Scottish Finance Secretary Shona Robison has been urged to deliver “better news” for businesses under pressure after the UK Government’s £25billion national insurance tax raid.
Ahead of the Scottish Government Budget next week, Aberdeen & Grampian Chamber of Commerce (AGCC) has set out a nine-point plan to grow the country’s economy.
It is calling for a simplification of Scotland’s income tax system, reform of business rates – including immediate relief for hospitality firms – and the relocation of key offshore wind decision-making bodies to Aberdeen.
The group, which represents the interests of 1,300 member companies across the North-east of Scotland, has also urged Ms Robison support proposals to reinstate rail services to Peterhead and Fraserburgh, two towns which will play a significant role in the energy transition.
‘Challenging context’
In a letter to the finance secretary, AGCC Chief Executive Russell Borthwick said the best way to fund and improve public services is to grow the economy.
“For many of our members, this year’s Budget Statement takes place in a challenging context,” he said.
“Announcements made in the recent UK Budget are set to increase the cost burden on many businesses in our region, most significantly through increases in Employer National Insurance contributions, and the lowering of the threshold, which will bring many part-time workers into scope for the first time.
“These changes will impact all sectors of the economy but will be most keenly felt in labour-intensive sectors such as construction, hospitality, and care, sectors that provide substantial numbers of jobs and might otherwise be expected to drive economic productivity.
“We are therefore looking to the Scottish Government for some better news on 4th December that will help mitigate some of these barriers to improved economic growth and increased productivity.”
Income tax changes
The Chamber has asked for the income tax system in Scotland to be simplified amid concerns about the impact of ‘fiscal drag’ on middle earners.
Its members report that the differential tax rates in Scotland is making it harder to attract and retain senior talent; and recent analysis from the Institute of Fiscal Studies suggests that those higher tax rates may not in fact be resulting in increased revenue.
Th Chamber has urged Ms Robison to take “a pragmatic approach that prioritises boosting economic growth and productivity as a more effective way to increase revenues and living standards”.
Business rates
On business rate, the Chamber has called for immediate relief for hospitality businesses, in line with England, alongside a commitment to deliver a “fairer, long-term replacement for non-domestic rates”.
The letter adds: “We remain concerned that despite Aberdeen City and Aberdeenshire being among the highest contributors of NDR, these local authorities are among the lowest funded, highlighting the need for a fairer distribution system.
“We would like to see the UK and Scottish Governments taking a holistic review of business taxation to determine whether local business rates are stimulating or hindering productivity.
The scope of this review could include consideration of whether a balanced system of local and online sales taxes would provide a fairer alternative to the out-of-date non-domestic rates regime.”
Energy
On energy, the Chamber wants to see faster progress on the £500million Just Transition Fund, which, four years in has spent just £75million.
The letter adds: “The announced £500million Offshore Wind Supply Chain Fund has not yet materialised, but alongside other initiatives such as the North-east Scotland Investment Zone, this and the Just Transition Fund can make a transformative difference in diversifying the regional economy. But it is needed now, not at some undefined point in the future.”
Following the UK Government’s decision to base Great British Energy in Aberdeen, the Chamber has called for Scottish Government agencies such as the Offshore Wind Directorate, Marine Scotland and Crown Estate Scotland to be co-located in the North-east “in order to complete the cluster and maximise opportunities for success”.
The Chamber’s letter also seeks investment in infrastructure and public transport, including the Buchan Rail Project. It also seeks an uplift in revenue for Scotland’s universities, an end to rent controls, meaningful steps to tackle Scotland’s housing emergency and previous pledges on arts funding to be honoured.
It also seeks Scottish Government support to secure an exemption for the third sector from the UK Government’s national insurance increases.
Mr Borthwick added: “The team at AGCC and our wider network stands ready to work with the Scottish Government to create the conditions that will enable the economic growth that we all want to see, in turn releasing additional funding for public services.”
