for hydro generators. Barclay considered both ends of the property scale, large and small. A reduction in the large business supplement was recommended, and in 2020 we introduced an intermediate property rate. In April, we raised the rateable value threshold in which the higher property rate applies. Over 95 per cent of properties are now liable for a lower property rate than anywhere else in the UK, and we remain committed to reducing the higher property rate when affordable. We also commissioned an independent review of the small business bonus scheme, or SBBS, by the Fraser of Allander Institute. Their findings were reported in 2022, and we convened a short life working group to consider their recommendation to collect new information to make a more robust assessment of the impact of SBBS possible in future. We are committed to evidence-based evaluation and policy development to ensure that our support schemes are effective and deliver value for money. However, acknowledging the concerns raised by the group over additional red tape and burdens on business, we are not currently planning to introduce any new reporting requirements for SBBS relief recipients. SBBS remains the most generous scheme of its kind in the UK. We have introduced changes this year to make it more progressive, and it continues to take 100,000 properties out of rates altogether. This year saw the revaluation of all non-domestic properties following a six-year gap. Barclay recommended more frequent evaluations to reduce volatility and shorter tone dates to allow rateable values to more closely reflect market trends. That revaluation marks the introduction of the first three-year revaluation cycle, with valuations based on a one-year tone date. New rateable values for non-domestic properties across the UK came into effect on 1 April, but in Scotland they are based on market conditions as at 1 April 2022, compared with a year earlier on 1 April 2021 in England and Wales. That ensures that values in Scotland more accurately reflect up-to-date rental market data, and specifically for that revaluation reduces the risks of Covid-19 distorting rateable values. Earlier today, a report on the impact of the 2020 revaluation was published. That report details changes in rateable values as a result of the revaluation, both by-property class and area, as well as resulting changes to gross bills. That is after the application of general revaluation of transitional relief, a relief that we introduced to protect those seeing larger increases in rateable values due to revaluation. The Barclay review also recommended a number of measures aimed at improving rate payer experience, including improving transparency and increasing efficiency. Assessors are now required to publish a draft valuation roll on 30 November the year before revaluation, as well as published for prescribed property types lists of the comparable properties that they use to determine the basic rate for revaluation. In advance of the next revaluation in 2026, we are committed to exploring whether further improvements can be made to the transparency of valuations. We also introduced a new two-stage appeal system on 1 April, and that took place alongside the transfer of valuation appeal committees to Scottish tribunals. The new appeal system ensures greater transparency and fairness, encouraging earlier information sharing and quicker resolution of cases for ratepayers, which is important for the success of three-year revaluations. We are committed to a fair and transparent non-domestic rate system that provides a level playing field. The Barclay review recommended the creation of a general anti-avoidance rule, and the Non-Domestic Rates Scotland Act 2020 introduced regulation-making powers to empower councils to tackle rates avoidance tactics. The first anti-avoidance regulations under those powers came into force last month, delivering commitments in the Bute House agreement and programme for government 2021. A number of other changes have also been made to level the playing field for all ratepayers. Self-catering property, liable for non-domestic rates, became required from 1 April 2021 to provide evidence of actual letting for 70 days per year, in addition to being available for let for 140 days in the year. We removed the financial incentives for councils toward charity or sports relief to arms-length external organisations and eligibility for charitable rates relief from mainstream independent schools. We published statutory guidance on discretionary sports relief to ensure that it supports affordable community-based facilities. We restricted the small business bonus scheme to occupy properties, focusing on the relief on economically active premises, and previously exempt property on parts became rateable from 1 April. We want to encourage empty properties back into economic use, and Barclay recommended a number of reforms to empty property relief. Those were, however, superseded when we devolved the relief to councils on 1 April this year. The reform was accompanied by a revenue transfer to councils of £105 million per year for three years, significantly more than the estimated cost of maintaining the national relief in light of the decision to freeze the poundage this year. That delivers greater fiscal empowerment as local authorities may use that