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Scottish budget is ‘unfair and discriminatory’
Scotland’s finance secretary, Shona Robison, announced her tax and spending plans as part of the Scottish budget last week (4 December), with specific support laid out for the hospitality sector.
The budget maintained the nation’s Small Business Bonus Scheme, which it described as ‘the most generous small business rates relief in the UK’.
Robison also announced a 40% non-domestic rates relief on 2025-26 for hospitality premises liable for the Basic Property Rate (up to £51,000/US$65,166), which is capped at £110,000 (US$140,528) per business.
Hospitality premises located on islands will continue to benefit from 100% non-domestic rates relief in 2025-26.
Leon Thompson, executive director of UKHospitality Scotland, welcomed the news but highlighted that many will miss out: “The introduction of 40% business rates relief is very positive for venues that are eligible for this support.
“With costs mounting for venues across Scotland, this support could be a lifeline for some businesses making tough decisions about whether to invest, take on more staff, or even shutting the doors for good.
“Freezing the Basic Property Rate and providing 100% relief for businesses on the islands are also positive measures that will help to ease the cost burden on the sector.
“However, there are around 2,600 businesses that will not be eligible for relief. They face a double-whammy of increased employer taxes and an inflationary rise in their higher level of business rates in April.
“This will seriously threaten their ability to support jobs and we have to recognise that these businesses employ more than half of Scotland’s hospitality workforce.
“Hospitality’s ability to provide jobs for everyone is one of our impactful contributions to Scotland and I am concerned about the unintended consequences those tax rises will have on the ability of those unsupported businesses to support employment.
“I’m grateful that the Scottish government has acted to introduce relief and I look forward to continuing discussions with them throughout this budget process, including on how we can ensure major employers in hospitality are supported.”
The UK’s autumn budget was announced in October and included an increase in spirits duty as well as employer National Insurance contributions.
‘A way to catch headlines’
The Scottish Licensed Trade Association (SLTA) was less than impressed by Robison’s announcement, describing it as “a way to catch headlines”.
Paul Waterson, SLTA press spokesperson, said: “Wide-ranging support on business rates was our big ask from the Scottish government, especially after Westminster’s budget, which raised the level of employer National Insurance rates, cut the payment threshold from £9,000 to £5,000, and an above-inflation rise of 6.7% to the minimum wage.
“Together this means, on average, operators’ outgoings will increase by between £2,000 and £2,500 per employee.
“Quite simply, the whole trade needed help to offset these costs. They have not listened to us and this announcement will only help those paying the basic property rate, which is those with a rateable value up to and including £51,000.”
Waterson added that the newly announced support was “unfair and discriminatory”, explaining that because the rate is based on turnover and not profit, some small businesses will be above the threshold.
He continued: “There are still many businesses teetering on the precipice of closure, with recent figures suggesting that 20% of UK pubs and bars are technically insolvent and other data said there was no profit in 80% of hospitality outlets in the UK. Closure rates in Scotland have been running at over double the rate of that in England.”
He called for a review of the commercial rating system, which ‘disproportionately burdens’ licensed premises.
The SLTA has partnered with the Scottish Beer and Pub Association to call for the introduction of a permanent non-domestic rates licensed hospitality-specific multiplier of 35p.
Waterson explained: “This would end the sticking-plaster policies that only provide temporary relief for some businesses that bring life to our communities and our city and town centres, where we are seen as the saviour of the high street, and provide one of the largest ‘tourist attractions’ for both domestic and foreign visitors to Scotland with over 75% of foreign visitors and 68% of domestic visitors visiting our pubs, bars and restaurants during their stay.”
The wholesale view
Representatives from the wholesale sector were also disappointed with the announcement.
Colin Smith, chief executive of the Scottish Wholesale Association, said: “This budget demonstrates an ambition to provide direction and stability, which is welcome, but for wholesalers, the reality on the ground remains tough.
“Rising costs linked to inflation, energy, and transportation – compounded by UK-wide changes to National Insurance contributions, the national living wage, and business property relief – continue to squeeze margins and challenge operations, particularly for family-run SMEs.
“We hope that measures within the budget will help ease pressures on wholesale employees, who are the backbone of our sector. Ensuring our workforce feels supported is essential as businesses navigate these economic challenges.”
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