THE Scottish hospitality trade has underlined its “extreme” disappointment that there was no reduction in value-added tax for the sector in a Spring Budget that sought to woo voters with a cut in national insurance contributions and an extension of the freeze on alcohol and fuel duties.

Pubs group the Scottish Licensed Trade Association (SLTA) said the dismissal by Chancellor of the Exchequer Jeremy Hunt of the industry’s campaign for a VAT cut was “disappointing but predictable”.

The SLTA reiterated its concern that “ongoing inaction” from the UK and Scottish governments to support hospitality and tourism was a “material threat” to its competitiveness in the long-term.

And it challenged the Scottish Government to use some of the £300 million of Barnett consequentials announced by the Chancellor today to provide pubs in Scotland with the same 75% relief from business rates that their counterparts in England currently enjoy.

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Colin Wilkinson, managing director of the SLTA, said: “It’s a torrid time for licensed trade operators across Scotland just now – everyone is struggling with ongoing cost of living issues. There was no response to pleas from SLTA and other industry groups for a VAT reduction for the hospitality sector in the Chancellor’s Autumn Statement last November, so today’s news is extremely disappointing but predictable.

“Doing so in his Spring Statement would have brought some welcome relief to businesses across the hospitality and licensed trade spectrum which are struggling with huge utility bills and other costs.”

The Night Time Industries Association in Scotland echoed the SLTA’s disappointment on VAT, declaring that businesses in the hospitality, retail, and leisure sectors would be “bitterly disappointed” that there has been no reduction in the tax.

A spokesperson said: “This is clearly a missed opportunity to provide support directly to Scottish businesses, after the Scottish Government's recent budget failed to pass on the 75% business rates relief for the third year in a row, despite already being provided with some £260m in Barnett consequential funding from Westminster to do so.

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"This means Scotland's struggling small businesses are up to £100,000 per year worse off compared to their counterparts in England, and along with a host of other anti-business policies being implemented by the SNP/Green Scottish Government, this has resulted in Scottish hospitality businesses failing and closing at double the rate of similar businesses in England.

"Such economically illiterate policy decisions, from Governments both north and south of the Border, are wholly unsustainable.”

Some measures in the Budget did receive a positive response from the business community in Scotland. The Federation of Small Businesses in Scotland welcomed moves to further reduce national insurance rates for the self-employed, and to increase the VAT registration threshold to £90,000 to £85,000. The Chancellor said this would take around 28,000 small businesses out of paying VAT.

However, FSB Scotland policy chair Andrew McRae warned “there’s still a real gap when it comes to the crunch small firms are facing – and the growth, jobs and economic security small businesses provide is not something the country can afford to risk”.

Mr McRae said: “Small firms are crucial for economic growth, and we were glad the Chancellor said that clearly from the despatch box. That said, those businesses face serious challenges – not least through rapid hikes in costs and shrinking margins – and they’ll be examining some of the measures outlined in today’s statement closely.”

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The decision to extend the current alcohol duty freeze beyond August until February was welcomed by the Scottish Beer and Pub Association, with spokesman Paul Togneri stating that it would help keep the “price of a point affordable”.

He added that the 2p cut in national insurance contributions would “hopefully encourage people to enjoy an extra trip to their local”, but expressed dissatisfaction that there was not cut in VAT for the sector.

The Scotch Whisky Association also welcomed the extension of the freeze in alcohol duty. But it warned that whisky continues to be disadvantaged by the alcohol taxation system.

Mark Kent, chief executive of the SWA, said: “With cost pressures hurting our bars and pubs, not to mention hard-pressed consumers, the Treasury has provided some much-needed certainty and stability for the year ahead.

“Despite this freeze, Scotch whisky is still put at a disadvantage by the duty system, based on a fundamental misunderstanding of how people consume alcohol and modern drinking trends. With today’s freeze cider is still taxed four times less than a spirit like Scotch whisky and responsible consumers who enjoy a Scotch are paying too much tax compared with a beer or cider.”