Budget puts ‘Scottish pubs at significant disadvantage’


Yesterday’s Scottish budget has been widely slammed by the industry, offering little respite to hospitality businesses and no rates relief in the coming months, despite the confirmed rates freeze.

Leon Thompson, Executive Director of UKHospitality Scotland, said, “The freeze on the business rate announced today is welcome news, and a key ask of UKHospitality Scotland, but we needed the Deputy First Minister to go further.

“Our businesses face a hard winter as costs continue to rise for them, whilst customers, concerned at their own spiralling costs and hit by rail strikes, are increasingly being more cautious and visiting venues less and less.

“What should be a time for hospitality to build up a financial cushion for the lean months ahead is instead resulting in cancellations and losses for many businesses. The lack of sector-specific relief on business rates for hospitality from the Scottish Government is painfully at odds with the support provided by the UK Government and Welsh Government to their hospitality sectors. By following their example, the Scottish Government would have extended a lifeline to struggling businesses so vital to our economy.

“This budget comes as our businesses were already counting the cost of the recent business rate revaluation process. This has resulted in many receiving higher valuations than before, which simply cannot be right after two years of Covid closures and restrictions for businesses now gripped by severe financial challenges. While the details for the transitional relief scheme announced today are still to be released, it remains the case that these are simply sticking plasters patching up a dysfunctional system that is in desperate need of reform.”

Steven Montogmery of the Scottish Hospitality Group commented, “Today the hospitality sector received no Christmas present, other than a business rates freeze”.

“The main single issue which would have assisted the sector, and created a better government understanding of the hospitality sector in Scotland would have been to have followed the UK Governments 75% reduction of rates, which was also followed by the Welsh Government, who actually went further, and will provide all ratepayers whose liability is increasing by more than £300, as a consequence of revaluation, with transitional relief.”

Emma McClarkin OBE, CEO of the Scottish Beer & Pub Association agrees saying,  “The lack of an announcement on business rates relief for Scotland’s pubs is hugely disappointing and will be met with dismay by many operators. Both the UK Government and Welsh Government have ensured that eligible businesses there will receive a 75% discount on rates next year, after a 50% discount for the entirety of this year. In comparison, Scottish businesses have been back to full rates since the summer. This puts Scotland’s pubs at a significant disadvantage in their recovery given the challenges they are facing.

“We’re glad the Finance Secretary’s has listened to industry and agreed to freeze UBR. This will provide a greater degree of certainty moving into 2023, but does not make-up for the failure to replicate the 75% discount the trade had been hoping for.

“From Perth to Paisley, Stranraer to Stornoway, licensed premises are trying desperately to hold on amidst a perfect storm, with increased business costs and customers who are being more careful than ever about what they’re spending, they are being squeezed at both ends and profit margins are being wiped out.

“We still desperately need additional action from both the Scottish Government and Westminster to save our much-loved pubs. Staff shortages, pressures throughout the supply chain, rising business costs, and unfathomable energy prices with inadequate support, are all adding together to create an extremely hostile environment for businesses. When coupled with increased regulations, including an unevidenced and unwanted Tied Pubs code, and impacts from Deposit Return, there is still a real uphill struggle for many to survive. Without our pubs and brewers our communities will be poorer not only economically but socially.

“Investment is critical to our sector’s survival and growth, and we remain committed to working alongside Government to ensure that Scotland remains competitive, and the sector can continue being a bedrock of the national economy.”

Marc Crothall, CEO of the Scottish Tourism Alliance commented, “The priorities of the Scottish Government’s budget in relation to tackling child poverty, strengthening public services and the transition to net zero are right and just.

“The news that the Scottish Government will freeze the current rate of non-domestic rate poundage for another year will provide a sigh of relief within the sector; this was a key ask from the industry.

“With VAT bills looming at end of January, business are grappling with an unprecedented rise energy costs and needing to repay borrowings; the decision to stay open or shut up shop has never been more real.

“The cost of living and the cost of doing business crises have put thousands of businesses and livelihoods across our industry at serious risk; this is being compounded by a conveyor belt of regulatory costs coming at a time when our sector continues to operate very much in recovery mode from a three-year period of intense challenge and hardship.

“The tax increase announced this afternoon further reduces consumer ability to support our already struggling sector; spending on leisure will continue to drop.

“There has been little respite for our industry and no meaningful fiscal support to date to enable an economic bounce back for tourism and hospitality businesses across Scotland.  The situation is grim; we have now entered our most difficult winter yet.  We have strikes, high levels of inflation and a further rise in interest rates, putting yet more squeeze on household spending, severely curtailing footfall and time being spent enjoying leisure and hospitality experiences at a time when businesses could have been trading at much healthier level.

“The continued erosion of Scotland’s tourism and hospitality industry should be a major concern for all, however there is some positive news from a marketing point of view in that VisitScotland’s core budget has been protected which we hope will translate to increased inbound visitor numbers.”

Leon Thompson, also commented on the Government review into upcoming Deposit Return Scheme, He said, “Beyond the budget, it is very concerning to learn that the Scottish Government’s own Gateway Review into the Deposit Return Scheme concluded that the scheme is not deliverable, in full, by the go live date of 16 August 2023. DRS alone is already costing hospitality businesses and producers time and money as they work to prepare for it. This assessment throws the viability of the scheme into further doubt and in the current economic circumstances cannot be afforded by our businesses.

“Rather than holding hospitality back with burdensome and costly regulation, the Scottish Government should be supporting and applauding the significant contribution our businesses make to employment and vibrant community life across the country.”