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I reiterate the points that I made in my answer to Mr Briggs. There is on-going engagement between ministers, individual businesses and representative bodies. That is a routine feature of the engagement in the finance and economy portfolio, so there has been the opportunity for discussion. As I said, the issue has not been raised in a significant way, and that has been reflected in contributions that were made in the committee’s previous evidence sessions. I highlight that there is an on-going process of engagement that provides a forum for businesses to raise any issues with ministers, including on the matter that the member mentions.

As I said in my opening remarks, the rationale is about clarifying the measures in the 2020 act. As the committee will appreciate, a material change of circumstances is normally considered to involve quite specific, delineated local cases—arising from roadworks, for example—in which individual properties are impacted. That has to be viewed in the context of the broader principles that underpin the non-domestic rates system. A key principle is a regular cycle of revaluation, and broader market-wide changes should be considered as part of that cycle.

It is important to understand the context. We have moved from a five-year cycle to a three-year cycle and we have reduced the tone date to one year. That provides a more appropriate means of assessing any changes that have taken place as a result of market-wide effects.

I hope that that explains the position. I reiterate that the order seeks to clarify what was intended with the measures that were introduced through the 2020 act.

[Inaudible.]

The member will be aware that the Government has consulted on a draft framework for tax and that engagement is one of the key principles that underpin our approach. The Cabinet Secretary for Finance and the Economy, my ministerial colleague Ivan McKee and I have had extensive engagement with business since our respective appointments following May’s election.

As I mentioned, the UK Government announced a similar measure in March that indicated its direction of travel. The Scottish Government indicated our intention in June. That has been clearly communicated and we have had extensive conversations with business, but I have to be frank. The matter has not been routinely raised with ministers, and that has been reflected in the evidence that the committee has taken over recent weeks.

Yes. On balance, we believe that the change is justified and necessary and that it is in the public interest. The order aims to prevent inappropriate use of the material change of circumstances provision. It is about ensuring fairness for all ratepayers and, importantly, protecting revenues for local authorities to enable them to fund the services on which we rely.

As a point of context, I note that, as the committee will be aware, the intervention is not unique to Scotland. Similar measures are being implemented in Wales, and the United Kingdom Government is taking similar action in respect of its responsibilities regarding the non-domestic rates system in England.

You asked whether we had received any of the money. I gave a monosyllabic response. No, we have not received any of it. I followed that up by saying that I understand that no businesses in England have yet received any of that money, either. We have no certainty about when we are likely to receive that funding from the UK Government.

Thank you for the opportunity to give evidence. The purpose of the draft order is to ensure that, in calculating the rateable value of specified properties after the order comes into force, no account can be taken of any matter arising on or after 1 April 2021 that is attributable to coronavirus.

Since the start of the coronavirus pandemic, more than 40,000 non-domestic properties have been appealed on the basis that there has been a material change of circumstances due to the pandemic. Typically, a “material change of circumstances” has been used to reflect either physical changes to a property, such as an extension or demolition, or certain major works in a specific area, such as the tram works in Edinburgh. The Scottish Parliament amended the definition to exclude changes in rent, in valuations generally or in values generally under the Non-Domestic Rates (Scotland) Act 2020, with effect from 2 April 2020.

The draft order further clarifies that definition in relation to coronavirus by specifying that, in calculating the rateable value of any properties in the 2017 valuation roll,

“no account is to be taken of any matter arising ... after 1 April 2021 that is directly or indirectly attributable to coronavirus.”

The use of that date is due to the fact that subordinate legislation cannot take us further back. Primary legislation is needed for that, and we confirmed in our programme for government our intention to introduce a bill on the matter in year 1.

The draft order applies only to the current 2017 valuation roll, which is consistent with our view that any impact of Covid-19 should be reflected at the next revaluation. Also, the order does not take into account whether a property should be included in the valuation roll. For instance, if someone started working from home as a result of the pandemic, the legislation would not affect whether their office space might be considered rateable.

The intention of the change in definition was to remove general economic factors from the category of relevant factors to consider in the context of valuation.