money as they see fit, according to the needs of businesses and communities in their area, including for any discretionary local empty property relief. We will undertake an initial review of the devolution of empty property relief in advance of the next revaluation. I have outlined this afternoon some of the key reforms, changes and significant progress that we have made following the Barclay review to deliver a system that better supports business growth and long-term investment, which increases fairness and transparency and improves rate payers' experience. The UK Government's fundamental review of business rates, which concluded in 2021, made recommendations that Scotland had already or has since implemented. It is important to recognise that non-domestic rates are an important source of revenue to fund the local services in which we all rely. We continue to offer a strong non-domestic rates package, responding to the calls from businesses to freeze the poundage and offering reliefs worth almost three quarters of a billion pounds this year alone. It will take time for the Barclay reforms to bed in and longer still for them to be evaluated. In line with the framework for tax, we want to provide certainty, convenience and efficiency to rate payers. However, we want to ensure that the door remains open to discussions on further improvements to the rate system. During the First Minister's statement on 18 April, he acknowledged the need for a new approach to the Government's relationship with business, and on Monday this week we announced the creation of the new deal for business group. One of the aims of this group will include establishing a consultative subgroup to advise on further enhancements to the operation and administration of a non-domestic rate system, following the final implementation of the independent Barclay review. As chair of this subgroup, I look forward to being set up and to hearing the views of the business community. As part of the new deal for local government, I will ensure that local government's views are fully taken into account when considering any further enhancements to the NDR system. I have also written to the spokespeople of the other parties to invite them to raise their NDR concerns with me. On that note, I will conclude in saying that I look forward to the constructive engagement that will take place between myself and Opposition Party spokespeople, and I look forward to the questions that they will raise this afternoon. Thank you minister. The minister will now take questions on the issues raised in his statement. I intend to allow 20 minutes after which we will have to move on to the next item of business, and I would encourage members wishing to ask a question. We have not already done so to press the request-to-speak buttons, so I call Liz Smith. I thank the minister for a prior site of the statement. I ask him three specific questions. The minister is well aware that the Scottish retail consortium has persistently demanded that when it comes to the higher property rate, it wants to see parity restored with England. I ask why ensuring that parity with England, which after all was a promise of the SNP manifesto in 2021, has still not been secured, thereby adding to what the Scottish Retail Consortium has described as damaging perceptions about Scotland's lack of competitiveness. Secondly, Kenneth Barclay was very clear, rightly so, at the time of the publication of the review in 2016, that all 30 recommendations that he was making were aimed at improving the economic climate in Scotland. Does the minister now accept, however, that retail, hospitality and leisure industries have already been put at significant disadvantage because the Scottish Government would not commit in the recent budget to the 75 per cent rates relief for 23.24, which is available in England, despite having the Barnett consequentials to do so? Thirdly, does the minister believe that Scotland, as the highest tax part of the UK, is in line with that competitive ambition, as expressed by Kenneth Barclay? I thank Liz Smith for her questions, as I touched on in my statement. With regard to the higher property rate, we are operating in a very demanding set of fiscal circumstances. However, we are committed to when it is affordable and finances allow to meeting that commitment on the higher property rate. With regard to RAHL, I would note that, because of our generous, the most generous of its type, small business bonus scheme, around 50 per cent of retail, hospitality and leisure premises are not paying any rates. Of course, as we move towards the budget process for next year, ministerial colleagues will be more than happy to discuss what opposition party priorities are, but I would note that to allocate additional revenue for non-domestic rates relief would require revenue being taken from other budget lines. With regard to the overall net tax position in Scotland, it is important to look at that in aggregate, because in Scotland we deliver a social contract that is unparalleled in other parts of the UK, and that is only made possible because of our progressive approach to taxation. Of course, all decisions on tax will be set out at the budget in line with established processes. I thank the minister for prior sight of the statement. I also remind the chamber of my