Official Report 1201KB pdf
The next item of business is a debate on motion S6M-19891, in the name of Ivan McKee, on the Non-Domestic Rates (Liability for Unoccupied Properties) (Scotland) Bill at stage 1. I invite members who wish to participate to press their request-to-speak button now or as soon as possible.
17:24
We are in the chamber today to debate stage 1 of a bill that seeks to correct a legislative error and ensure that there is a clear legal basis for local authorities to collect non-domestic rates from the owners of unoccupied properties. I welcome the Parliament’s agreement that the bill can be designated as an emergency bill, reflecting the gravity of the situation and its importance to public services and, indeed, to businesses. Ministers have sought to resolve this serious matter as quickly as possible.
The bill will help us to protect public revenues, which play a fundamental role in funding the public services on which we all rely. It will prevent us from potentially having to cut £350 million of funding from our schools or our hospitals or having to increase the rates liabilities for non-domestic properties in future.
Will the minister give way?
I will make a wee bit more progress, before perhaps giving way to the member later.
As members know, the Scottish Parliament voted in 2020 to devolve empty property relief to local authorities in order to provide greater local fiscal empowerment for councils by letting them, rather than Scottish Government, decide whether to offer any rates discounts to the owners of unoccupied properties.
To do that, a Government amendment at stage 2 of the Non-Domestic Rates (Scotland) Bill in 2019, approved on a cross-party basis at committee, repealed legislation from 1966 that provided that no rates were payable on unoccupied properties, and also repealed a power that allowed ministers to prescribe by regulation classes of unoccupied property for which such rates were payable.
Empty property relief was devolved on 1 April 2023 and local authorities were given £105 million of additional revenue funding each year, equal to the forecast cost of that relief before it was devolved. Councils, which are accountable to their local electorate, have full flexibility over how they deploy those extra resources locally.
However, a technical error in the Non-Domestic Rates (Scotland) Act 2020 was recently identified that means that the amendments did not have the intended legal effect. Although section 19(2) of the 2020 act repealed section 24 of the Local Government (Scotland) Act 1966, which stated that no rates were payable for unoccupied non-domestic property, the effect of section 16(1) of the Valuation and Rating (Scotland) Act 1956, which sets out that rates shall by payable by occupiers only, was regrettably not taken into account.
In the interest of transparency, I can inform members that a routine inquiry about the basis for rates to be charged to the owner of unoccupied properties was received from a council by Scottish Government officials on 23 June. There was no indication at that time of the implications of the query and it was treated as routine.
In investigating the issue, it became apparent to Scottish Government officials that there might have been an error in the 2020 legislation. Initial concerns were notified to ministers on 21 August, and that concern, following further investigation and legal advice, was confirmed to ministers on 19 September.
Will the minister give way?
Will the minister give way?
Ministers agreed that the introduction of legislation be explored, and officials have worked at pace to develop the bill and secure a parliamentary slot since then, taking into account the three-week period that is required for the laying of legislation.
I am happy to take interventions.
The minister has, in part, answered my question about the party that has challenged the legislation. Since 23 June, have further parties come forward? Is he able to say to which local authority area the case pertains?
No other party has come forward on the issue, because it was not known about. Only one council has come forward. I do not know whether I want to give the name of the council; I will not do that at this stage, because it is up to the council to do that.
Will the minister give way?
Will the minister give way?
I have finished with that question, so I will take Martin Whitfield.
I seek further clarification of the situation. Will the minister confirm that what he described as a “routine” request was one that was created internally within a local authority—I am content to keep its name private—rather than as a result of an approach that had been made to a local authority by someone who was outwith it, questioning the ability to raise the tax?
I would need to check back on the detail on that. As far as the Scottish Government is concerned, the request came from a council, and its council officials asked the question of Scottish Government officials about the basis for the process that we are currently discussing. That was considered internally and then taken forward through the mechanism that I have described.
Who is next?
Given the dates that are involved and the slight confusion around that, is the minister willing to publish all internal correspondence about the error and the timeline surrounding it?
In the interests of transparency, we are absolutely willing to co-operate with any requirements in that regard.
Is that everyone?
I seek clarification. When did the Scottish Government decide that legislation would have to be brought to the Parliament? On what date was that decision made? Even if it had to wait until August or September, given that the Government waited two further months to bring this legislation, does that make it emergency legislation? When did the Government come to the view that primary legislation would be required?
Minister, I can give you the time back for the intervention.
Thank you.
As I indicated in my earlier remarks, initial concerns were notified to ministers on 21 August. That is the first date that ministers were aware that there was a potential issue. Then, further investigation was undertaken, and, as you would expect, legal advice was sought in order to understand the situation. The outcome of that was confirmed to ministers on 19 September. Ministers then agreed that the introduction of legislation should be explored. That was the point from which we started to take the process forward.
