SNP unveils business rates 'sticking plaster' for hospitality sector and North East

SNP unveils business rates 'sticking plaster' for hospitality sector and North East

Scotland’s Finance Minister has been accused of using a “sticking plaster” to deal with crippling rises in business rates after announcing a one-year deal to cap the increases for the hospitality sector.

 

Derek Mackay unveiled a 12.5 per cent cap on increases for restaurants, pubs, hotels and cafes across Scotland, and for office premises in the North East, which has been hit hard by the oil downturn.

 

The olive branch was warmly welcomed by the industry bodies representing licensed trade and hoteliers and relieved weeks of intense political pressure that had been building on Mr Mackay, with even Alex Salmond expressing sympathy for those facing extraordinary increases in their bills.

 

The package was an about-turn by the minister after he previously insisted that it was for local authorities to provide relief.  However, retailers dismissed it as “another sticking plaster on the suppurating wound” of an unreformed business rates system.

 

Gerald Eve, one of the UK’s largest property consultants, said the scheme raised “real questions about favouritism and the Government picking winners”, with little help for other sectors. Among the organisations facing large increases in their bills are universities and nurseries.

 

Mr Mackay’s attempts to draw a line under the furore were also undermined by a high-profile hotelier who last week called for a boycott of the new rates.

 

Stewart Spence, who runs the five-star Marcliffe Hotel in Aberdeen and is a friend of Mr Salmond, said he would continue to refuse to pay any increase, even if it was capped.

 

At Holyrood, questions were raised about where the minister had found the £44.6 million cost, with the Conservatives arguing it came only weeks after the minister claimed to have “maxed out” his spending power in his 2017/18 Scottish Budget.

 

Companies have been facing steep increases in their business rates of up to 620 per cent thanks to the first revaluation since 2010 of their premises’ rental values, which are used to calculate the levy.

 

Hotels had been facing an average increase of 37 per cent - far higher than other sectors - while office spaces in Aberdeen and Aberdeenshire were facing average rises of 17 per cent and 15 per cent respectively.

 

Many firms have warned they would be forced to lay off staff, pass on the cost to customers or even go under as they could not afford to pay.

 

Announcing the relief package in the Scottish Parliament, the Finance Minister said seven out of ten business premises would be better or no worse off after the revaluation, with more than half paying no rates at all.

 

But he said: "It has become clear that there are some sectors and regions where the increase in rateable values is out of kilter with the wider picture of the revaluation.”

 

Mr Mackay said the 12.5 per cent cap would help 8,500 hotels, pubs, restaurants and cafes across Scotland and around 1,000 offices in Aberdeen and Aberdeenshire.

 

A package of relief for the renewables sector will include rolling forward current rates relief of up to 100 per cent for qualifying community renewables projects, capping rates bill increases at 12.5 per cent for small-scale hydro schemes and a new 50 per cent rates relief for district heating schemes.

 

The minister also pledged early action on the findings of a review of business rates, due in July, but the Tories said he had been ignoring the issue for weeks.

 

 

Murdo Fraser, the party’s shadow finance minister, said: “In the typical style of this SNP government, it fell asleep at the wheel and only woke up when it crashed into the wall.

 

“We’ve heard on more than one occasion that this budget has been maxed out, yet once again Mr Mackay has been able to find a bit more money down the back of the couch.”

 

He added: “It’s a desperate eleventh-hour move which will do very little to ease concerns within Scotland’s business community, given that it is for one year only.”

 

The Scottish Tourism Alliance, the British Hospitality Association and the Scottish Licensed Trade Association welcomed the announcement as “hugely encouraging” and said it would bring confidence to their members.

 

But Ewan Macdonald-Russell, head of policy for the Scottish Retail Consortium, said the package was a “sticking plaster” that would add “even further complexity to an already fiendishly complicated system.”

 

He said: “it will do little to deal with the underlying problem caused by revaluations which take place too rarely to flex with the economic conditions. The rates system is no longer fit for purpose.”

 

Ken Thurtell, partner and head of Gerald Eve’s Glasgow operation, said: “A half-baked transition scheme that has all the hallmarks of being formulated on the hoof will be of little comfort to those sectors and regions who don’t benefit from these reliefs – such as education, healthcare, large industrials and utility companies – and many will feel they are being treated unfairly.”

 

Mr Spence last week complained he was facing a 25 per cent increase in rates despite turnover at his hotel falling 40 per cent in the wake of the oil downturn.

 

Asked by BBC Scotland about Mr Mackay’s announcement, he said: “I will continue, regretfully, paying my old rates, which I am not happy about…I will not be agreeing to an increase.”

 

 

 

Article Source: The Telegraph