Cap brings rates reprieve for trade

Campaign to have entire system overhauled continues

By Gillian McKenzie

The 12-month cap on rates rises of 12.5% has been welcomed by trade groups, which say it will provide “breathing space” for operators while the fight for a complete overhaul of the business rates system continues.

Finance secretary Derek Mackay

Industry bodies welcomed the Scottish Government’s climb-down last week, which saw finance secretary Derek Mackay announce that rates increases will be capped at 12.5% for hospitality businesses for a year.

Mackay’s announcement followed a concerted lobbying effort by the British Hospitality Association (BHA) Scotland, the Scottish Licensed Trade Association (SLTA) and the Scottish Tourism Alliance (STA) after new draft rateable values, published late last year, saw some operators hit with crippling increases of 300%.

Confirmation of the cap came just weeks before the new rateable values – the first non-domestic rates revaluation since 2010 – were due to come into force on April 1; it also comes before the Barclay group, which was set up to review Scotland’s business rates system, is due to report to ministers in July.
Willie Macleod, executive director for Scotland at the BHA, welcomed the year-long cap on increases but said the campaign to have the business rates system overhauled continues.

“I’m delighted with the outcome, considering where we’ve come from, but we’re taking it a stage at a time,” he said.
“There is clearly something fundamentally wrong with the system. But we can’t be at all certain what will come out of Barclay.
“If it is supportive of our case, then good. If not then we need to persuade Derek Mackay that something must be done longer term.
“Barclay is due to report in the middle of the summer recess; and if it is supportive of our industry, and if any changes require primary legislation, we could be looking at another two years before those changes take place. This cap has given us some breathing space.”
SLTA chief executive Paul Waterson  said: “Obviously we’re very happy with the outcome at this stage. It’s for a year and we must now look forward to Barclay.

“We’ll certainly be looking at trying to alleviate the basing of our rates on turnover once and for all.”
Nightclub owner Donald MacLeod, who was heavily involved in the rates lobby group, said the Barclay group “needs to come back with something tangible and radical”.
“This should never have happened in the first place because RVs of licensed premises should not be calculated the way they are,” he said.

“It’s an issue that’s been highlighted by the SLTA and SLTN for months. The fact it wasn’t dealt with sooner by the government when figures like 200% started coming out is a disgrace. But as an issue this galvanised us; when we get together we are a real force.”
Announcing the 12.5% cap, finance secretary Derek Mackay said the measure followed “concerns that have been raised with me over the scale of the increases and the valuation methodology which sets [hospitality businesses] apart from other sectors”.