As I indicated, a three-week period is required for the laying of legislation. The October recess also fell in that period. However, when we sat down at the end of September to consider the issue, we were absolutely focused on how quickly we could bring the legislation to the Parliament—make no mistake of that.
Primary legislation is required to correct the error and provide a clear and certain basis for local authorities to collect rates from the owners of unoccupied properties. Without it, the amounts that have been paid would need to be refunded. The bill is therefore needed to bring the statute book unequivocally into line with the Parliament’s intention—and with its position as understood by local authorities and ratepayers, as applied by local authorities, and as voted on by the Parliament in 2019—to devolve empty property relief to local authorities .
The sums that are potentially at stake would fall to the Scottish Government to pay and are estimated to amount to more than £100 million per year if local authorities have to repay the rates that have been collected since 1 April 2023.
There will be no changes to rates bills as a result of the legislation, and the bill, if passed, will not introduce any new additional costs to businesses or individuals compared with the Scottish Parliament’s original intended policy. For that reason, we have not consulted on the bill, which simply intends to rectify the position, as it had been understood by the Parliament, local authorities and ratepayers since 1 April 2023.
Will the minister give way?
He may do so very briefly.
I have a technical question to assist my understanding. I understand the position as to the non-domestic rates that have been paid despite there being no legal basis for them to be paid. What is the Government’s understanding of arrears or enforcement action that councils will potentially take against owners who have not been paying their non-domestic rates bills during that period? Does the Government have an understanding of the legal status of that debt?
I can provide clarification on any specific example that Mark Griffin wants clarification on. In simple terms, everything would continue as if the legislation proposed by the bill had been in place from the date on which the policy was introduced—everything is applied retrospectively. Due to the importance of bringing clarity to the matter, and due to the sums at stake, I hope that members will support this important piece of legislation.
I move,
That the Parliament agrees to the general principles of the Non-Domestic Rates (Liability for Unoccupied Properties) (Scotland) Bill.
17:33
The Scottish Conservatives have very real concerns about the emergency bill—concerns about how we got here, the legality of the measures and that, today, two days into our knowing about the situation, the Scottish Government’s story is already changing. Will the Government be sure-footed in the answers that it gives moving forward? We do not have confidence that it has been on top of the issue to date.
Ministers are saying today that they have confidence that the tax can be levied retrospectively. However, thanks to Mr Fraser, we all know that the law states quite clearly that retrospective taxes can apply only in exceptional circumstances. I heard what the Deputy Presiding Officer said to Mr Fraser about the legal competence of the bill, but, as the formal response from the Presiding Officer to Mr Fraser makes clear, whether a provision of a bill is within the Parliament’s legislative competence can only definitively be determined by a court.
Will the minister produce the legal advice—whether now or during the debate? I know that the Government would not routinely do that, but will the minister do so in order to confirm beyond reasonable doubt that these are exceptional circumstances? If he cannot do so, he should be very worried, because property developers are already in discussion with lawyers and are murmuring the words “unjustified enrichment”. Will the minister also confirm on the record that it is the Government, and not councils, that will be on the hook for the potential cost of £400 million and all other associated costs?
The £400 million in non-domestic rates has been levied on property owners without any legal basis. Although we do not want to delve too deeply into the impact of the original legislation since it was introduced because, at the behest of ministers, the debate and the process will be too short for us to do so, it is worth putting it on the record that the £400 million that has been levied illegally in rates since then has done real and lasting damage to the commercial property market in Scotland, and therefore to towns, jobs and industry.
The member emphasises that businesses have had to pay the rates, but where would the £400 million come from? Would he support cutting it from local authorities?
Mr McKee has managed to magic up £1 billion in public sector reforms in the blink of an eye, so I am sure that he could find another £400 million.
The damage has been very real. Some developers have razed buildings to the ground because they could no longer afford to pay or were not prepared to pay tens of thousands of pounds in tax for buildings that they could not sell or rent. Others have collapsed corporate structures and simply handed back the keys, leaving the councils with the liability for hard-to-maintain properties.
The ministers who were responsible for the defective legislation that the bill seeks to remedy were Derek Mackay and Kate Forbes. Looking back to the consideration of that legislation at stage 2 by the Local Government and Communities Committee, it is clear that ministers did not do what was required of them in terms of legislative scrutiny or legal due diligence. At the time, the Government explicitly referred to repealing section 24 of the Local Government (Scotland) Act 1966, but it overlooked the existence of section 16 of the Valuation and Rating (Scotland) Act 1956. Kate Forbes and her legal team were asleep at the wheel. In fact, at stage 2 deliberations on what became the 2020 act, Ms Forbes told MSPs that the bill was sound. She said:
“Amendment 42 delivers that by repealing legislation that provides that no rates will be payable on unoccupied lands and heritages. It also repeals a power that allows ministers to prescribe by regulation classes of unoccupied lands and heritage for which such rates are payable.
