NEARLY 40 per cent of Scottish pubs, clubs, restaurants and hotels have a seen a decline in sales in the third quarter of the year, as trade bosses warned that hundreds of outlets face closure next year unless radical change is made to the way business rates are calculated for the industry.

Publishing its latest quarterly business insight survey today, the Scottish Licensed Trade Association (SLTA) declared that outlets around Scotland continue to face “very difficult trading conditions”.

The survey, based on responses from more than 700 businesses, ranging from city centre bars to rural outlets, found that nearly two-fifths said turnover was down compared with the third quarter of last year.

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Some 13 per cent reported that sales were down by more than 10 per cent, while around one-third (33 per cent) of outlets said their sales position had not changed. That is despite those figures being measured against a period last year during which sales were found to have radically fallen in light of the reduction in the legal drink driving limit.

The legal limit was cut to 50mg of alcohol per 100ml of blood from 80mg per 100ml in December 2014, and was cited by the SLTA in June as it reported that more than half of licensed outlets had seen a decline in beer sales in the first half of this year.

Trade chiefs have also highlighted the pressure on operators from the introduction of the living wage for workers aged 25 and over in April.

Now the industry is warning the forthcoming revaluation of business rates will have a devastating effect on the sector.

Trade chiefs have long argued the method calculating rates for pubs, which takes account of turnover, puts the industry at a disadvantage to other sectors.

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It claims the differential hands a particular advantage to supermarkets, which account for the bulk of overall alcohol sales in Scotland, arguing that while pubs pay as much as 8.5 per cent of their turnover in rates, the major grocers can pay as little as 1.5 per cent to two per cent.

Paul Waterson, chief executive of the SLTA, said: “The Scottish Government has said that Scottish businesses should not disadvantaged to other business in the UK. We are clearly disadvantaged to pubs elsewhere in the UK.

“Our message is simple: the 8.5 per cent of turnover we pay in rates has got to be reduced, and it has got to be halved.

“I don’t think there is any doubt that any increase in rateable values will be the death knell for many, many hundreds of pubs in Scotland. I have absolutely no doubt about that.”

Mr Waterson said pressure on overheads, arising from rates as well as other costs such as the living wage, was forcing many operators to reduce their opening hours during week days in order to control costs. He said this was a “very worrying” development given the importance to Scotland of the wider hospitality and tourism sector as a “massive employer”.

“We do want to give good service,” Mr Waterson said. “All we’re asking the government to do is to give us money back to pay it, because our staff deserve the living wage. They absolutely deserve it. But how do we pay it? We are not getting anything back to pay it, and costs keep going up. Rates are a significant part of our costs and there seems to be no telling the authorities that business is going down.

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“And that’s not to mention the euro [and] the pressure the pound is under, pushing wine prices up. These are the day to day things you have to deal with as well. All in all it is a very difficult time.”

According to the survey, 25 per cent of respondents were unaware of the business rates revaluation, which is due to take place next year after being postponed in 2015. That was to allow the Scottish Government to complete its review of the non-domestic rates system.

Half of respondents said they were unaware they are entitled to a free right of appeal following the revaluation.

Mr Waterson said there are early indications that the revaluation will result in a significant rise in rates for Scottish hotels.