RISHI Sunak’s week has been dominated by a major Cabinet reshuffle which commentators have interpreted as a last-ditch bid to revive the Tories’ fading electoral hopes.
But while the Prime Minister has been preoccupied with sacking the troublesome Suella Braverman, his now former home secretary, and manoeuvres to bring David Cameron back into government, business groups have been upping the ante for radical steps to be taken at next week’s Autumn Statement.
Equally, the voice of business has been making itself heard to First Minister Humza Yousaf north of the Border, ahead of the Scottish Budget next month.
In England, retail and hospitality groups are today ramping up their appeal to Chancellor of the Exchequer Jeremy Hunt to provide support on business rates as he puts the finishing touches to the Autumn Statement, which he will announce to the House of Commons on Wednesday (November 22).
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The retail, hospitality, and leisure sectors south of the Border are already benefiting from 75% relief from business rates, up to a maximum of £110,000 per business, in the current financial year.
However, with so many businesses still under pressure from energy bills, rising overheads, increased interest rates, and the cost of living crisis, they are calling today for that relief to be continued for a further year. They also want the business rates multiplier - a figure that is multiplied by the rateable value of a property to calculate its rates bill - to be frozen.
“Freezing rates and extending relief will be a lifeline for a sector that simply cannot absorb any more costs,” said Kate Nicholls, chief executive of UKHospitality. “Inaction will leave hospitality businesses with no choice but to put up prices, open less or, in the worst-case scenario, shut their doors for good.
“Pubs, restaurants, cafes, and hotels, to name a few, act as pillars of their communities and they want to continue in that central role, as well as driving economic growth and providing countless jobs. Action on business rates at the Autumn Statement is critical to that.”
The Scottish Government has ultimate responsibility for setting business rates policy north of the Border, and it too is facing similar calls for relief.
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Action on business rates was put front and centre of a major new campaign launched last week by the Scottish Hospitality Group, which warned in stark terms that there are “just five weeks to save” the sector in Scotland.
It is calling for the industry in Scotland to receive the same level of relief from rates that their counterparts in England and Wales are currently entitled to, and for the creation of a new hospitality category for business rates, which it said would recognise the “unique challenges faced by hospitality and ensure rates don’t cripple” operators.
The group’s wishlist also includes a new partnership between the industry and government to develop a plan to “grow Scotland’s much-loved hospitality industry and address the challenges it faces”.
“The hospitality industry – our pubs, bars, clubs, cafes, restaurants, and hotels – makes a vital contribution to Scotland’s economy and they are embedded in the heart of our communities,” said SHG director Stephen Montgomery.
“But the hospitality industry faces a crisis, and we can’t go on like this. Without government support, there will be higher prices for consumers, a loss of jobs, and many of our best-loved hospitality businesses closing their doors forever.
“We need to back our hospitality industry to survive and thrive. A new, fairer deal on business rates would be one step the Government can take in the [Scottish] Budget to give our hospitality industry a fighting chance. A freeze in rates or the status quo won’t be enough. We need both emergency support and long-term reform. This is an SOS – we need help to make sure Scottish hospitality can survive.”
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The Scottish Government has routinely faced calls for relief from business rates and while the SHG – and other bodies such as the Scottish Tourism Alliance – are certainly entitled to argue the case, it is perhaps not one to which they should expect to ministers acquiesce.
When previously faced with this request the Scottish Government has said it provides relief from rates in different ways and again last week pointed to the support offered by its current support package. Over 2023/24, the Scottish Budget will support a package of reliefs worth £749 million, it said, including the small business bonus scheme that it noted would “take over 100,000 properties out of rates altogether”.
Arguably, the more interesting ask of the SHG is for a special business rates category to be introduced for the hospitality industry. Organisations such as the Scottish Licensed Trade Association have long argued that the method assessors use to calculate rates for hospitality outlets, which is based on their hypothetical achievable turnover, is unfair and leads to the likes of pubs paying bills which are disproportionately high.
As such, introducing a special category for hospitality on business rates would seem like a sensible way forward, albeit it may not be enticing to the Scottish Government if it ultimately leads to less cash flowing into its coffers.
For Leon Thompson, executive director of UKHospitality in Scotland, some respite from rates is certainly needed. He warned that without some form of support more business closures are inevitable.
Mr Thompson said: “The impact of business rates remains one of the biggest concerns for venues across Scotland. Unlike in England and Wales, businesses here have suffered without any rates relief and, in many cases, have seen their rates continue to increase.
“We hope the UK Government takes action on business rates at the Autumn Statement next week but, regardless of the outcome in Westminster, there simply has to be rates support for Scottish businesses this year. Without it, closures will continue and businesses will have no choice but to increase prices for customers – a move that will only fuel inflation.
“The Scottish Government has made much of its reset with businesses and now is the time to prove those credentials and act where it matters most – on business rates.”
Returning to England and Wales, it is hard to see whether Jeremy Hunt will accede to the requests from the retail and hospitality sectors on rates. Likewise, it would be a big surprise if he lowers the rate of value-added tax for hospitality, which has been another key lobbying point for the industry.
With a general election on the horizon, there has been noise emanating from Westminster that Mr Hunt is preparing to announce tax cuts in a bid to sweeten voters.
It is more likely, therefore, that the contents of the Chancellor’s Autumn Statement will focus more on boosting the Tories’ election prospects than giving support to vital business causes, no matter how deserving – and important for the economy – they are.
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