Although amendment 42 is simple, the implications are significant, both for national non-domestic rates policy and for local empowerment.”—[Official Report, Local Government and Communities Committee, 4 December 2019; c 36.]
The Government believed that the matter was simple, simply because it did not do its homework properly. It went back to the 1966 statute, but, apparently, it did not go back any further.
Ms Forbes is meant to be the brains of the Scottish National Party operation when, in fact, it was slapdash and shoddy. Who is to be held accountable for that? I see no signs of any heads rolling. However, here we are again. As I said yesterday, the Government’s solution to fix a problem in legislation that was rushed is to rush through legislation.
I also have concerns about the lack of consultation. Ministers are saying that it is because they need to bring forward remedial legislation as quickly as possible following the concerns that were raised with them, but I do not accept in any way that, if they have been able to spend five months giving the matter due consideration, they cannot consult even for a matter of weeks, and that we should be forcing the bill through in two days.
We will not support the bill and we will seek to amend it to the point where ministers must go back and try to get it right. We also question the numbers. Although non-domestic rates on unoccupied property may have brought in £400 million, what damage has that done to the commercial property sector and the construction industry? Would this not be an opportunity to pause for some form of impact assessment to see what damage the legislation has done? If the minister were to speak to those in the industry—many of whom are very angry at the situation that the Government finds itself in—they would tell him, in plain language, what the effects of the tax have been.
On that basis, we cannot support the financial resolution. Given the significant doubts that we have about the possibility of a legal challenge, to support the financial resolution would be to give the Scottish Government a blank cheque while it could face significant legal fees.
I point out that we will try to amend the bill at stage 2 in a number of ways. Douglas Ross, who will speak shortly, will rightly try to ensure that we get greater transparency and accountability. This is the most significant legislative failure in recent years, and the minister should not be seeking to brush that under the carpet. Independent scrutiny is needed to restore confidence in the system and to identify the lessons to be learned.
This bill is, I fear, fraught with difficulty and complexity. I appeal to ministers not to be frivolous with the legislative process now, as they were in 2020. They should pause, think, consult and ensure that they approach it in the proper manner.
17:40
On the face of it, this emergency bill is a short and simple bill, designed to rectify an error in the Non-Domestic Rates (Scotland) Act 2020. As the law stands, local authorities have had no legal basis to collect non-domestic rates on empty properties since 2023. Had that oversight gone unnoticed, the Scottish Government would now be facing refunds to business property owners amounting to around £350 million.
We intend to support the principle of this emergency bill, not to spare the Government’s blushes but because it is necessary to correct the error, to bring the law back into line with the intent of the 2020 act and, crucially, to ensure that Scottish taxpayers do not end up footing a £350 million bill for a Scottish Government mistake.
We cannot ignore the fact that it seems like sheer luck is all that stood between the Scottish budget and a refund bill worth roughly three quarters of the annual Scottish child payment cost. That is not a small slip; that is a near miss of staggering proportions.
I am curious. The member says that the Labour Party will support the bill. Does he not have any concerns about the legal issues raised earlier by my colleague Murdo Fraser?
I do have concerns about the legal issues. However, as the Presiding Officer said, all legislation that is passed in this place will ultimately face the scrutiny of the courts. What I am more concerned about is the Scottish taxpayer having to foot a £350 million bill for a mistake of the Scottish Government’s making. That is the consequence of our not passing this legislation.
Costly mistakes from this Government are becoming all too familiar. A billion pounds has been spent on ferries that still do not sail, another billion has been spent on a prison that was supposed to cost £100 million, and millions more have been wasted on legal fees defending the SNP Government’s incompetence—and I hope that there will be no more legal fees as a result of this other mistake.
Failure and mismanagement have already drained billions of pounds of public money. It is fortunate that, this time, someone eventually did their homework, because the country is well past the point at which it can afford to keep paying for the Government’s errors.
Even though it appears that the issue was caught in time, there may yet be hidden costs for local authorities, such as for legal and financial advice to protect themselves from exposure as collection agents. Like Mr Hoy, I would like a reassurance that hard-pressed councils will not be expected to bear any burden for a blunder that was not of their making. Given the minister’s response to my intervention, I am still not clear whether any debt recovery action that has commenced in the past few days—or could potentially commence in the coming weeks—will be sound or whether it could potentially have legal costs attached to it.
The Government will be well aware that we are approaching a moment when the Scottish people will have the opportunity to hold it accountable. Its record on finances and taxation is woeful. We face a looming fiscal gap and, even with this legislative fix, the non-domestic rates system is not functioning as it should. It is a complex labyrinth of exemptions and reliefs—and that may well have been what allowed the error to go undetected for so long.
It is not only in financial legislation that the Government falters. Only last week, we were summoned to the chamber to consider a phantom heat in buildings bill, only for the Government to admit that it had no intention of introducing such a bill. Those are not the actions of a Government with a clear plan; they are the actions of a Government that has run out of ideas and is rapidly running out of time.
