CHRISTMAS is fast approaching, but it seems there has been little festive warmth in the Scottish hospitality industry in recent days.

Groups from across the sector have been turning up the heat on the Scottish Government to support the industry in its Budget later this month. It comes at the end of another challenging year, which has seen the trade continue to come under pressure from high overheads and the fall-out from the cost of living crisis.

Lobbying efforts have largely focused on calls for business rates support to match the package provided by the UK Government to the hospitality, retail, and leisure sectors in England and Wales, which will now enjoy 75% relief (up to a maximum of £110,000 per business) for a further year.

The Scottish Government has said its decisions on domestic rates for 2024/25 will be disclosed as part of the Budget, which will be announced on December 19. But, as revealed in The Herald on Saturday, we may already have been given a heavy hint about the direction of travel.

READ MORE: Scottish Greens deal major blow to hospitality sector

In correspondence sent by Lorna Slater, minister for green skills, circular economy, and biodiversity, to a constituent in the Lothian region, she said her party, the Scottish Greens, “cannot support a new relief from non-domestic rates for businesses in the hospitality sector”.

Ms Slater, a controversial figure in business circles following the botched handling of the deposit return scheme, acknowledged the pressure on the industry, citing the after-effects of Brexit, the pandemic, and the cost of living crisis. However, after highlighting the support already provided by the Scottish Government on rates, such as through the small business bonus scheme, the minister said offering a new form of relief would require taxes to be raised by other means.

And perhaps this is no surprise, given reports which have since emerged concerning the difficulties facing ministers in balancing the books as the Budget nears.

Ms Slater’s intervention may not be the final nail in the coffin of the hospitality trade’s business rates hopes. It will not be until Finance Secretary Shona Robison presents the Budget for 2024/25 to the Scottish Parliament that we will know for sure.

But given the Scottish Greens are in a power-sharing agreement with the SNP at Holyrood, which means that the SNP will likely have to count on the party’s support to ensure the Budget is passed, there is a very good chance that Ms Slater’s position will hold sway.

READ MORE: Scottish hospitality industry laments 'devastating blow'

As such, it was no surprise that the hospitality industry reacted with dismay when contacted by The Herald to comment on the contents of Ms Slater’s letter.

Stephen Montgomery, director of the Scottish Hospitality Group, said the position taken was “disappointing” and warned of the economic consequences of failing to provide further support for the industry. “This is about the local jobs in hospitality venues, of the constituency that these MSPs have been elected to serve,” he said.

“Our asks of Scottish Government are very clear,” he added. “Pass on the full 75% rates discount which is so desperately needed this year for the hospitality sector, and sit down with us to look at proper reform ahead of the next Budget, giving hospitality its own rates category. This to allow the sector to protect jobs, support local producers, and allow hospitality to thrive.”

Other trade groups said this week that there has already been a huge impact on the industry from the divergence in policy on business rates between Scotland and England and Wales.

The Scottish Government said the various reliefs it offers will be worth £749 million in the 2023/24 financial year, adding that more than 100,000 properties have been taken out of the scope of rates completely because of the small business bonus scheme.

But in a joint statement this week, the Scottish Beer & Pub Association and Scottish Licensed Trade Association directly linked the absence of the 75% relief from business rates to pubs closing at double the rate in Scotland compared with England and Wales. The rate of pub closures has been accelerating in Scotland this year, the groups found, with 76 having shuttered in the first three quarters compared with 56 over the whole of 2022.

READ MORE: Shipbuilding returns to Stornoway for first time in century

“The failure to pass on rates relief last year was a devastating blow for Scotland’s pubs and bars and has resulted in a record number of permanent closures,” said the SBPA and SLTA in the statement.

“The next financial year will also see increased costs in the form of wages, with increases to minimum wages, which will need to be paid for directly by businesses. The rates relief in England will help businesses there with this increased cost, but unless the Scottish Government passes on the support, pubs, and bars north of the border will be left to entirely fend for themselves and the rate of closures will only increase.

“The Scottish Government must ensure that the rates relief is passed on in full or it will cement further closures in the sector, directly resulting in job losses and blows for communities across the country.”

Those comments were quickly followed yesterday by a statement from UKHospitality Scotland, which argued that the Scottish Government would “cement the fact that operating a business in Scotland is now unquestionably more difficult than in the rest of Britain” if action was not taken on rates in its Budget.

Meanwhile, as if the mood in the industry was not dark enough, there was a further blow this week when the UK Government unveiled its latest proposals to crack down on immigration.

The industry has been beset with staff shortages since Brexit ended freedom of movement between the EU and UK. Now, with plans to increase the minimum salary needed to secure a skilled worker visa (from £26,200 to £38,700) next year, and the prospect of hospitality not being included on a new immigration salary list (which will replace the shortage occupation list), that challenge looks set to become even more acute.

“We urgently need to see an immigration system that is fit-for-purpose and reflects both the needs of business and the labour market,” said Kate Nicholls, chief executive of UKHospitality. “The system at the moment does none of that.”

Faced with such a difficult trading backdrop, the need in the Scottish hospitality trade for a strong festive season is nearly as pressing as it was during its immediate post-Covid battle for survival.