Highland business bodies react to Scottish Government budget announcement
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The Scottish Government today announced the Scottish Budget which sets out its proposed spending and tax plans for 2024 to 2025. It received a mixed response from the business community.
Business rates for premises valued at less than £51,000 will be frozen in Scotland, while hospitality businesses in Scotland’s islands will be given 100 per cent relief.
Speaking in Holyrood, the deputy first minister Shona Robison said ratepayers across the country would save £37 million compared to if rates rose by the level of inflation.
She added: “In recognition of the unique challenges faced by the hospitality sector and our island communities, we will - in this budget - introduce 100 per cent relief for hospitality properties in our islands, capped at £110,000 per business.”
The small business bonus scheme will also continue while the government will assess how valuations for business rates are carried out, Robison said.
The Federation of Small Businesses (FSB) in Scotland has welcomed the protection of the Small Business Bonus Scheme (SBBS) and poundage rate freeze outlined in today’s Budget, but has described the decision not to pass on targeted reliefs for sectors under particular pressure as “a missed opportunity”.
The small business body said not reintroducing targeted reliefs for small firms in retail, hospitality and leisure has put more at risk of closure.
The FSB’s Highlands and Islands development manager, David Richardson, said: “Highlands and Islands members will be delighted that the all-important Small Business Bonus Scheme (SBBS) relief hasn’t been tinkered with. We know just how important this is to our members, particularly at this time of rapidly escalating costs, and it is imperative that it’s not eroded further.
“We’re also pleased that the Cabinet Secretary has listened to the call from a broad coalition of business organisations and frozen the main poundage rate.
“However, the Highlands and Islands as a whole has a visitor-based economy, and many tourism, hospitality and retail businesses are currently skating on very thin ice, their margins cut to the bone. Sadly, the Scottish Government missed a golden opportunity today to replicate the targeted reliefs afforded to small traders south of the border.
“For business life here is just as tough as it is in England, almost 3,500 Scottish hospitality and accommodation businesses having disappeared in the past year alone. And while some Scottish businesses will benefit from the SBBS, many very important, keystone businesses won’t, receiving nothing. Meanwhile, their counterparts in England can continue to rely on additional relief until at least March 2025, while businesses here have gone without it for 18 months and counting now.
“On a brighter note,the Cabinet Secretary’s recognition of the particular pressures facing rural businesses is very welcome news for this region, particularly her targeted reliefs for island hospitality. We know that challenges around skills shortages, for example, are especially acute for our rural and remote members.”
He added: “Even in the teeth of some of the toughest conditions we’ve faced in many years, Scotland’s small businesses still employ over 900,000 people and produce 28% of the country’s turnover. That’s a lot of mortgages paid, revenues generated and services delivered, particularly in the largely rural Highlands & Islands, where medium and large businesses are fewer and further between.
“But you can’t take them for granted. We lost 20,000 small businesses in Scotland last year. That, for comparison, is the same as we lost during the Covid pandemic between 2020 and 2021.”
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.
Commenting, the groups said: “With estimated consequentials of around £230 million coming to Scotland as a result of the 75 per cent 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 per cent rates relief which has been announced for hospitality businesses in our island communities is welcomed, given the economic disruption these businesses have experienced from 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.”
“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.
“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.”
Prosper - formerly the Scottish Council for Development and Industry - has also issued an urgent call for greater clarity from the Scottish Government following the Budget Announcement.
Prosper chief executive Sara Thiam said: “A combination of UK and Scottish Government challenges have meant difficult decisions in today’s Budget. Prosper’s private, public and third sector members will have a range of reactions. However, they share a common view that clarity over economic policies and implementation in areas, such as lifelong learning, infrastructure and innovation, is urgently required from Ministers to generate a stronger future economic position.
“We welcome measures to streamline the planning system to unlock the economic opportunities associated with the renewables sector in Scotland, the investment in supporting port and manufacturing infrastructure for the offshore wind sector, support for innovation and the commitment to reforming public services to become fit for the future.
“However, we are disappointed the reduction in capital investment, reduced support for economic development and the missed economic opportunity this represents.
Ms Thiam added: “Scotland must be more attractive to leadership and management talent if more of our companies are to grow and compete globally, and more international businesses are to invest in Scotland. Following this latest income tax rise for people earning management-level salaries, the Scottish Government must set out how it will improve the attractiveness of working in Scotland for homegrown and international talent.
“Now that this year’s Budget has been set, the Scottish Government must urgently work with business and civic partners to drive the sustainable economic growth that is a precondition for the social prosperity and better public services we all want across Scotland. This should include a plan for skills delivery reform which is clear for employers and educators.”