As I have said, we will support the bill, if only to ensure that the Scottish people do not pick up the tab for that mistake. We know that when Governments get it wrong, ordinary people end up paying the price, and we firmly believe that public services should never have to absorb the cost of financial or legal incompetence from a Government here that, increasingly, looks and sounds completely knackered.
I call Lorna Slater. You have up to four minutes, Ms Slater.
17:45
Thank you, Presiding Officer. I do not intend to use my full time.
The Scottish Greens understand the seriousness and importance of the bill and are content that the proposed solution to the drafting error in the 2020 legislation is in keeping with the intention of that legislation and does not change policy or practice. The Scottish Greens will support the bill at stage 1.
We move to the open debate.
17:45
I am grateful for the opportunity to speak in support of the general principles of the bill. As we have heard, the bill has been introduced to correct an error in law relating to the liability of owners of unoccupied properties to pay non-domestic rates. It is perhaps worth while to set out what the bill does not do before getting into its purpose and why it is required.
There will be no change to rates bills as a result of the bill. It will not introduce any additional new costs for businesses or individuals beyond what the Scottish Parliament originally intended. I offer that reassurance to my constituents and to businesses in Dundee and, indeed, across Scotland.
I also want to reassure small businesses that the bill will not have an impact on the small business bonus. As of June this year, small business bonus scheme relief had been awarded to more than 116,000 properties, to a value of £247 million. Small business bonus relief of 100 per cent had been awarded to more than 100,000 properties, to a value of £217 million. None of that will be impacted by the bill.
I will move on to why the bill is needed. As we have heard, the bill has been introduced to correct an error in law relating to the liability of owners of unoccupied properties to pay non-domestic rates. The Non-Domestic Rates (Scotland) Act 2020 devolved powers to councils to provide discounts to owners of unoccupied properties from 1 April 2023. As a former local government minister, I remain an advocate of empowering our local authorities and welcome the devolution of such powers to councils. I am surprised by the Conservative Party’s position on the matter, because, if it were to speak to Conservative local authority leaders, it would find that they would say that they would not want to lose those devolved powers.
Is Mr FitzPatrick seriously telling us that we should pass a law that might be illegal and could be struck down by the courts?
No. It is clear that a legislative error was made. That has been identified in amendments to the relevant act. The purpose of the bill is to rectify that error, which is why we should do the responsible thing and support it. I understand that there is politics to be made of the issue, but the Conservatives should step up to the plate and do the responsible thing, in the same way that the Labour Party has done. I get that the Labour Party will use the issue to make things difficult for the Government more widely, but, as Mark Griffin said, it is really important that the bill is passed, so that our local authorities do not lose a significant sum of money.
We know that it has been identified that a mistake was made. If the bill is passed, it will apply the necessary changes retrospectively for all levies charged since April 2023, thereby ensuring that the statute book is brought into line with the Parliament’s original intention. If the changes were not applied retrospectively, some ratepayers would have an unexpected windfall, but, significantly, around £350 million in public revenue would be lost. At a time of extreme pressure on the public finances as a result of political decisions by Labour and Tory Governments at Westminster, I welcome our SNP Scottish Government’s approach to ensuring that every penny of public revenue is recovered and allocated appropriately.
The bill will enable the charging of non-domestic rates to owners of unoccupied non-domestic properties, subject to any reliefs that local authorities might choose to put in place, backdated to 1 April 2023. The Non-Domestic Rates (Scotland) Act 2020 was intended to provide greater fiscal powers to local councils, and this bill will ensure that the Parliament’s intentions in the original legislation are realised to their fullest.
17:50
This is an absolute mess. It is a mess of this Government’s own making, and each day brings more questions. I repeat what I said yesterday when the Minister for Parliamentary Business and Veterans said that some of us on the Opposition benches were looking for conspiracies. Well, we are being aided by a Government that is not being up front and honest.
I also want to address something that is at the heart of the nationalist support, certainly, and that I understand is Labour’s reason for supporting the bill. I tried to intervene on the minister, but it was the only intervention that he did not take. [Interruption.] I do not take it personally, and I will give way to him to allow him to answer this question. If the argument that we must support the bill to protect £350 million of public money is true, the minister will be able to stand up and say that, if his bill passes at stage 3 tomorrow, that £350 million is guaranteed, so there will be no opportunity—no flaws in the legislation—that would allow a legal challenge. As Murdo Fraser and others have said, this is going to end up in the courts, so can the minister, who is seeking support for his bill at stage 1 and, ultimately, tomorrow at stage 3, give the Parliament a cast-iron guarantee that the money referred to in his financial memorandum will go to local services and that it will not, in any way, be effectively challenged in the courts?
