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Thank you, convener, and I thank the committee for the opportunity to give evidence on a second piece of NDR legislation today.

The Scottish Government is keen to ensure that non-domestic property valuations are better understood by ratepayers. The draft instrument that we are considering increases accountability in the non-domestic rates system ahead of the 2023 revaluation.

The Barclay review of non-domestic rates called for assessors to provide more information to property owners and occupiers when making rateable value calculations. The Barclay implementation appeals sub-group, which is an expert group that was set up to inform and advise Scottish ministers in respect of NDR reforms to the appeals system, specifically recommended that assessors should provide, alongside property valuations, the addresses of let properties, the rental evidence on which was used to inform the calculation of the basic rate to be applied to the property.

It proposed that four categories of property be covered in the first instance—standard shops, offices, warehouses and workshops—and that the list be expanded in the future.

We consulted on a draft instrument that sought to require that assessors provide that information in draft and final valuation notices in respect of revaluation. On one hand, some responses called for the proposed information-sharing requirements on the assessor to be expanded to more property types, or to more valuation methodologies. On the other hand, some raised a concern that, if the requirements were expanded, confidential and commercially sensitive information such as trading accounts or lease details could potentially be provided to third parties.

We considered that concern and, as a result, this draft instrument goes beyond the appeals sub-group’s recommendation. It requires that, for 32 categories of property that are valued using the comparative method and a basic valuation rate, the assessor must provide the addresses of comparable properties used to calculate that rate and state where that information can be accessed. Requiring that a list of addresses be produced only where two or more properties have been used for comparison for the valuation will avoid the risk that commercially sensitive information can be worked out indirectly.

I believe that our response to the consultation demonstrates our commitment to greater accountability in the rates system while ensuring that our reforms do not place an unrealistic burden on assessors. I hope that members will welcome that, given the points that the committee raised about assessor workload in its stage 1 report on the Non-Domestic Rates (Coronavirus) (Scotland) Bill.

We remain committed to greater accountability in the rates system and will explore how to expand on the information-sharing requirements in advance of the 2026 revaluation.

The draft instrument also contributes to modernising the NDR system by allowing for draft valuation notices to be sent electronically where that has been requested by the owner or occupier and has been agreed in writing between the assessor and owner or occupier.

I hope that members will support the draft instrument.

I reiterate the point that, ultimately, this comes from the agreement that was reached with the Barclay implementation appeals sub-group, which considered a wide range of options. That goes back to the point about commercial sensitivity.

Another aspect is what the Institute of Revenues Rating and Valuation said in its response to the consultation, in which it recognised that addresses provide a sufficient level of information for ratepayers and professional representatives to do their own research.

I touched on a number of aspects in my opening remarks. One is the need to ensure that we recognise commercial sensitivity issues, which is why there is a focus on the use of a comparative methodology as opposed to a receipts and expenditure or constructor’s basis method.

Another aspect that I touched on is the practicality of delivery, in recognition of assessors’ workloads. We have a revaluation from 1 April 2023 and a one-year tone date to which assessors are working. For the first time, assessors are being required to produce a draft valuation notice for 30 November this year.

Taking all that into account, and through engagement and in collaboration with assessors, we settled on the 32 property classes that are included in the draft order.

We have set out what we intend to do for the revaluation in 2023. The next revaluation is scheduled for 2026, so we will continue to look at ways in which we can expand the amount of information that is provided ahead of the 2026 revaluation. The Parliament will of course be fully notified of and included in that process.

As I said, we will consider what we can do. One concern would be that, if we were to start factoring in information on rental agreements, leases and the cost of buildings, we would get into the territory of commercially sensitive information. That is particularly the case when we look at the other two methodologies of valuation: the receipts and expenditure method and the contractor’s basis method. That issue also touches on, for example, how rateable value is calculated for hotels, restaurants and pubs, because turnover is an input into that process.

We must consider these matters carefully. However, the Government is committed to providing as much information and transparency as possible, so that users of the non-domestic rates system have the greatest understanding of how RVs are calculated.

RV is derived from net annual value, which is derived from a reflection of what would be a property’s yearly rental income on the open market. Ultimately, the rental market will be determined by market forces. By dint of how the methodology works, the prevailing national and local economic conditions will feed into how that is considered and, consequently, the RV. Therefore, it is factored into the process.

That shows the importance of having revaluation on a three-yearly cycle, with a tone date of one year, to ensure that, when the revaluation comes into effect, it is as up to date as it possibly can be. That, of course, is a reform that we introduced ahead of schedule.

I will bring you back from income tax levels to general economic performance, which is captured by the national strategy for economic transformation—NSET—and the evidence paper that is provided with it. Those are fair points, so I will take them away and reflect on them.

I am conscious of the point that I made earlier about the need for the framework to remain a concise, high-level document. As I interpret it, what you are driving at is that the strategic objective for stable revenues needs to be unpacked to some degree in order to highlight those points.

—and are forecast to grow year on year. That ultimately comes down to the different make-up of the economy in other parts of the UK. I think that we are all familiar with the impact that the concentration of financial services in London and the south-east has on inflating earnings overall elsewhere in the UK, and the challenges that that creates. It is important that we look at what are the drivers of earnings and economic performance, and we are setting out our vision for that in the national strategy. Equally, though, we cannot lose sight of the impact on the block grant adjustment and the need for that process to be considered as part of the fiscal framework review.

I take the point around economic performance and the need to maximise opportunities and prosperity in Scotland, and that is what we are setting out through the national strategy for economic transformation. However, we cannot lose sight of the block grant adjustment aspect as well, and we have to bear in mind that income tax revenues are forecast to continue growing in Scotland.

That is not determined yet. We have an agreement that is in the shared programme with the Scottish Green Party. We are at an early stage in how we will develop the process, but we are going to be working at pace.

Any remit must be consistent with what is in the policy programme, so it will cover the resourcing of local government, including council tax. It will be for the citizens assembly to consider what issues it wants to explore within that remit. As I said, I do not want to prejudge its work.

In response to a previous question, I touched on aspects around metrics. I have not yet touched on a point that I referred to in my opening statement, which is that I am keen for the framework to help us to elevate the public discourse on tax. I hope that the committee knows that I am keen to advance transparency, improve engagement and have more substantive discussion across the range of my responsibilities. I know that the committee welcomed the work that was done to prepare the guide to the spring budget revision. That approach informs how I want the framework for tax to be implemented.

The document sets out how the Government will approach tax policy, but it also provides a framework or tool for others to bring forward tax policies, whether that be in the Parliament or among the general public and other stakeholders, such as civic Scotland. I hope that it can help to catalyse a more informed and more reasoned debate about tax, in recognition of the important contribution that tax makes. That is important in the context of the existing powers that we have and in the context of any changes that will emerge via the fiscal framework review or any subsequent devolution.

Along with all the stated objectives of transparency and demonstrating the Government’s commitment to on-going engagement and a culture of continuous improvement, I hope that the document can contribute to providing a strong reference point or a foundation for a more substantive debate about tax. I hope that we all share that view and aspiration.