register of interests. I am a director of a company with retail interests, and indeed my constituency office benefits from the small business bonus scheme, I think that is probably important to add as well. I look forward to engaging with wider reform on non-domestic rates, but reflecting on the analysis provided alluded to by the minister, it leads with the median rateable value increasing by £450, but with the median rateable value being below the small business bonus threshold, what is the actual aggregate rise in bills? Is it the 12.5 per cent on page 13 of that report, and how does that compare to economic growth over that period? One of Barclay's recommendations was about having national standards on assessment methodology, and it calls so-called for a statutory body if needed. Can I ask the minister for his reflections on whether such a statutory body is needed at this time? Although he may not want to acquiesce to the calls for a 75 per cent discount, many small businesses complain of being at a competitive disadvantage compared to England. So has the Scottish Government made an assessment of what impact that differential has had on Scottish businesses? Mr Johnson, the total gross bill has increased by £127 million, which is 3.7 per cent, after adjustment for the general re-evaluation transitional relief. With regard to a statutory body, we have sought to increase standardisation through our reforms of the appeal process. As part of the discussions that we have through the subgroup on the new deal for business and engagement with Opposition Party spokespeople, I am happy to explore what further standardisation and simplification could be undertaken. As with regard to the competitive position vis-à-vis the rest of the UK, we take a range of factors into consideration during our budget-setting process. As I touched on earlier, we provide the most generous social contract anywhere in the UK. That is made possible because of our progressive approach to taxation, but where Opposition members feel that there should be a change to taxation policy, whether that be on income tax or indeed on non-domestic rates, we are open to these discussions but it is incumbent on Opposition spokespeople not just to identify the addition of spend the wish to see, but to see where the corresponding reduction would take place elsewhere in the budget. I am looking forward to those discussions going forward. The minister mentioned the new deal with business in his statement, and I wonder if he can tell us any more about how that is progressing and particularly whether that might lead to further enhancements to the NDR system. I thank Mr Mason for his question. My colleague the cabinet secretary, Neil Gray, co-chaired the first meeting of the new deal for business group yesterday afternoon, and it will be agreeing the parameters and priorities for the new deal and how the subgroups agreed will be established. As I mentioned in my speech, the consultative subgroup will be established to advise on further enhancements to the operation and administration of a non-domestic rate system following the final implementation of the Barclay review. More details including the membership of the subgroup will be confirmed in due course. I very much look forward to engaging with the subgroup, indeed engaging with Opposition spokespeople, and may I add that my door is open to any member of this Parliament who wishes to engage on any matters pertaining to my portfolio, including on non-domestic rates. The minister mentioned the threatened review of rating for small-scale hydro schemes, which we all want to support as part of our transition to net zero. Many of those have seen punitive increases in the rateable value, potentially putting their viability at risk. The temporary relief that the minister mentioned is very welcome. Nevertheless, it does not provide the necessary long-term certainty that investors in the schemes want to see, as Scottish land and the states point out in their briefing to MSPs. Are we going to get a permanent solution to this significant issue so that we see small-scale hydro ramp up to the levels that we all want to be at? I think that Mr Fraser raises a very important set of questions there. We will, of course, keep all of our non-domestic rate policies under review, both in line with policy aspirations, but also within affordability and other Government priorities. We would all recognise that there is a big role for the Scottish Government in realising the potential of hydro. There is also a big role for the UK Government in realising the potential of hydro. We are committed to working collaboratively and constructively using the powers that we have at our disposal to ensure that hydro can flourish and play the important role that it can play and must play in reaching net zero by 2045. Small businesses are the beating heart of Glasgow's economy and culture. My constituency is home to the subversion gallery located in the west end. A small business was eligible for the small business bonus scheme, the benefits of which I know have been a lifesaver to many businesses across the country. Can the minister confirm how many Glasgow's small businesses are eligible for the scheme and how much it has invested back into Glasgow's economy? I can confirm to co-capture our statistics show that, as