First, I apologise to Douglas Ross for not taking his intervention. He must have sat down too early—I took interventions from everybody who had their request-to-speak button pressed. Of course, in going through the process, we take legal advice on how we need to proceed, and that robust legal advice underpins what we are taking forward in this legislation. It is essential that we pass the bill to address this issue.
I can give you the time back, Mr Ross.
That was not my question. Let me ask it again. If the bill passes—the bill that the minister is taking forward and that members of his Government’s party and the Labour Party are supporting to protect £350 million of public money—can he guarantee to members who support it that that £350 million will be protected, or does he accept that there is a risk of legal challenge and that the £350 million could be challenged in the courts?
I know that, if we do not pass the bill, that £350 million absolutely will be lost. I also know that the legal underpinning for taking this forward is robust, and that is the basis on which we are taking it forward.
I am sorry, but it is not a difficult question. The minister and Joe FitzPatrick said that Opposition politicians should not make politics with this matter. However, if we cannot get that guarantee, there is no reason to support the bill, because the money absolutely could be lost. Even if a member supports the bill and the member’s argument is to support the bill to protect the money, the money could still be lost, because of the way that this Government legislated and the way that the problem has unravelled.
rose—
Can I get the time back for taking John Mason’s intervention, Presiding Officer?
Does the member accept that every piece of legislation made in this place can be challenged in the courts? We cannot guarantee that any piece of legislation will not be challenged.
What we can guarantee, based on Murdo Fraser’s letter to the Presiding Officer, is that this bill will be challenged—not because of what we, as Opposition politicians, are saying but because of what the Government itself is saying in its own accompanying documents to the bill. It will not take a professional lawyer much time to make an argument, because the argument will be to hold up the Government’s own documents that accompany the bill—because those admit the deficiencies in the bill that the Government is trying to pass.
Will the member give way?
Can I get the time back for taking Michelle Thomson’s intervention, Presiding Officer?
I can give you the time back.
We should not confuse risk with probability. The minister is saying that, if we do nothing, we will have complete certainty that the money will be lost. Obviously, with legal advice, anything can be challenged. We need to separate those two points. With all due respect to Mr Ross, I ask what exact remedies he is bringing forward, given that we have this situation. We have a duty to act responsibly in this Parliament, and I am interested in hearing what remedies the Tories have.
Here is a remedy: let us take a little bit longer over the legislation. The problem occurred in the first place because, during Covid, we had an expedited process for putting through legislation. That is why this mistake occurred—a mistake that could cost £350 million. Why not take a bit more time to get more legal advice and inform members more about what is behind the Government’s problem and how it is trying to sort it? We should not use another expedited process to pass legislation that could still end up in the courts and potentially cost us £350 million.
There are some areas that I want to focus on, given that you have allowed me more time, Deputy Presiding Officer.
In his intervention on the minister, Jeremy Balfour made a very good point. I have gone through the letter that I received from Graeme Dey today. I will go through the timetable. On 23 June, the Government was made aware of the problem. The matter then went to officials who concluded, on 13 August, that there was likely a problem with the legislation. What on earth were they doing for the rest of June, the whole of July and half of August? If the issue is so big that it needs emergency legislation, surely Scottish Government officials should have been putting it up in lights straight away.
We then find out that, when they decided that there was a problem—on 13 August—they took more than a week to tell ministers. They informed ministers on 21 August. Again, where was the urgency? If we are being told that this is such a crucial piece of legislation that it has to pass in hours and days, why did officials at the Scottish Government think that they had more than a week to tell their ministers about it?
Jeremy Balfour’s point was this: after ministers knew about it, when did they start to introduce the legislation? Ministers agreed on 22 September to progress emergency primary legislation to remedy the matter. The minister who responded to Jeremy Balfour said that the Government needed three weeks. It has been more than three weeks since 22 September, although I appreciate that there was a recess. It has been 10 weeks since the Government not just found out about the issue but decided that it needed to do something urgently. I ask the minister please not to tell me and other MSPs that he was treating it as an emergency, given that he sat on it for 10 weeks before he even took it to the chamber.
I know that I have used all my time, Presiding Officer, and I am grateful for your indulgence.
Will the member take an intervention?
If I am allowed to, I will
I will allow it very briefly, Mr Ross, after which you will need to wind up.
Half of what Douglas Ross said was about our rushing things through, and the other half was about our taking too long to fully investigate what the issue was and what its solution was.
I ask the minister to listen to what members are saying. If this was the emergency that the Government says it is, its officials should have taken less than two months to bring it to ministers’ attention, ministers should not have sat on it for 10 weeks before they brought it to the chamber, and we should not be rushing the bill through. That is the whole point of what I said to Michelle Thomson. We should be taking our time, because we know how bad the Government is at legislating.
Let us not make more mistakes. Let us do this properly. I support the Conservatives in opposing the bill.
We move to the winding-up speeches. I call Lorna Slater.
I have no more remarks, thank you, Presiding Officer.
