The rates burden on Scottish business will be reduced to the same level as England, First Minister Jack McConnell pledged yesterday (6th September).

This decision to cut rates for business premises in Scotland by around 10 per cent or 5p in the pound was a last-minute addition his legislative plans for the next 20 months leading up to Holyrood elections in 2007. He presented the move, which will cost at least £200 million, paid for by public sector efficiency savings, so not needing specific legislation, as essential to promoting economic growth and removing a “critical” disadvantage over Scotland’s ability to attract enterprise.

Indeed, Mr McConnell went further when he said that he was also prepared to "consider carefully" a specific additional reduction in business rates for companies that invest in research and development, an area in which the Scottish economy has been historically weak. If implemented, he said, it would make “Scotland the most attractive place in the UK to invest in research and development”.

By bringing Scotland’s rate poundage down to that for England, the Executive is, in effect, restoring the uniform business rate from which it withdrew in 2000. Finance Minister Tom McCabe is due to announce by the end of the year details of when and how the rate poundage cut will be implemented.

Andy Willox, Scottish policy convener for the Federation of Small Businesses, said firms had become increasingly concerned about a "rates gap" with England. He comments: "At a time of increasing waste charges and fuel prices, any savings will be a help to Scotland's small businesses".

Scottish Chambers of Commerce director Liz Cameron described Mr McConnell's announcement as "absolutely fantastic news" and the "first steps" to boosting Scotland's international competitiveness.

CBI Scotland director Iain McMillan added: "This is a step that we have campaigned hard for over five years and I am delighted that the first minister and his executive colleagues have found the financial headroom within the overall executive budget to improve Scotland's competitive position in this way."