Ministerial Engagement Briefing: Keith Brown

MINISTERIAL ENGAGEMENT BRIEFING: DEREK MACKAY

Engagement title Meeting with Roy Macgregor from Global Energy Group – Non-domestic rates at Nigg Engagement timings Time: 15:30-16:00

Date: 01/03/2017 Organisation Global Energy Group

Venue and full address Parliament T4.07

MACCS reference 2016/0037769

Background/Purpose Previous correspondence between Roy Macgregor and (including invitation history) Mr Mackay addresses NDR issues for Nigg site..

Mr Macgregor has met with officials from Highland Council regarding discretionary rates relief and has a number of questions following that meeting, which form the basis of this meeting request. The topics which are to be discussed, as detailed in the letter are as follows:-

 Council ability to discount business rates for empty properties in an enterprise zone, the local authority would have to foot the bill  Misalignment between the 2016/17 ratings system and questioning the reasons for establishing enterprise zones in Scotland.  Retrospective views on choices of enhanced capital allowances or rates relief

Relevance to core script We live in Scotland that is the most attractive place for doing business in Europe.

Meeting attendees Mr Derek Mackay MSP, Roy Macgregor – Global Energy Group Supplementary information Annex A – Nigg Enterprise Area / NDR position Annex B – background correspondence Official support: Dougie McLaren & Andy Cairney ext 47588 / 0785 496 7018 Annex A

NIGG ENTERPRISE AREA, EASTER ROSS, HIGHLAND

 The key issue is around what rates relief the site could or should get – either from SG or from Highland Council.  This Enterprise Area has been in place since 2012 with Enhanced Capital Allowances rather than rates relief (both cannot be provided simultaneously), as it was anticipated that Nigg would stand to gain much more from ECAs.  However, in hindsight, Roy Macgregor seems to be wondering whether that was the right decision.  He also indicates that he would welcome further clarity on the facts around NDR reliefs – which officials can expand upon in the meeting if required.

BACKGROUND

 Scotland’s four Enterprise Areas (EAs) are spread over 16 sites and complement wider support fostering economic development and job creation activity across Scotland. Nigg is within the Low Carbon / Renewables North EA, which includes Hatston, Lyness, Arnish and Scrabster and Nigg.

 EAs currently offer some or all of the following incentives: business rates relief; enhanced capital allowances; streamlined planning; broadband; skills support and international marketing support. The main incentive available at Nigg is Enhanced capital allowances. Streamlined planning; high speed broadband connections and skills, training and other support is also available.

 Nigg benefits from enhanced capital allowances, rather than rates relies as HMRC does not allow both incentives and it was felt that enhanced capital allowances would provide greater support as it allows eligible capital expenditure to be written off against taxable profits.

ENTERPRISE AREAS  The 2011 Government Economic Strategy included a commitment to establish four EAs – including sites with a particular focus on low carbon manufacturing opportunities. Four EAs over 14 sites were established in April 2012, with two further sites added (in 2013 and 2016) and the timescale for all existing EAs extended by three years to 2020.  The 16 sites within each of the four Enterprise Areas are: o Life Sciences – Irvine, BioQuarter, BioCampus Midlothian, Forres Enterprise Park, Inverness Campus and BioCity. o Low Carbon / Renewables North – Hatston, Lyness, Arnish, Scrabster and Nigg. o Low Carbon / Renewables East – Dundee and Leith. o General Manufacturing / Growth Sectors – Creative Clyde, Prestwick Aerospace Park and West Lothian RATES RELIEF FOR CERTAIN ENTERPRISE AREAS Rateable value Percentage of rates relief £120,000 or less 100% More than £120,000 but not exceeding 50% £240,000 More than £240,000 but not exceeding 25% £480,000 More than £480,000 but not exceeding 10% £1,200,000 More than £1,200,000 but not exceeding 5% £2,400,000 More than £2,400,000 2.5% NIGG – NDR POSITION

We are not fully sighted on all properties associated with Global Energy Group, but our best estimation of the Nigg site is as follows.

% Relief it would Gross Bil Gross Change Change receive - if UARN Occupier RV 2016 RV 2017 2016 Bill 2017 Gross Bill Bill applicable GLOBAL PROJECT 03/27/016420/9 SERVICES LTD £33,000 £46,000 £15,972 £21,436 £5,464 34% NIGG SKILLS 03/27/016415/1 ACADEMY LTD £27,500 £40,000 £13,310 £18,640 £5,330 40% 5-10% of bill, GLOBAL £40-£60k 03/27/016400/3 ENERGY NIGG £1,140,000 £1,200,000 £581,400 £590,400 £9,000 2% GLOBAL ENERGY NIGG 03/27/016425/4 LTD £33,000 £46,000 £15,972 £21,436 £5,464 34% 03/27/016405/8 ISLEBURN LTD £300,000 £410,000 £153,000 £201,720 £48,720 32% Total £1,533,500 £1,742,000 £779,654 £853,632 £73,978 9%

Global Energy Group

Global Energy group own 16 different companies, each of those companies likely occupy a number of site in Scotland. Given the time constraints I’ve only been able to identify sites for 6 of these companies. I would therefore take the data below as a partial picture of the total RV for Global Energy Group. I can keep looking for more global energy sites if you wish.

The largest parts of the business are “Global Energy Group”, “Global Port Services” and “Ross-shire Engineering”

Gross BilL Gross Bill Change Gross Business RV 2016 RV 2017 % Change Bill 2016 2017 Bill Global Energy Group £2,412,000 £2,712,250 £1,225,869 £1,327,245 £101,376 8%