THERE is little in the way of festive warmth being directed towards the Scottish Government from the hospitality industry as Christmas nears.

Industry groups have been left dismayed after ministers confirmed the sector would not be receiving the 75 per cent relief from business rates that has been secured by hospitality operators in England in Wales.

The Scottish Government did follow Westminster in freezing the uniform business rate, or poundage figure that is used to calculate rates bills – a move that the wider Scottish business community had been calling for. But the decision to not provide Scottish firms with the level of relief granted down south saw the Government north of the Border, and Deputy First Minister John Swinney in particular, come in for a barrage of criticism after he announced the Scottish Budget for 2023/24.

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Warning that the Scottish hospitality industry was “on its knees” – as it feels the icy blast of cost pressures and a cost-of-living crisis – the Scottish Licensed Trade Association said Mr Swinney had denied the industry some much-needed Christmas cheer. A strong festive season has traditionally helped tide pubs through the quieter months of January and February, but this time things will be different, said the SLTA, which declared that a “grim” few months lie in store. Many businesses have already closed for the winter because it is too expensive to open, and some will close permanently, the organisation warned.

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“There is extended and increased relief for retail, hospitality and leisure businesses in England worth almost £2.1 billion and this is the most generous business rates relief in over 30 years, outside of Covid-19 support,” said SLTA managing director Colin Wilkinson.

“Yet there is nothing for Scotland which means we cannot remain competitive with our neighbours south of the Border. Instead, our hospitality sector is facing a winter of discontent.”

The SLTA was not the only voice from the sector to express dismay. The Scottish Beer & Pub Association, which represents major pub companies and brewers, said it was “glad” the uniform business rate had been frozen, noting that it would “provide a greater degree of certainty moving into 2023”.

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However, chief executive Emma McClarkin said it “does not make up for the failure to replicate the 75% discount the trade had been hoping for.”

Ms McClarkin said: “From Perth to Paisley, Stranraer to Stornoway, licensed premises are trying desperately to hold on amid 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.”

It is important to note that the Scottish Government has delivered some measures to mitigate the impact of business rates. Transitional relief will be introduced to cap increases in rates liabilities further to November’s draft revaluation, which was based on a “tone date” of April this year. Such relief would mean that, in 2023/24, increases in rates bills will be capped at 37.5% for large businesses, 25% for medium-sized properties, and 12.5% for small properties, before rising in the subsequent years.

The small business bonus scheme will remain in place, though the threshold for 100% relief will be reduced to properties with a rateable value of £12,000 from £15,000.

There will also be transitional relief for small businesses that will find themselves no longer eligible for the small business bonus scheme because of changes to thresholds.

Andrew McRae, policy chair of the Federation of Small Businesses in Scotland, welcomed the transitional relief but said the group needs to “understand what impact the changes to the small business bonus scheme threshold will mean in practice for our members across Scotland”.

He added: “We know the scheme is a lifeline for tens of thousands of our smaller firms and it is essential that its value is preserved.”

While the freeze of the poundage rate has rightly been welcomed, alongside the commitment of transitional relief, there are concerns that the provisions offered by Holyrood will not be enough for the many businesses now facing significant rises in rates bills following draft revaluation, and which are simultaneously facing deeply challenging trading conditions.

It is true that not every property will have seen its rateable value rise following the latest revaluation. One ratings insider told The Herald that it has been a “mixed bag”, with some seeing their rateable values actually fall. Often there are variations between different outlets within the same hospitality business. But for those suddenly facing a significant rise in their bill for business rates, it really could not have come at a worse time – and there are plenty of operators in this camp.

Leon Thompson, executive director of UKHospitality Scotland, said: “Revaluation will see many hospitality businesses paying more. In speaking with members across the country, some have seen the rateable values of their businesses rise by as much as 50%. These increases fly in the face of the conversations held with the Scottish Assessors Association and Scottish Government who had been urged to find a fair way to calculate rateable values for our businesses.

“Increased rates will result in less investment and, taken with the lack of business support from the Scottish Government, will most likely lead to closures and job losses. At a time when Scotland needs to be competitive this revaluation has left our businesses reeling, particularly as similar businesses in England will pay significantly less following the revaluation there.”

Rates payers will have an opportunity to appeal draft valuations, but even here the situation is far from ideal. New regulations will see the current appeals process replaced with a mechanism through which rates payers can lodge a proposal if they are unhappy with the draft valuation provided by assessors.

Under the new system, bill payers have a four-month window – between April and July next year – to lodge a proposal which must explain in detail why the valuation by the assessor is inaccurate. The proposal must be underpinned by detailed evidence and, moreover, there will no opportunity to change that proposal once it is lodged, even if new information germane to the case comes to light.

The new system looks set to place an additional burden on business owners when they are already under intense pressure from a variety of fronts.