Scottish tourism and hospitality bodies express ‘extreme disappointment’ at Scottish Budget

Leading Scottish tourism and hospitality bodies have issued a unified statement in response to the Scottish Government 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.

What was announced?

There was little in the Budget announcement for hospitality businesses:

1
Poundage frozen
One of our key asks was for the poundage, or UBR, to be frozen. This has been delivered and forms the main support for business in the next financial year.
2
Rates relief not passed on
For the second year, the Barnett consequentials from the 75% rate relief in England have not been passed on to Scottish businesses.

This is despite extensive and sustained representation to Scottish Ministers, from both UKHospitality and our members.
3
Hints at reform
The Deputy First Minister and Finance Secretary did highlight the need to continue to look at reform of the business rates system for hospitality. We will continue to press for an improved business rate model that allows our businesses to invest and flourish.
4
Relief for island businesses
In recognition of the ongoing ferries fiasco and the adverse impact this continues to have on our island businesses, there will be 100% rate relief applied to hospitality businesses on Scottish islands.
5
New income tax band
A new income tax band was introduced, hitting those earning between £75,000 and £125,140 with a 45p rate.
6
Affordable housing
There will be additional expenditure on affordable housing; an issue that continues to impact on our businesses, particularly, but not exclusively, in rural areas.

Joint response

Commenting on these announcements, 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 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.

Competitive disadvantage

“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.

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.

Poundage frozen

“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.”