Scottish tourism and hospitality bodies have expressed “extreme disappointment” at the Scottish budget.
The Scottish Tourism Alliance, UKHospitality Scotland, the Scottish Licensed Trade Association and the Scottish Beer and Pub Association have highlighted the material threat of long-term damage to the competitiveness of Scotland’s hospitality and tourism sector, as a result of ongoing inaction.
They said 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.
According to the announcement yesterday, hospitality businesses on Scotland’s islands will get 100% non-domestic rates relief capped at £110k.
But the rest of Scotland’s hospitality businesses will get no relief whatsoever, although poundage has been frozen for all businesses up to a value of up to £51k, SNP finance secretary Shona Robison said.
In England hospitality businesses received a 75% rates relief package and Wales has revealed a 40% relief package for hospitality.
Commenting, the trade bodies 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.
“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.”
Nick Mackenzie, Greene King CEO, 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.”
Lawson Mountstevens, managing director of Star Pubs & Bars, added: “Business rates relief has 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. 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. Whilst we welcome the continuation of business rates relief in Wales, its reduction is disappointing.
“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.”