at 1 July 2022, 11,410 business premises in Glasgow received the small business bonus scheme relief, with over 90 per cent of these premises receiving a 100 per cent reduction. That has saved ratepayers in Glasgow an estimated £33 million in 2022-23 alone and over £160 million cumulatively over the past five years between 2018-19 and 2022-23. The changes that were introduced under Barclay on self-cating properties were already well out of date when they were announced in Wales and introduced the 140-day rule back in 2010. A year later, the Government have announced more consultation on taxation affecting housing and in the spirit of suggesting areas of additional funding. Can I ask if the Government will consider including in that consultation abolishing the short-term let's rate relief, which could save councils £21 million? I thank Mr Griffin for raising our on-going and live consultation on potential reforms to council tax regarding second homes, empty property and indeed NDR. As a member will appreciate, those areas are interrelated, which is why, as well as asking specific questions on the proposition around council taxes that applies to empty properties and second homes, we also ask a question on NDR. I would encourage all members to engage with that consultation and to promote it amongst their stakeholders and networks and, of course, we will report back to Parliament on the conclusion of the consultation. The review has offered an opportunity to local authorities to incentivise the occupation of vacant properties by allowing them to consider applying an NDR charge in respect of empty properties. Does the minister agree with me that this provides an opportunity to breathe new life back into vacant town and city centre properties that have regrettably become a more common feature of many streetscapes in Scotland? The member raises a very important point and, of course, there is a number of actions that we are taking across in government to support our town centres that have been led by my colleague Jo Fitzpatrick, minister with responsibility for planning and regeneration. With regard to the role that NDR can play, we have evolved empty property relief to councils as of 1 April this year. As I referred to in my statement, we are providing councils with £105 million in extra revenue funding annually over the next three years, which is far more of an expected cost of continuing empty property relief as a national relief due to the freezing of the poundage. There are a number of measures that we are taking through the planning system, through the tax system and through the wider empowerment of local government to support the regeneration of our town centres. I want to press the minister a little bit further on Liz Smith's question about the large business supplement. When I look back at the 2021 manifesto, it did not mention anything about affordability in that commitment. Of course, it is sensible to have affordability as a characteristic of this policy, but I am sure that that was considered when the manifesto was drafted. Why has the commitment been watered down and will it be delivered by 2026, as was promised in the manifesto, especially considering the state of the high street just now? I recognise the point that the member is making. I would just add that the challenges that are high street face are multifaceted taxes, partly because the member will appreciate that there is a broader range of factors that impact on that. We have made progress with regard to the number of properties that are eligible for the higher relief. We increased the threshold for the intermediate property rate from £95,000 to £100,000, where less than 5 per cent of properties are qualifying for that higher rate. I note to the member that we are two years into a five-year session. Of course, we have faced the highest inflation in my lifetime—in the lifetime of many of us in this chamber—and significant economic pressures. However, we have a commitment and, as I said, those decisions will be taken as part of the annual budget process. I note that we still have a number of years to run in this parliamentary session, which was a manifesto commitment that was delivered over the entirety of the Parliament, and we have to take those decisions in light of affordability at the time. Of course, we will keep members up to date, as we always do, through the annual budget process. Elaborating on the relevant comments in his statement, does the minister agree with me that it was right that, in 2020, the Parliament decided to delay undertaking the revaluation of non-domestic rates from 2022 to 2023, with a tone date of 1 April 2022 instead of 1 April 2020? I agree absolutely with what Ben Macpherson has said. The bark of the review highlighted the dangers of economic volatility occurring between the revaluation date and the tone date. Ben Macpherson will be well aware of it, and the challenges around the tone date were key determination and the decision to delay the revaluation. If the revaluation had not been delayed, the tone date would have fallen on 1 April 2020, just three weeks after Covid-19 was declared a global pandemic, and during a period when many businesses had stopped trading, the tone date would not have delivered rateable values that reflect post-Covid economic conditions, as the rental