SPICe is publishing this blog post instead of the usual bill briefing due to the short time available between the Bill’s introduction and its parliamentary consideration. The Bill is brief at only two pages but the implications of this Bill not passing are potentially significant.
Fixing a mistake
Scottish Government lawyers have identified a serious technical flaw in the Non-Domestic Rates (Scotland) Act 2020 meaning that some of the legislation’s policy intentions are not accurately reflected in law.
As a result of this error, owners of up to 34,000 unoccupied properties may have been paying Non-Domestic Rates (NDR) on their properties over the past three years when, legally, they didn’t have to. This overpayment could amount to anything between £300 million and £350 million in total between April 2023 and September 2025 for instance.
The issue was first identified by Scottish Government officials after a routine enquiry from a local authority. This prompted a re-examination of the legislation and identification of the error. Luckily for the Scottish Government, no one else appears to have noticed. Given the possibility of an avalanche of repayment claims when the error comes to light, the Government is introducing an emergency bill to correct the mistake and apply the correction retrospectively.
What is an emergency bill?
Emergency bills go through parliamentary processes much faster than other bills, and only the Scottish Government can propose them. Their introduction is a fairly unusual event, happening only four times before in Session 6.
Previous examples include the Coronavirus (Extension and Expiry) Bill 2021, the Cost of Living (Tenant Protection) Bill 2022, the Post Office (Horizon System) Offences Bill 2024 and the Prisoners (Early Release) (Scotland) Bill 2025. All these bills were considered and passed within a matter of days or weeks of being introduced.
Emergency bills are introduced with the same accompanying documents as any other Government bill, but they are not required to go through the usual Stage 1 committee process. Stage 2 of an emergency bill – normally when amendments are considered by committees – must be taken by a Committee of the Whole Parliament (i.e. all MSPs meeting in the Chamber, but operating under committee procedure, and with the Presiding Officer acting as convener).
In this instance, the Bill was introduced on Monday 24th November. Stage 1 will take place on Wednesday 26th with Stages 2 and 3 planned for Thursday 27th.
Given the truncated nature of the emergency process there is little opportunity for consultation with stakeholders, and MSPs have almost no time to formulate amendments and fully scrutinise provisions. It can also be problematic for Parliamentary timetabling. In short, emergency bills are far from ideal from a scrutiny perspective.
Why is this bill an emergency bill?
Emergency bills are sometimes needed to respond to court judgments or anticipated legal action following the discovery of a loophole or problem of interpretation in an existing piece of legislation.
This emergency bill introduces a legal basis to levy rates on the owners of unoccupied properties following an error by the Non-Domestic Rates (Scotland) Act 2020. which accidentally removed it. The Bill re-establishes the position in law, with effect from 1 April 2023, to ensure there is “no gap in the law”.
Without remedial legislation, it would be necessary for all rates paid by owners of unoccupied property since April 2023 to be refunded and they could no longer be billed going forward.
What does the Bill actually do?
The Bill is fairly straightforward and, at 2 pages long, short. It seeks to amend the Local Government (Scotland) Act 1966 Act by adding a new section imposing NDR liability on owners of unoccupied properties. According to the Scottish Government, this “gives effect to the intention of the Scottish Parliament in enacting the 2020 Act”.
The Explanatory Notes explain:
“The liability as set out in new section 24ZA(1) is for the owner to pay the amount of the rate that would have been payable if the property did have an occupier. Section 24ZA(2) then provides that all other legislation relating to rating (including UK and Scottish Acts) applies as if the property were occupied by the owner.”
The main provisions of the Bill will have effect from 1 April 2023 because that’s the date when Section 24 of the 1966 Act was repealed (as set out in regulations from 2022). This retrospectivity in legislation is relatively unusual, but not unprecedented.
For example, the Non-Domestic Rates (Coronavirus) (Scotland) Bill was introduced in December 2021 but had retrospective effect back to 2 April 2020.
Financial Memorandum
The Financial Memorandum is unusual in that it doesn’t focus on costs associated with the Bill passing but is concerned more with costs if the Bill does not pass. There would be significant costs to both the Scottish Government and local authorities in that instance.
The FM is clear that the cost of refunding overpaid rates previously charged, including any interest due on these rates, would fall to the Scottish Government:
“The Scottish Government estimates that a one-off refund of empty property rates by those who paid them between April 2023 and September 2025 would amount to approximately £300m to £350m, including interest of approximately £20m to £25m. This rises to an estimated £350m to £400m if considering the three financial years 2023-24, 2024-25 and all of 2025-26.”
These estimates are calculated using the gross bills for properties that were awarded Empty Property Relief in 2022.
It is estimated that between 24,000 and 34,000 properties could be eligible for repayments, and there would be costs in terms of time and money for local authorities having to process repayment claims:
“…should the Bill not pass, it is estimated that local authority administrative costs could be around £150,000 to £370,000. This assumes that the bills of between 24,000 and 34,000 properties would be processed, at a rate of 5 or 4 per hour respectively, and with an A4 supervised by a B2 civil service grade, or a B2 supervised by a C1 respectively.”
If the Bill passes, it will not directly introduce any additional new costs to local authorities, other public bodies, businesses or individuals.
Greig Liddell, Senior Researcher, Financial Scrutiny Unit