Finance secretary Shona Robison delivered the announcement yesterday (Tuesday 19 December) and said business rates for premises valued under £51,000 would be frozen while island hospitality firms would receive 100% relief.
However, despite calls from the Scottish hospitality sector for business rates support ahead of the Budget, Robison failed to meet these calls and replicate the rates help for pubs in England with a 75% business rates discount, which Chancellor Jeremy Hunt announced in November.
The Scottish Hospitality Group, which represents bars, pubs, cafés, restaurants and hotels, said it was sorely disappointed the Scottish Government had not delivered new emergency support for the sector.
Director Stephen Montgomery added: “Unless a hospitality business is located on the islands, this Budget offers no new support to survive the unprecedented challenge of rising costs, inflation and the legacy of the pandemic.
“The very real implication is many Scottish hospitality businesses will struggle to survive and customers will see prices increase.
“This will be a bitter pill to swallow for thousands of Scottish hospitality businesses, given English hospitality businesses will be benefitting from a 75% business rates discount for the next year.
“Our attention will now be focused on helping those firms survive what will be a very challenging year to come.”
However, Montgomery welcomed the Government’s commitment to exploring a long-term, fairer deal for hospitality on business rates.
“It is a ray of hope in an otherwise disappointing day for Scottish hospitality. This is a golden opportunity to deliver a fairer deal once and for all,” he said.
“We have been engaged with the New Deal for Business group for a number of months and it is time the Scottish Government’s actions matched their words.
“The finance secretary has committed to introducing a long-term fairer deal for Scottish hospitality at next year’s Budget. We will hold her feet to the fire to make sure she delivers on this promise.”
Golden opportunity squandered
Tourism and hospitality bodies The Scottish Tourism Alliance, UKHospitality Scotland, the Scottish Licensed Trade Association and the Scottish Beer & Pub Association issued a unified statement, highlighting the material threat of long-term damage to the competitiveness to the country's industry, due to on going inaction.
The statement said: "With estimated consequentials of around £230m coming to Scotland as a result of the 75% rates relief afforded to businesses in England, the Scottish Government has 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.
“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.
“Around 10,000 of our businesses will not benefit from the Small Business Bonus Scheme, leaving them unsupported, and this growing gulf with the rest of Britain will cost jobs, economic growth, investment and, ultimately, tax revenues which are needed to fund public services.
“The announcement of a new income tax band will also hit our sector’s ability to recruit senior and highly experienced candidates from elsewhere in the UK and potentially retain our emerging leadership talent. Businesses already report that it is challenging to fill vacancies, with higher tax in Scotland being a barrier.
“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."
Greene King, which operates 244 pubs in Scotland under its Belhaven brand, CEO Nick Mackenzie called for regulatory reform to ease the cost of doing business.
He 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 [the] Budget but these reforms must be looked at as soon as possible.”
Campaign for Real Ale (CAMRA) Scotland director Stuart McMahon said pubgoers would be deeply disappointed by the lack of help.
He added: “While 100% rate relief for hospitality businesses in island communities will be welcomed, failing to pass on extra money from the UK Government to help with business rate for the rest of our hospitality businesses is undoubtedly a blow and puts many of our pubs at risk of permanent closure.
“Yet again, it seems the Scottish Government just doesn’t understand the importance of our pubs, social clubs and breweries as a vital part of our social fabric – bringing communities together and providing a safe, regulated environment to enjoy a drink with friends and family.
“Our locals are community hubs that need and deserve help to make sure they survive and thrive.
“With reports pubs are closing at a faster rate here than elsewhere in the UK, Scottish Government ministers urgently need to rethink the decision not to give our locals the 75% discount with business rates bills pubs south of the border are receiving.
“The Scottish Government also needs to support consumers, pubs and breweries in the new year by ditching any plans to bring back restrictive bans on alcohol advertising."