17:57
It is right that the bill is urgent, and it is right that it is essential. From listening to the speeches and interventions, we know that the reality is that at least £350 million would have to be paid if we did not pass the bill.
It is right to note that there is a risk in passing the bill—as with every piece of legislation that the Parliament passes—that it can be taken to court for a question to be raised. That raises the questions that Murdo Fraser wrote to the Presiding Officer about, which we have heard about today. There is a potential human rights challenge, and members have pointed to cases in which the Government has not been successful when such challenges have taken place. A significant number of members are aware of constituents who have suffered as a result.
However, such questions are for the court to settle. If it so wishes and is so inclined, the court may take into account everything that has been said in the chamber to lead to an indication of the thinking of ministers and of those of us who do not sit on the Government benches—and the court may take a decision on that.
I am following Martin Whitfield’s argument with interest, but does he agree that, rather than our spending time in passing the bill in the expectation that the issue will then go to a court to be resolved, we should get this right in the Parliament, because that is our job as legislators?
The reality is that, within the legislative procedures that we have in the Parliament, we cannot prevent or stop a challenge, although we can take steps to minimise the risk.
This very short, technical and tightly drafted bill seeks to do everything that it can to bring to legislative fruition what people have understood to be the law for a considerable time. The risk lies in the retrospective element.
With regard to on-going action by local authorities to recover funds, I hope that the Government is in a position to give the same assurance about underwriting potential risks. The figure for that will be much smaller than £350 million, but I hope that the Government will give a realistic figure and say where it would be raised from.
If we delay the legislation so that we can look at the situation again and come up with a solution, we will, in all probability, still come up with a very short bill that looks not dissimilar to the one that we have. However, we would extend the period in which more and greater potential risks could arise to our local authorities, which are the recovery agents.
We need to balance the legal risk on one side with the real financial risk of not passing the bill on the other side. I hope that we will pass the bill tomorrow night. Not to pass the bill would be a true dereliction of duty to every taxpayer out there because, at the end of the day, a Government undertaking still involves taxpayers’ money.
I am conscious of time. We will support the bill tonight. We will be looking for explanations and assurances from the Government at stage 2, but supporting the bill is the right thing to do. Maybe this is a salient lesson for the Parliament about how we go about scrutinising legislation.
18:01
Douglas Ross is right that this is a shambles; it is an absolute shambles. We have dealt with emergency legislation in the Parliament before. Emergency legislation proceeds on a very tight timescale in situations where there is a political consensus about fixing a problem that needs to be fixed urgently. We do not have a consensus now because, in the past few hours, we have unravelled the fact that there are key legal problems with the bill.
My colleague Douglas Ross pointed out that the information that the Scottish Government has provided about timing has been inaccurate. It has had since June, potentially, to resolve this, but it is trying to force the bill through Parliament in 24 hours.
Do we have consensus across the chamber that we do not want to automatically reimburse £350 million?
I absolutely do not want to see a hole in the public finances, but there is no point in passing a bill that is not going to achieve that because it will be defeated in the courts, and I believe that there is a very real risk that it will be.
The issue is all down to SNP incompetence and incompetent drafting. We should not have to spend parliamentary time sorting out the SNP’s mistakes because someone did not do their job properly.
I will look at the substance of the issue. If I remember correctly, the rationale behind removing empty property relief—which was simply another tax raid on businesses—was the belief that it would incentivise landlords to let empty properties more easily. I am interested in knowing whether that has been achieved—maybe the minister can address that in his winding-up speech. Do we know whether there are fewer empty properties now than there were in 2020, when the legislation was passed?
High streets are full of empty retail and office premises. Labour market changes and increased working flexibility mean that there is less demand for office space, whereas retail is under pressure. As Craig Hoy mentioned, landlords are actively demolishing perfectly sound properties because they cannot find tenants in the short term and cannot afford to pay their rates. The policy has not delivered on its ambition, but if the minister wants to correct me with some numbers in winding up, I will listen to him.
I come back to the legal question. It seems that the law in this area is quite clear. We cannot pass retrospective legislation to take away people’s rights, except in extreme circumstances. The bill seeks to retrospectively extinguish the existing right in Scots law that, as the law stands, would give people the right to make a claim under the principle of unjust enrichment.
The European Court of Human Rights is very clear about the matter. I have read the Scottish Government’s policy memorandum, which makes the case that the public interest in relation to the financial consequences for the state outweighs the property rights under article 1 of protocol 1, but let me state what the European Court of Human Rights has said. It is clear that financial considerations for the state, or the wish to avoid the consequences of a Government mistake, do not of themselves constitute a sufficient justification for extinguishing private law rights. In fact, the Court has treated retrospective legislation that was designed to rescue the state from its own error with particular suspicion.
In my letter to the Presiding Officer, I referred to the case of Maurice v France from 2006. Paragraph 87 of the judgment states:
“the Court has already found that the taking of property without payment of an amount reasonably related to its value will normally constitute a disproportionate interference, and a total lack of compensation can be considered justifiable under Article 1 of Protocol No. 1 only in exceptional circumstances”.
