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Evaluation of the Impact and Effectiveness of the Small Business Rates Relief Scheme
5 Consultations
5.1 Consultations were carried out with stakeholder organisations and other business support agencies. The stakeholder organisations had been part of the consultation process before the SBRRS was introduced and had at that time made representations to the Scottish Executive on the expected effect of the Scheme on their members. As the Scheme has been in place for less than a year, none of the organisations had as yet any feel as to the impact of the Scheme. The stakeholders consulted for this study were:
- Scottish Council for Development and Industry (SCDI) -an independent, membership-driven economic development organisation. It was created in 1931, and today is supported by around 1200 members across Scotland's manufacturing and service sectors, universities and colleges, local government and enterprise networks, trade associations and professional bodies, arts organisations, churches and trade unions. As an entirely independent organisation, SCDI's membership network seeks to strengthen Scotland's economic competitiveness and sustainable prosperity by influencing Government policy at all levels - whether in Scotland or the UK, the European Union or globally.
- Scottish Chamber of Commerce (SCC) - current membership ranges from the country's largest companies to the smallest retail and professional operations. The present membership ranked by market capitalisation, includes 23 of the top 25 companies, and 38 of the top 50 companies in Scotland. Together Scotland's Chambers provide well over half the private-sector jobs in Scotland and provide an unequalled geographical and sectoral representation throughout Scotland compared to other organisations representing Scottish business.
- Federation of Small Businesses (FSB) - has 185 members in the UK (18,000 members in Scotland). The organisation campaigns to create a political and economic environment that will allow small businesses to prosper and foster the creation of wealth.
- Confederation of British Industry (CBI) - aims to help create and sustain the conditions in which business in the UK can compete and prosper. The organisation represents companies from every sector of UK business. Direct corporate membership employs over four million and a trade association membership representing over six million of the workforce.
- Forum of Private Business (FPB) - FPB is a not-for-profit pressure group, driven by its membership representing over 25,000 businesses in the UK and offer a wide range of business solutions and benefits to help our membership grow successfully and profitably.
5.2 In the view of a number of the stakeholders, many small businesses do not appear to know that the SBRRS exists. The main source of information - a leaflet explaining the Scheme included with the rates bill - was regarded as something that might easily be overlooked. Moreover, businesses that have moved premises recently may not have received a leaflet unless they have informed the Local Authority that they have changed premises.
5.3 The stakeholders suggested that there is not enough information given to relevant small companies to inform them of the Scheme, of the potential benefits and how to apply. Stakeholders have been consulted on the implementation of the Scheme and the information leaflet to be given to ratepayers but did not appear to be informing members independently about the Scheme.
5.4 It was considered that the impact of the Scheme on the Scottish economy must be weakened by the lack of take-up of the higher rates by eligible businesses.
5.5 None of the stakeholders knew if the Scheme is having an impact on small businesses. The general opinion was that the rates relief would be very welcome to businesses but is unlikely to be significant. The amount saved would enable companies to spend a bit more in other areas, but is unlikely to have any effect on employment as the amounts of money involved are just not large enough. However, it was accepted that it may have a more significant impact on start-up businesses, where relatively small amounts of money can mean the difference between survival or failure.
5.6 Rates were not thought to be the top priority of businesses. Other costs are more significant, although any reduction in the rates burden would be welcome to small companies whether or not there is any real impact. The Forum of Private Business was concerned about licensed hotels which were considered to be one group where rates bills are a large proportion of costs and where businesses are not eligible for SBRR.
5.7 The supplement in principle causes concern. Some asked, "Why should successful companies subsidise competitors?". However, there was a general resignation to the supplement, especially as it has been reduced for the year 2004-05. It was not considered to be an imposition on the companies with larger rateable values.
5.8 Consultations were also carried out with business support agencies that are in the front line of providing advice to small businesses. A random sample of Business Gateways were telephoned and if there was an advisor there with knowledge of the scheme and had experience of discussing this topic with clients then an interview was undertaken. Two Business Gateways came back with a group response to the questions. Within the Business Gateways, the advisors are aware of the workings of the SBRRS and try to ensure that any of their clients that appear to be eligible for the higher rates have the information necessary.
5.9 In the experience of the business advisors, some eligible companies have not applied for the higher rates of SBRR. The reasons given for this lack of take up were:
- "businesses get a lot of information sent to them and often don't read it"
- "some businesses assume that they would only get relief if the rateable value of the property is below 3,000"
- "some businesses do not appear to realise that the higher rates of relief are not applied automatically"
5.10 It was generally unknown as to whether the amount of rebate would have any significant impact on businesses as rates tend not to be a significant proportion of costs. However, it was acknowledged that any money coming back to companies was good news and that it should make a modest difference to start-up businesses. There were no opinions forthcoming on the supplement. Business advisors were not aware of this as an issue with companies that they dealt with.
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