The Fraser of Allander Institute (FAI) has found no evidence showing the Small Business Bonus Scheme (SBBS) has supported enhanced business outcomes.
The FAI conducted a survey of small businesses about the SBBS scheme provided by the Scottish Government.
It offers a non-domestic rates – or business rates as they are often referred to – relief to businesses in Scotland under a certain size, as measured by their rateable value.
The review found “no empirical evidence that identifies the SBBS as supporting enhanced business outcomes”, although there was evidence that businesses perceive there to be benefits.
The FAI undertook an econometric analysis of the data in an attempt to understand whether the SBBS leads to enhanced outcomes for businesses that benefited from it most, in terms of turnover, employment, or gross value added, but again found no conclusive evidence that it does. lead to enhanced outcomes.
It noted that the coverage and usage of the SBBS increased over time, with businesses being given 100% relief from their non-domestic rates if the cumulative rateable value of all properties in their business is at most £15,000.
If their cumulative rateable value was between £15,001 and £35,000, the business receives 25% relief on any property with a rateable value of £18,000 or less.
The report also found that more than three quarters of non-domestic properties in Scotland associated with single-property businesses have a rateable value below the 100% threshold of £15,000, and that take-up of the relief among them is relatively high.
The FAI recommended the Scottish Government reflect upon how it builds in information gathering, data collection and evaluation into its policy development process on all aspects of its business support policy agenda from the outset.
It called for the government to collect new information that will make a more robust assessment of the SBBS – and other schemes – possible in the future.
The FAI also called for the creation of a digital registry of businesses in Scotland, maintained by the government, requiring each business operating in Scotland to maintain a digital registry entry providing its contact details and detailing all properties the business owns, rents or has use of. , both within and outside the country.
The Federation of Small Businesses (FSB) in Scotland also urged ministers to retain rates relief for small businesses, but supported moves to modernize Scotland’s business rates system.
Andrew McRae, the FSB in Scotland’s policy chair, said: “Trading conditions have changed dramatically since this review was commissioned in 2019, so Scottish local and independent businesses – loaded with debt from the Covid crisis – now face huge supply-chain disruption and spiraling energy bills.
“There’s no doubt that the small business bonus has been a lifeline for many firms,” he continued. “Scrapping this relief would lead to the average small business in Scotland paying an additional £2,000 more in tax and some paying more than £7,000.
“This would undermine struggling high streets and make it more difficult for firms to survive cash flow difficulties – that’s why ministers should stick by their manifesto commitment and keep this relief, the cornerstone of their small business support policies.”
Last year, £279m was spent on the provision of this relief for qualifying properties.
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