Throughout the course of the pandemic, Chambers of Commerce have been consistently raising our concerns about the unintended consequences of the rapid shift to hybrid working, and the major implications this may have for our once-thriving urban centres.
Research from the CIPD found that 40 per cent of employers expect more than half of their workforce to work from home for at least one day a week after the pandemic has ended, but it remains unclear how this will play out in practice. Firms have equally reported real challenges in adapting to remote working, with Fraser of Allander research highlighting that 60% of employers reported negative impacts on innovation and collaboration.
While the merits and challenges for businesses and employees can be debated, it’s clear that if regular homeworking becomes a part of many workers’ lives, we cannot underestimate the wider impact this will have on city centres. Thousands of jobs across the north east depend on the finely balanced eco-system where footfall driven by offices has allowed retail and hospitality businesses to grow alongside them. With Centre for Cities data currently ranking Aberdeen in the bottom 10 for high-street spend compared to pre-pandemic levels, we need the Government to work with the private sector and take concrete steps to ensure that city centres are supported to recover.
The Scottish Budget, set for December, offers a clear opportunity to set us on the right path. In particular, feedback from our members suggests that a few key actions to reform the outdated business rates system would help to spur on recovery.
Firstly, mitigating the damaging decision to delay the next business rates revaluation from 2022 to 2023. The Scottish Government took this decision in light of the uncertainty caused by the pandemic, but the north east will feel the impact of this more than any other region. Excluding designated utilities, Aberdeen City and Aberdeenshire accounted for 45% of the Scotland-wide increase in rateable values at the last revaluation in 2017.
This staggering increase clearly didn’t reflect economic conditions in the area at the time, and following a campaign driven by the Chamber, the Scottish Government responded to this and created a north-east specific transitional rates relief scheme.
However, years on, this scheme is now effectively inaccessible, and it means that businesses across the region are faced with rates bills which can far exceed those for comparable properties in another part of Scotland. The Government must recognise that this further year of delay has hit our region the hardest and step up with a refreshed regional relief scheme, which ensures that north-east firms get rates bills that reflect reality while we wait for the revaluation to level the playing field. Of course, this needs to go hand in hand with a concrete commitment to conduct that delayed revaluation as planned in 2023.
Secondly, we need to consider a phased and proportionate reintroduction of business rates for the hardest-hit sectors which are currently exempt, such as retail, hospitality and aviation.
Cutting the headline poundage rate could be another method that the Government considers to reduce the burden on cash-strapped businesses.
Finally, the Scottish Government should commit to come together with ratepayers to kickstart an ambitious, independent review of the business rates system to succeed the Barclay Review. This should focus on delivering a true level playing field and supporting firms to invest in decarbonising building stock as we look to COP26 and our net-zero ambitions.
City centres can have a hugely exciting future, but we need to take decisive action to bring archaic systems like business rates into the modern age, securing the best possible foundation for a strong recovery.
Russell Borthwick is chief executive of Aberdeen & Grampian Chamber of Commerce