Business rates remain one of the most resented fixed costs for Scottish SMEs — a tax calculated on property valuations that bears almost no relationship to whether you're actually turning a profit. So when John Swinney commits publicly to reform, it's worth paying attention, even if the word 'reform' has been doing a lot of heavy lifting in Scottish business policy circles for the better part of a decade.
Swinney's pledge covers two connected fronts: a structural review of how non-domestic rates are calculated and applied, and a broader regional growth agenda designed to distribute economic activity more evenly across Scotland rather than concentrating it in the central belt. For Edinburgh businesses specifically, the rates question is acute — commercial property valuations in the capital remain among the highest in Scotland, and the current relief system leaves a significant number of small operators exposed.
According to the Scottish Fiscal Commission's most recent projections, non-domestic rates generate around £3 billion annually for the Scottish budget — which is precisely why substantive reform keeps getting deferred. The money matters. Business groups including the Scottish Chambers of Commerce and the Federation of Small Businesses Scotland have consistently called for a move away from rateable value as the primary basis for the tax, arguing it penalises investment in physical premises and hits high-street retailers, hospitality operators, and independent healthcare providers hardest.
The regional growth dimension is the less-reported half of this story, and arguably the more interesting one for businesses outside Edinburgh and Glasgow. The Scottish Government's own National Strategy for Economic Transformation, published in 2022 and updated since, identified regional inequality as a structural drag on Scottish productivity. Highlands and Islands Enterprise and South of Scotland Enterprise have both flagged that the current business support architecture still favours businesses with the capacity to navigate complex application processes — which tends to mean larger ones. Whether Swinney's pledge translates into a reformed regional funding model or remains a directional statement is the question that will define its value.
The timing has political logic. With UK Government spending decisions putting pressure on the Scottish block grant, Swinney needs a domestic economic story that signals ambition without requiring immediate large-scale spending. Business rates reform — particularly expanding relief thresholds for small businesses — can be structured as fiscally neutral if designed carefully. Edinburgh's SME community, which ranges from independent retailers on Leith Walk to small professional services firms in the New Town, will be watching the consultation process closely. The promise is real. The substance is still being written.