markets would not have adjusted. Similarly, a tone date of 1 April 2021 would also have been unsuitable, as volatility in the commercial property market continued. We remain committed to that free yearly revaluation with a one-year tone date, with the next revaluation scheduled to take effect on 1 April 2026. Analysis by the Parliament's information centre in 2020 found that shooting estates benefit to the tune of £10 billion a year from non-domestic rates relief through their eligibility for the small business bonus scheme. I am glad that, in response to the bark of review of the scheme that took place and some reforms were made, but does the minister agree that shooting estates simply should not be eligible for this kind of tax break? Shooting rights and deer forests were added to the valuation role with effects from 1 April 2017 following the Land Reform Scotland Act 2016. In 2021-22, shooting rights and deer forests raised £1.7 million in non-domestic rates income, and we are in receipt of £4.9 million in relief, such as a small business bonus scheme and empty property relief. I recognise the members using these matters, and I will be very keen to discuss them with Mr Greer as part of my on-going engagement with all members of all political parties on NDR. From the impact report, we can see that 70 per cent of properties in Aberdeen had their rateable value reduced. I welcome this cut, because I have been campaigning for it for the last seven years. Will the minister now accept that the valuations for Aberdeen were so badly wrong and that the Government should have acted sooner to stop the impact of SNP austerity in the north-east? I am sure that Mr Lumson is aware. I certainly hope that Mr Lumson is aware that the matter of valuation is conducted independently by Scottish assessors, and that is informed by the rental values that are estimated at the tone date and that is determined by macroeconomic conditions. It is a matter for assessors to determine what valuations they should do. It is a matter for local authorities to administer non-domestic rates, and, of course, within the Government and Parliament, we set the overall legislative framework within which that takes place and, indeed, the property rates. Beyond that, I am happy to engage with the member directly on any specific matters around non-domestic rate reform that he thinks merit further consideration, but, as I say, on the issue of valuation, which he raises, that is, of course, a matter for the independent Scottish assessors. Michelle Thomson, to be followed by Liam Kerr. I welcome the fact that the Scottish Government acted decisively at an early stage to implement those Barclay review recommendations, which did not require primary legislation. I note that the minister has already mentioned measures such as expanding fresh start relief to help town centres and changing the business growth accelerator relief. However, can the minister provide any further information as to whether any evaluation has been made of the impact of those early recommendations being introduced and their benefit to businesses in Scotland? Can I thank Michelle Thomson for her question? I am happy to confirm to her that, since fresh start relief was expanded, it has saved rate pairs on estimated £17 million between 2018-19 and 2020-23. Since the business growth accelerator relief was introduced, it has saved rate pairs on estimated £96 million over the same time period. Our statistics show that, as of 1 July 2022, 320 business premises were in receipt of fresh start relief, and 450 business premises were in receipt of business growth accelerator relief, demonstrating the positive impact that those policies are having. Finally, Liam Kerr. I am very grateful. The minister seems to know an awful lot about Glasgow, but some will worry that he is less familiar outside the central belt. Aberdeen's union street has many empty properties. What impact assessments and scenario planning did he do on the effect of those reforms on union street, and what do those reports suggest that the outcomes will be? I can assure the member that I am very familiar with union street having worked in Aberdeen for many years as part of my pre-political career in music. I recognise that union street, like many of our high streets across Scotland, has faced a range of challenges, whether they be the pandemic, whether it be Brexit, whether it be the specific challenges that the north feast has faced around oil and gas, or whether it is the more general challenges that retail has faced due to the changing nature of how people purchase products. As I touched on and highlighted in my early statement, that was an independent review, chaired by Ken Barclay, following the review where there was an implementation group with consultation and engagement, so that is having to look at how we set a non-domestic rates policy for the whole of Scotland. What I would say to the member, of course, is that under the Community Empowerment Act 2015, local government does have a discretionary power where they can provide targeted reliefs for their particular areas, and that is an important power, an important piece of fiscal autonomy that local government has, and that is something that we are committed to expanding as demonstrated through the devolution of the Empty Property Relief.