“Bitter blow” for hospitality as Kate Forbes chooses to ignore rates plea

Kate Forbes

“A budget of choices,” said Finance Secretary Kate Forbes, as she chose to deliver another blow to hospitality operators.  This afternoon (9th  December) she revealed that the Scottish Government’s 2022-2023 Budget did not include an extension to rates relief beyond the first three months of the next financial year for hospitality and retail premises despite trade organisations lobbying for a longer extension.

She said in her address to Parliament that the rates relief  will continue at 50% for the first three months of the 2022 financial year and is to be capped at £27,500 per ratepayer. Although businesses with a Rateable Value of less than £15,000 would pay nothing for the next 12 months.”

Stephen Montgomery, spokesperson for the Scottish Hospitality Group said, “Today’s budget is a bitter blow for the hospitality sector in Scotland. Throughout the last 20 months every sector of the economy has suffered, but none more so than the hospitality sector. From lockdowns to curfews, restricted hours, and music bans, we have endured it all, and today we got little or no thanks for anything we have suffered.

“The inclusion of a £27,500 per ratepayer cap, is a devastating blow to larger businesses, all of which will have retained staff right the way through this pandemic, and today have received no thanks for it. For many businesses within the hospitality sector of all sizes, this will be the end of the road after fighting for survival for over 20 months.

“At a time when we are seeing cancellations coming in during a month that is traditionally where hospitality would have seen 30% of its annual turnover come in during normal times, and after Christmas being more or less cancelled last year, there will be many many businesses, there will be many within the sector feeling very disheartened and let down.”

Marc Crothall, Chief Executive of the Scottish Tourism Alliance said, “Today’s budget announcement sends a clear and stark message to Scotland’s tourism industry that the short-term extension of business rates relief is effectively the one last lifeline of support available.  The cliff edge the Finance Secretary refers to will only be delayed until June 2022 when the impact will be felt hard by businesses across all sectors within our industry.

“Whilst smaller businesses with a rateable value of less than £15,000 will be relieved to know that they are exempt from paying rates, businesses that fall into the higher bracket, especially larger businesses will be underwhelmed, disappointed and find themselves with even tougher decisions ahead, particularly in this current climate of uncertainty.  Many businesses are already expressing disappointment and shock that the future relief doesn’t match what has been announced by the UK Government.

“Given the impact of the pandemic on Scotland’s tourism industry over the past two years, we are of the strong view that today’s budget announcement does not go anywhere near far enough in delivering the level of meaningful, long-term or indeed short-term support required by our tourism businesses to recover.  It will certainly not enable our industry to deliver the successful business activity, entrepreneurship and innovation Ms Forbes refers to as part of a ‘wellbeing economy’.

“Tourism is a major economic contributor to Scotland’s public purse; it will be key to moving our country through recovery to a much stronger position.  Many of our businesses continue to operate in survival mode, cash reserves have dwindled and the weeks ahead of the ‘golden season’ which would have been an opportunity for businesses to recoup lost income have certainly lost their sheen due to the arrival of the Omicron variant along with a degree of consumer uncertainty from a public health point of view.”

While UKHospitality Scotland, Executive Director Leon Thompson said, “The Scottish Budget has failed hospitality businesses across the country. It provides little hope to businesses at risk of financial free-fall as they face a much-reduced Christmas and New Year trading period due to concerns over the spread of omicron.

“The extension of business rate relief of 50% from April to June 2022 simply moves the financial pressures a little further down the line and does nothing to eliminate the very real challenges that our businesses face. With increased cancellations, many businesses face stark months ahead. Many had pinned their hopes on today’s budget statement and will now be facing very difficult choices. It’s a difficult juncture for both owners and their workers.

“Not only has the Scottish Government failed to listen to the pleas of our hard-pressed sector, but budget documents also reveal plans to revisit the introduction of a tourist tax. Businesses need support, not further measures that will limit the opportunity for recovery – whenever they might come.”

 

Ms Forbes defending her decision highlighted the fact that businesses in England started paying rates last July in Scotland while in Scotland businesses are still not paying rates. Although she did not mention the fact that in Scotland hospitality businesses pay far higher rates than the rest of the UK.

She said, “It has been a challenging Budget due to the continuing impact of the pandemic, and the uncertainty and worry that Covid poses for us all. This has been confounded by the UK Government’s decision to remove necessary Covid consequential funding at a time when we undeniably need to help our public services.

“This is a budget of choices… cannot deliver all of the resources our partners would have wanted. I believe we have made the right choices.”

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