Although appeals have been submitted for more than 40,000 properties, that is less than a fifth of all non-domestic properties in Scotland and, as the Federation of Small Businesses pointed out, not many small businesses are among them. That may reflect our existing generous support package for small businesses, but it is likely that it also reflects the fact that well-resourced professionally advised property owners and occupiers are more likely to know about the material change of circumstances provisions and are therefore more likely to have appealed.

I am aware that some large firms under appeal have been successful during the pandemic. As was highlighted in evidence last week, there is a disconnect between how Covid has felt to businesses and how it has impacted on rents in the commercial property market. It is a hugely complex issue and Covid-19 appeals could take years to resolve. The outcome is also uncertain. It cannot be assumed that those appeals would be successful, or their outcome fair.

In light of that complexity and the provisions in the 2020 act, it seems to me that the question here is quite a dry and technical one. When is the right time for market-wide economic changes, including any effects of coronavirus, to be reflected in rateable values? We believe that the right time for such changes to be reflected is at revaluation.

We strengthened revaluations following the independent Barclay review of non-domestic rates in order to ensure that they more closely reflect market circumstances. First, we increased the frequency of revaluations from every five years to every three years and reduced the time between the tone date and the revaluation. Secondly, with the support of your predecessor committee, we delayed the next revaluation by one year to 2023 and brought forward that commitment to a one-year tone date. The tone date for the next revaluation will therefore be 1 April 2022 in order to give sufficient time for the property market to adjust post Covid.

Covid-19 has had a major impact on the economy, and we responded swiftly and on an unprecedented scale to support businesses through the pandemic. We introduced 100 per cent retail, hospitality, leisure and aviation relief in 2020-21, and we are the first Government to confirm a full extension of that relief to 2021-22.

The extension of the RHLA relief into 2021-22 takes the total level of support that the Scottish Government has provided to businesses since the beginning of the pandemic to £4.5 billion, which includes £1.6 billion of Covid-related reliefs. That demonstrates that the Scottish Government has acted quickly to support the business community when it most needed that support. We have been able to support businesses through the pandemic, but we must bear in mind that we must also continue to fund the public services on which we all rely.

I return to my opening comments. The draft order seeks to ensure fairness for all Scottish ratepayers while maintaining the integrity of the non-domestic rates system as well as the stability of the public finances. If the instrument is not approved, the non-domestic rates system and, therefore, the public finances will carry significant long-term risks for years.

I look forward to answering any questions that the committee has.

As I have said, our intent in the order is to clarify what is, in our view, an appropriate use of a material change of circumstances appeal. The intent was set out in the Non-Domestic Rates (Scotland) Act 2020; the order clarifies that. To reiterate my previous point, market-wide changes of circumstance are better considered in the context of revaluation, whereas a material change of circumstance is usually more a matter for specific delineated local circumstances.

I hope that that clarifies the motivation, purpose and thinking behind the Government’s introduction of the order. Obviously, the matter that you raise is for assessors, who operate independently, to determine.

Mr Coffey articulates the matter very well. With an appeals process, there is great uncertainty—there is uncertainty over timescales and over the outcome. As Mr Coffey will be aware, since the start of the pandemic, the Scottish Government has supported business through a combination of reliefs and grants of about £4.5 billion.

Another important point to make is that we cannot assume that the link between the rental value and the economic circumstances of an individual business is clear cut. From a fairness perspective, I believe that the model whereby we have provided support through business grants is far more effective and provides far more certainty. That is the approach that we have taken, and it will continue to inform how the money that we will, I hope, eventually receive from the UK Government will be deployed to support businesses.

Mr Coffey raises an important point. He will appreciate that it has not been possible to support every business and organisation that we would like to have supported, due to a combination of the ability to administer and the ultimate limitation on the resources that are available to be deployed.

Throughout the pandemic, over the past 20 months, we have listened, reflected and learned, which has informed how iterations of support have been provided. As I said, dialogue is on-going and we will reflect on such matters.