Hospitality bodies express ‘extreme disappointment’ with Scottish budget

The Scottish Tourism Alliance, UKHospitality Scotland, the Scottish Licensed Trade Association and the Scottish Beer and Pub Association have highlighted the material threat of long-term damage to the competitiveness of Scotland’s hospitality and tourism sector as a result of ongoing ‘inaction’.

Scottish Finance Secretary Shona Robison announced in her Budget on Tuesday (19 December) that business rates for premises valued under £51,000 would be frozen, while island hospitality businesses would be given a 100% relief – moves which were welcomed by industry.

However, Robison failed to meet calls from the hospitality industry and replicate the support given provided to the industry in England by Chancellor Jeremy Hunt in the form of a 75% business rates discount, instead saying that the Scottish Government was prioritising health funding instead of business tax cuts.

It comes after the Scottish hospitality industry pleaded for business rates support​​ ahead of the Budget.

The Fraser of Allander Institute has concluded that around 10,000 hospitality businesses would stand to benefit if the Scottish Government heeded the calls from UKHospitality Scotland and introduced a business rates relief scheme that replicated support in England.

Commenting on Robison's Budget, the groups said: “With estimated consequentials of around £230 million coming to Scotland as a result of the 75% rates relief afforded to businesses in England, the Scottish Government has squandered a golden opportunity to support one of the country’s most important sectors for the second year in a row. 

“The 100% rates relief which has been announced for hospitality businesses in our island communities is welcomed, given the economic disruption these businesses have experienced as a result of years of underinvestment in our ferry infrastructure. However, this measure falls very short of what has been expected. It is an extreme disappointment for tourism and hospitality businesses across Scotland.”

The trade bodies have warned that a lack of business support measures will see ‘many thousands’ of tourism and hospitality businesses facing acute financial challenges in the next year ‘tipping many into crisis’.

“It also entrenches the fact that it is now immeasurably harder to run a hospitality, leisure or tourism business in Scotland, than anywhere else in Britain,” the statement continues. “This is particularly highlighted by the decision not to support the sector with rates relief, at a time when pubs in Scotland are already closing at twice the rate of those in England.

“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.

“The announcement of a new income tax band will also hit our sector’s ability to recruit senior and highly experienced candidates from elsewhere in the UK and potentially retain our emerging leadership talent. Businesses already report that it is challenging to fill vacancies, with higher tax in Scotland being a barrier.

“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.

 “The Scottish Government must 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.”