A case is made in the policy memorandum, but that statement in that judgment reflects a series of other judgments from the European Court of Human Rights—including the case of the holy monasteries v Greece in 1994, the case of the former King of Greece and others v Greece in 1994 and the case of Jahn and others v Germany in 2001—so we are talking about a settled law.
I seek clarity from Mr Fraser. Does he believe that there is no legal way for the money to be retained, or does he believe that, if further time was provided for scrutiny, a legal way around the situation could be found?
We simply do not know the answer. Having looked at the case law, I can say that the case that the Scottish Government makes in the bill’s policy memorandum is, in my view, hard to sustain, because the case law refers to exceptional circumstances. In this case, the exceptional circumstances relate to legislative incompetence on the part of the Scottish Government. I find it very hard to believe that a court in Scotland would uphold that as a justification for breaching the very strong presumption against retrospective legislation taking away the property rights under article 1 of protocol 1.
Will Murdo Fraser take an intervention?
Do I have time, Presiding Officer?
You will need to be very brief, Mr Whitfield.
Are the exceptional circumstances that everyone understood what the law ought to have been from that date?
I fear that, under the law, that is an entirely irrelevant matter, because the court will consider what has actually been legislated for—the letter of the law is what is important.
Why are we in this mess? Who is taking responsibility? Why did nobody in the Scottish Government, the civil service, the ministerial team or the legal directorate spot the mistake? It is hugely embarrassing for the Scottish Government, and we have yet to hear an apology for the errors that have been made.
I am genuinely sorry that the Labour Party is supporting the bill. Mr Griffin referred to his concern about costs—if the matter ends up going to court, the costs for the taxpayer will mount up and up and up. I believe that, if we pass the bill, the matter will almost certainly go to court, because, given the very large sums involved, people will feel that they have a justifiable legal claim to make.
You need to conclude.
It is not the job of the Scottish Conservatives, as the principal Opposition party in Holyrood, to help the failing SNP Government to clamber out of the hole that it has dug for itself. If other parties want to come to the Government’s rescue, so be it, but we will not.
18:08
I thank members who have taken part in the debate. I welcome the recognition of the seriousness of the issue, and the need to move at pace to address the challenge, from the Labour Party, the Green Party and, I believe, the Liberal Democrats, although I cannot see any of their members in the chamber. All those parties support our taking forward this measure. That represents a mature approach and an understanding of the situation in which we find ourselves. As a Parliament, we need to work together to address the issue, which is what those in the outside world would expect us to do.
That contrasts with the approach of members on the Conservative benches, who have—to be frank—taken this as an opportunity to grandstand, coming up with no answers and looking for—
Will the minister give way?
[Made a request to intervene.]
I will make some progress and come back to Paul Sweeney in a minute.
It is worth reflecting on the original bill. As I understand it, the bill process was not expedited—it took place over a number of months. It went through stage 3 in early February 2020, before Covid had taken effect, and the policy intent was agreed. The interventions from Conservative members this afternoon have been a bit contradictory and incoherent, so I am not sure, but I do not think that their position is that they disagree with the policy intent of devolving the power to local authorities. I also note that that was agreed to unanimously in committee at stage 2.
With regard to the specific measure that Murdo Fraser asked about, we have some data from Perth and Kinross Council. It had 89 exempt properties as at 31 March 2023, and it has indicated that the removal of the exemption has generally had the desired effect: 41 of those properties are now occupied; 29 are still empty; seven have had their rateable value reduced to nil by the assessor; and 12 have been deleted or merged with other properties by the assessor. By and large, that evidence suggests that the policy intent has been fulfilled.
Of course, the intent was primarily to give that power to local authorities. Again, we never tire of hearing from the Conservatives about the need for us to devolve powers to local authorities, so I do not understand their issue with that.
The process that we are currently going through was agreed at the Parliamentary Bureau on a cross-party basis. Representatives from all the parties were at that meeting. They included the Conservatives’ business manager, who signed up to the process and supported our having the stage 1 debate on Wednesday—the day of the UK budget—rather than tomorrow morning. Again, I highlight that there was cross-party support not only for the policy intent in passing the original amendment but for the process that we are currently going through.
[Made a request to intervene.]
Will the minister give way?
I will take an intervention from Paul Sweeney, because I think that he was first.
In the spirit of cross-party working, I think that there is cross-party consensus that the policy has generally been successful in Glasgow, but there have been a couple of instances in which it has had unintended consequences, most notably in relation to Govanhill baths and Flemington house in Springburn, where dozens of small businesses were evicted because the owner had to pursue a temporary relief for 12 months. There are cases in which it could be improved. Would it be possible to lodge a light-touch amendment to the bill to signal where best practice should be adopted by local authorities? That would not be militating against their devolved rights but signalling where improvements could be made at national level to preserve listed buildings.
