The Scottish Government has left Scotland’s largest hospitality operators out in the cold, with its decision not to award 40% rates relief to hospitality businesses who pay more than £51,000 in business rates. Instead the Finance Secretary Shona Robinson watered down the relief, offered to all English hospitality operators, and has given it only to smaller hospitality businesses in Scotland paying the basic property rate of £51,000 or less with a cap of £110,000 per business.
The Scottish Government said that these changes would help 92% of hospitality premises, however included this figure is non-licensed hospitality premises. Finance Secretary Shona Robinson said this represented 11,000 businesses and in an interview last night said they Scottish Government couldn’t afford the potential cost which would have been incurred if all hospitality operators had been included. This is despite the UK Government providing this funding via Barnett consequentials.
The estimated 2,600 larger businesses who have missed out on the relief generate the majority of the revenue and employ over 50% of the sectors workforce in Scotland. Industry commentators believe the fact that these businesses have not been helped will lead to a reduction in investment in Scotland and a reduction in jobs. With some warning that it will lead directly to businesses closing.
UKHospitality Scotland agreed that although the relief provided much-needed support for eligible hospitality businesses. it revealed that 2,600 Scottish businesses wouldn’t be eligible for relief. Executive Director Leon Thomson of UKHospitality Scotland commented, “Those businesses will face both increased employer National Insurance Contributions from the UK Budget and an inflationary increase to the Intermediate and Higher Property Rate.” He continued, “This will seriously threaten their ability to support jobs and we have to recognise that these businesses employ more than half of Scotland’s hospitality workforce.
“Hospitality’s ability to provide jobs for everyone is one of our impactful contributions to Scotland and I am concerned about the unintended consequences those tax rises will have on the ability of those unsupported businesses to support employment.”
Stephen Montgomery, Director of the Scottish Hospitality Group, added that the Scottish Governments offer, “is on a significantly more restricted basis than elsewhere in the UK and affords those above a rateable value of £51,000 absolutely nothing for a fourth year in a row – at a time when all licensed hospitality businesses need support.
“The reality is that this amounts to little more than a drop in the ocean given the spiralling costs faced by bars, restaurants, and hotels across Scotland.”
Marc Crothall MBE, CEO of the Scottish Tourism Alliance said,“While the business rates relief measures announced in today’s Scottish Budget will provide comfort for many smaller hospitality businesses, we are however very disappointed that those tourism and hospitality businesses facing the biggest cost burden have been overlooked. In fact, businesses in the intermediate and higher property rate bracket will be paying even more due to the increase in poundage.
“The rise in National Insurance employer contributions will already leave those with the highest wage bills vulnerable and exposed. With no measures to immediately ease mounting financial burdens, many will be forced re-evaluate their business models and will be left at a competitive disadvantage compared to their counterparts over the border.”
Louise Maclean, Director at Signature Pubs which has 720 employees said, “As we start to work through the small print, devastatingly, it would appear that due to the nature of our business, we will receive ZERO rate relief next year.
“Our smallest venue has an RV of £56k; therefore, all our venues are above the threshold. I can’t believe we are in this position again.
“So many meetings, so much work to trying to explain to those in political positions of power what is happening to our business, and whilst those slightly smaller businesses now have a degree of comfort, we have no support. Yet again this year, I am left wondering, “what is the point?”
Bucks Bar owner, Michael Bergson, is one of the fortunate licensees this rates relief will help. He said, “The 40% is welcome, although overdue, but we were hoping for more. I feel the Government have done this as they have been backed into a corner and why the cap?”
“It feels like this 40% figure has been plucked from the air because it is what the UK Government offered. However, we are coming from a weaker position as an industry than our English counterparts due to rates relief not being passed on previously. It would be nice if they had recognised that and offered more to allow businesses to get back into a stronger position.”
An NTIA Scotland spokesperson said, “The Night Time Industries Association (NTIA) Scotland welcomes today’s Scottish Budget announcement and the recognition of our sector’s vital role in the Scottish economy, contributing £2.2 billion annually and supporting over 45,000 jobs. This is a step in the right direction, and we are optimistic about what this could mean for businesses at the heart of our vibrant nighttime economy.
“The specific package of NDR support for music venues was one of the main requests NTIA Scotland made of Scottish Government in the lead up to the budget, and we are grateful that this particular ask has been prioritised.
“However, while the headline announcements are encouraging, it’s essential to delve into the detail to fully understand the impact and ensure it aligns with our key asks: addressing soaring operational costs, improving access to funding, and safeguarding jobs within the Night Time Economy in Scotland. In particular it will be critical to understand the detail around the specific qualification criteria for these NDR reliefs.”