ONE of Scotland’s leading hoteliers has refused to pay “crazy” business rate hikes and urged others to join him in a boycott of the inflation-busting increases.
Stewart Spence, whose five-star Marcliffe Hotel in Aberdeen is a favourite of Alex Salmond, told The Herald he would not pay the proposed 25 per cent increase in his rates as it took no account of a 40 per cent drop in his turnover following the oil price slump.
The first independent revaluation since 2010 has left thousands of premises with dramatically higher bills, with hotels and the licensed trade among the biggest losers.
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John McLellan: To tinker with rates is to take big risks
The problem is particularly acute in the North East, where the revised figures are based on the health of businesses in 2015, before a catastrophic wave of job losses in the oil industry.
With some bills up 400 per cent, pub and club owners have warned they face going out of business and threatened not to pay the increases in the licensed trade’s “poll tax moment”.
Calling on Nicola Sturgeon to start “banging heads together” to end the “national uproar” over rates, Mr Spence said a “complete rethink” was needed on how premises were rated, and blamed the government for failing to consult adequately in advance of the change.
He said: “My net payable is 25 per cent up yet my turnover is 40 per cent down. It just doesn’t stack up. I’ve been asked to pay £314,00 as against £253,000.
“I’m just going to continue paying the old amount until there’s a settlement. I’m encouraging others to do that as well. Until they agree to make a settlement with us, that’s my stand.”
Mr Spence, an SNP member and long-term friend of Mr Salmond, said the hikes would never have been allowed through if the former First Minister was still in charge and John Swinney was still Finance Secretary instead of Derek Mackay.
“Nicola’s gone very quiet on the whole thing. I would rather she got involved,” he said.
“John Swinney would have discussed this with us. He would always ask people their opinions. Whereas the current finance minister just isn’t interested in speaking to anyone.”
Mr Spence’s intervention comes as North East business leaders warn hundreds of firms face ruin because rates based on 2015 boom times are being applied during the bust of 2017.
Around 30,000 jobs have been cut in the region since the oil price collapse.
James Bream, research and policy director at Aberdeen and Grampian Chamber of Commerce, said new rateable values “reflect a position when times were good” but are hitting businesses “at a point when they can’t bear those extra costs”.
“From 2015/16 onwards there has been less activity [in the oil industry] and companies’ turnover has fallen but because they had built up over a 10-year period they were operating with a lot of staff and had big offices,” he said.
“Over the course of a year to two years their businesses have completely changed. They have shed staff but they’re left in offices that they have 10 to 15 year leases on.”
Oil & Gas UK chief executive Deirdre Michie said the new rates failed to take into account “dramatic changes in the economic climate over the past two years, in particular the extreme pressure placed upon the oil and gas sector and its supply chain by a depressed oil price”.
The knock-on effect in the local economy has seen a drastic fall in demand for goods and services, with hotels, restaurants, shops and even children’s nurseries affected.
Adrian Watson, chief executive of Aberdeen Inspired, the business improvement district with 700 firms in the city centre, said vacancy rates had risen from seven to nine per cent in the last two years, and Union Street’s vacancy rate was now 13 per cent.
He said a significant rates rise could lead more businesses to fail, adding: “This has been the biggest issue by far for our members. People have gone to their accountants and found that with the push on rates they’ve gone from being a moderately profitable business to one that’s not a viable concern. This couldn’t have come at a worse time.”
Local business leaders are now lobbying Mr Mackay for extra funding to help councils in the region waive rates for those hardest hit by the downturn and the rises.
With pressure mounting on the SNP Government to act, Mr Mackay and Economy Secretary Keith Brown will meet pub and tourism bosses next week.
Paul Waterson, chief executive of the Scottish Licensed trade Association, said the “level of outrage has probably taken them [ministers] by surprise”.
Organisations representing the pub, nightclub, hotel and tourism sector also meet in Glasgow today to discuss their campaign against the rates bills.
John McLellan: To tinker with rates is to take big risks
Donald MacLeod, owner of the Garage nightclub and convenor of the Glasgow Licensing Forum, said mass non-payment was a “last resort”, but was “certainly on the table”.
He said: “We have to see what the government comes back with.”
Aberdeen City Council is preparing to sign off a relief scheme when it sets its 2017/18 budget next week, with 21 options ranging between £600,000 and £26.7m under consideration.
Finance convener Willie Young said although the Government gave the city an extra £4.5m recently, it remained “in conversation” with Mr Mackay about getting more.
“There’s only one way round this and that is for Mr Mackay to dip into his pockets,” he said.
The Scottish Conservatives have urged every firm squeezed by higher rates to lodge a formal appeal to bring home the scale of the problem to Mr Mackay.
Finance spokesman Murdo Fraser said: "Businesses facing these extortionate increases could send a very clear message to the SNP on this. [Mr Mackay] is refusing to listen to opposition parties and experts, but he might listen to the individuals affected.
“If the Scottish Government doesn’t heed warnings about firms going out of business as a result of these rises, unemployment queues are going to get longer north of the border.”
In response, the SNP accused the Tories of hypocrisy on the issue after Tory-led Moray council rejected an SNP budget proposal for rates relief.
SNP councillors in Aberdeenshire last week passed a £3m rate relief scheme to help firms with the largest revaluations.
Writing in the Herald today, Mr Mackay insists he is engaging with businesses across Scotland and listening to their concerns.
He suggests councils could follow Aberdeenshire’s lead and use the 2015 Community Empowerment Act “to attract new investment into town centres, target specific locations or sectors of their economies or in this case, to alleviate the impact of a revaluation”.
The Scottish Government has said half of businesses will pay no rates at all next year.