I acknowledge the member’s concern on that issue, and I recognise the significant work that he does with regard to historic and listed buildings in general. I have received correspondence from the member on that issue. I would say two things. First, this bill is about taking a focused approach so that we can take through the measures that are needed in order to protect that revenue and provide clarity in the rates system, and I think that it would be a mistake to complicate that further. However, I absolutely recognise the issue that the member has raised regarding the local applicability of the policy, and I am happy to work with him on how we can seek to address that issue through other measures.
Is Mr McKee able to advise us whether Scottish Government lawyers have been able to find any precedents in case law that support the contention that legislative failure amounts to an exceptional circumstance as would be upheld to defeat the presumption under article 1, protocol 1 of the European convention on human rights?
I will comment on the issue of retrospective legislation, which I think is at the core of what Murdo Fraser was talking about. Retrospective legislation is not inherently unfair or incompatible with human rights. Such legislation has been passed by the Parliament previously, including the Erskine Bridge Tolls Act 2001, the Criminal Procedure (Amendment) (Scotland) Act 2002, the Crofting (Amendment) (Scotland) Act 2013 and the Land and Buildings Transaction Tax (Relief from Additional Amount) (Scotland) Act 2018. There have been several occasions on which retrospective legislation has been taken forward successfully.
The Scottish Government acknowledges that great care must be taken when changing the law with retrospective effect, and that there is a general public interest in the law not being changed retrospectively. However, sometimes, it can be justified and is proportionate to do so; this is one such case. Crucially, the bill will not raise new revenue; it seeks to protect revenue that has already been collected. The affected ratepayers have already paid the rates that are demanded, so retrospectively validating the rates will not pose a severe or undue burden to them. At most, it will deprive them of a windfall that they had not expected or, indeed, budgeted for. We must weigh up the community interest against that. Failing to ensure that legislation is retrospective would mean a potential loss of up to £350 million in public revenue, as has been highlighted. That could result in either significant cuts to public services or compensatory tax rises being required in subsequent years. In that context, the Government considers that the bill strikes a fair balance between community interest and the rights of individuals. The Government considers the bill to be compatible with convention rights and that it is within the legislative competence of the Parliament.
Liam Kerr rose—
Craig Hoy rose—
I will give way—who was first? Members should decide between them.
Will the minister answer the question that Mr Griffin put to him? We know that the Government is on the hook for the £350 million, but is he giving a guarantee to councils that all other associated costs that might arise, including interest, legal costs or fees associated with debt recovery will be underwritten by the Scottish Government?
The Government will have conversations with the Convention of Scottish Local Authorities on the matter now that it has been raised. We expect that individual councils will be taking legal advice on how they should proceed and on the effect of the retrospective legislation.
Will the minister take an intervention?
I have probably taken enough interventions.
In conclusion, I urge members to recognise the importance of the matter that the bill seeks to address. It is vital in order to maintain the credibility of the tax system, protect public finances, and enable the non-domestic rates system to continue to operate as it had been understood to be operating by local authorities and ratepayers since 1 April 2023. If passed, the bill will not introduce any new additional costs to businesses or individuals compared to the Scottish Parliament’s original intended policy. The Parliament voted in 2020 to devolve empty property relief to local authorities to provide greater local fiscal empowerment for councils by letting them, rather than the Scottish Government, decide whether to offer any rates discounts to the owners of unoccupied properties. The bill will give full effect to the Parliament’s original intention by clarifying the legislative position as quickly as possible. I urge members to support it.
On a point of order, Presiding Officer. In an earlier point of order this evening, before you assumed the chair, I raised the letter that we received from Graeme Dey correcting what he had said on the record yesterday. He had informed the Parliament that the Government first became aware of the error in the law in August, but it turns out that it learned of it in June. My question to the Deputy Presiding Officer was about the information that was provided to other party representatives. Certainly, we were told about the August date. I asked when you had been informed. In the discussions that you have had with the Government about the emergency legislation, did it state to you as the Presiding Officer—the person who we have elected to be representative of all MSPs, not just Government ministers and MSPs—that the relevant date was August, or were you informed of the June date?
I received notification of the bill being within the Parliament at the beginning of November. I am not aware of the dates to which Mr Ross refers. The bill came into the building at that point for the usual pre-introduction checks.
I was not clear: that would be the three-week period that the Government would have to inform you about a bill, which would take us to today. My question was, when the Government informed you of that, did it alert you, as I understand it informed Opposition parties, that it was aware of the error in August, or did it tell you about the true date, which was June?
I do not believe that such dates were discussed with me by the Government. That is not a point of order, Mr Ross, but we will continue with our business.
That concludes the debate on the Non-Domestic Rates (Liability for Unoccupied Properties) (Scotland) Bill.
Air ais
Points of Order