Hopes that ScotGov would match the 75% business rates relief currently being enjoyed by England’s hospitality businesses were dashed this week, as the latest Scottish Budget came and went leaving only scraps of comfort for the trade.
Deputy First Minister Shona Robison’s Budget Statement stressed that last month’s Autumn Statement by UK Chancellor Jeremy Hunt had been a ‘worst case scenario’ for Scotland, reducing the overall amount of funding allocated from the Exchequer.
Although she conceded that England’s ongoing rates relief for business had meant extra money for Scotland under policy ‘consequentials’, Ms Robison stated that this had been achieved via Westminster cuts elsewhere.
“While the UK Government may be happy to provide tax cuts on the back of real terms cuts to their NHS, I am not.
“Because let us be clear, if I spent every penny of consequentials on business relief and tax cuts, that would mean a real terms cut to our NHS and other vital public services – just as the UK Government has done.”
Expectations thus lowered, Ms Robison said she would at least freeze the poundage on the Basic Property Rate, protecting businesses with a rateable value up to and including £51,000 from the impact of inflation.
She continued: “For the hospitality sector, we recognise the pressures they face. That’s why, this year, we’re going to work through the New Deal for Business group to take forward two actions to be implemented in our budget for 2025-26.
“First, we will work with the sector to explore longer-term targeted solutions, and better promotion of existing reliefs – rather than relying on short-term steps that do little for their future sustainability.
“And second, to examine with the Scottish Assessors the valuation methodology for the hospitality sector to address the concerns that have been raised that it is not truly reflective of the experiences of these businesses.”
Ms Robison also introduced a targeted relief in recognition of the ‘unique challenges faced by the hospitality sector in our island communities’ – 100% rates relief for island hospitality properties, capped at £110,000 per business.
Issuing a unified statement in response to the Scottish Budget, the Scottish Tourism Alliance, UKHospitality Scotland, the Scottish Licensed Trade Association and the Scottish Beer and Pub Association, said ScotGov had ‘squandered a golden opportunity to support one of the country’s most important sectors for the second year in a row’.
“The 100% rates relief which has been announced for hospitality businesses in our island communities is welcomed, given the economic disruption these businesses have experienced as a result of years of underinvestment in our ferry infrastructure. However, this measure falls very short of what has been expected. It is an extreme disappointment for tourism and hospitality businesses across Scotland,” read the joint statement.
“The lack of business support measures will see many thousands of tourism and hospitality businesses facing acute financial challenges in the next year, tipping many into crisis.
“It also entrenches the fact that it is now immeasurably harder to run a hospitality, leisure or tourism business in Scotland, than anywhere else in Britain. This is particularly highlighted by the decision not to support the sector with rates relief, at a time when pubs in Scotland are already closing at twice the rate of those in England,” said the trade bodies.
“One positive is the decision to freeze the poundage, which keeps another multi-million price rise at bay for now, but this will simply maintain the status quo of already extortionate business rates.
“The Scottish Government must now work closely with businesses, as promised in the Budget announcement, to bring forward a clear strategy for economic recovery and growth, including delivering on its commitment to reform business rates through careful examination of the methodology as a starting point.”
Commenting from pub chain and brewer Greene King, its CEO Nick Mackenzie said: “We welcome the decision by the Scottish Government not to increase the poundage on basic property rates at a time when the cost of doing business has already risen significantly.
“However, the challenge facing pubs across Scotland is immediate, and these measures have not brought parity with the current support these same pubs would receive if they were in England.
“Pubs play a huge role in contributing to Scotland’s growth, employing tens of thousands of people and contributing millions to the economy. Significant regulatory reform is needed, particularly around business rates, to bring parity for hospitality and it was good to hear an ambition to address this at today’s budget, but these reforms must be looked at as soon as possible.”
Managing director of Star Pubs & Bars, Lawson Mountstevens, responded to the Budget announcement by observing that business rates relief had ‘made a real difference’ to pubs in England and Wales.
“It’s damaging for the vast majority of Scottish pubs to miss out for the second year running,” said Mountstevens. “They are already battling inflation, high energy bills and rising staffing costs. Business rates relief would have eased some of these financial pressures and given pubs some breathing space. Pubs play an incredibly important role as social hubs of the communities they serve. They need to be supported, not penalised, in difficult economic times.”
However it fell to Scottish Chef Dean Banks to encapsulate the industry’s gut reaction.
“We were asking for fairness with what England is offering and the fact that the funding to pay for that has been put in place already. That funding is the taxes I, my staff and my businesses have paid.
“It’s absolutely shocking that this is the outcome. I’m shocked and disgusted,” said Banks. “I hope that many of us business owners and staff within the industry come together, demand change – how can anyone in our industry ever vote SNP or Green again?”
