Scottish Budget a ‘squandered’ opportunity to save hospitality

Hospitality bodies have lamented the lack of business support measures in yesterday’s Scottish Budget, as pubs close at double the rate of those in England.

Deputy First Minister of Scotland Shona Robison announced in the Budget on Tuesday (19 December) that the hospitality sector in Scotland’s island communities will receive 100% business rates relief in 2024-25, capped at £110,000 per business.

However, the Budget announcement fell short of the 75% business rates discount supplied to businesses in England, despite lobbying from trade bodies.

More than 400 hospitality firms and workers signed an open letter ahead of the announcement, calling for an emergency 75% business rates relief to ease pressure on the sector.

The Scottish Budget has frozen the Basic Property Rate, which is charged to properties with a rateable value up to and including £51,000, at 49.8p. Robison also announced that the Government will be maintaining the Small Business Bonus Scheme.

“We have been compelled to take painful and difficult decisions in order to prioritise funding in the areas which have the greatest impact on the quality of life for the people of Scotland,” Robison said as part of the statement, saying that the Scottish Government will “make no apology” for its actions.

Squandered opportunity

Trade bodies the Scottish Tourism Alliance, UKHospitality Scotland, the Scottish Licensed Trade Association and the Scottish Beer and Pub Association expressed their disappointment at the lack of support, saying the Government has “squandered a golden opportunity to support one of the country’s most important sectors for the second year in a row”.

In a joint statement, the trade bodies said that the failure to support hospitality businesses facing acute financial challenges would tip “many into crisis”.

Pubs in Scotland are closing at twice the rate of those in England, the statement said.

“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.”

Responding to the Budget Stuart McMahon, Scotland director of consumer group CAMRA (the Campaign for Real Ale), accused Holyrood of “yet again” failing to understand “the importance of our pubs, social clubs and breweries as a vital part of our social fabric”.

“Our locals are community hubs that need and deserve help to make sure that they survive and thrive,” he said.

“With reports that pubs are closing at a faster rate here than elsewhere in the UK, Scottish Government ministers urgently need to re-think the decision not to give our locals the 75% discount with business rates bills that 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.”

Robison commented on the lack of business rates relief in her Budget statement, saying: “We will always be open and honest with the public about the choices that we have made. We have faced calls to replicate Non‑Domestic Rates Retail, Hospitality and Leisure relief available to businesses in England. While we are sympathetic to these calls, replicating this temporary relief would have meant that we could not provide our NHS, schools, or emergency services with the funding that they require. We also could not have continued to ensure that over 95 per cent of non‑domestic properties remain liable for the lowest non‑domestic rate in the UK, or provided a package of relief worth £685 million, including the most generous Small Business Bonus Scheme in the UK, therefore maintaining a competitive non ‑ domestic rates system in Scotland.”

New tax band

The Budget statement also introduced a new 45% band for people earning between £75,000 and £125,140, meaning they will pay more tax than they currently do.

The Scottish Tourism Alliance, UKHospitality Scotland, the Scottish Licensed Trade Association and the Scottish Beer and Pub Association said in their joint statement that this would hit the sector’s “ability to recruit senior and highly experienced candidates from elsewhere in the UK and potentially retain our emerging leadership talent”.

They said: “Businesses already report that it is challenging to fill vacancies, with higher tax in Scotland being a barrier.”

The trade bodies called on the Scottish Government to “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.”

They said: “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.”