By Scott Wright

THERE is mounting anger in the hospitality industry over the decision by Scottish ministers to employ property rateable values to determine grants given to businesses hit by the coronavirus epidemic, with operators claiming they are losing out because the approach unfairly penalises the sector.

It comes as business groups gave a broad welcome to the move by the Scottish Government yesterday to extend the grants for firms affected by the coronavirus pandemic, bringing the support measures more in line with England and Wales.

Businesses in Scotland are now eligible for a grant of £25,000, plus further awards worth 75% of that sum for other properties they trade from, if the rateable value of those premises falls between £18,001 and £51,000.

However, hospitality and tourism industry figures say the approach freezes out many businesses in their sector because the methodology used to calculate property values means they are rated more highly than properties used by other sectors.

Restaurateur Alan Tomkins, who owns Urban Bar and Brasserie and Vroni’s Wine Bar in Glasgow city centre, said: “It is totally unfair that certain businesses are being excluded. To be fair to the government, they came out of the starting blocks really quickly to help everybody, and it is always difficult to cover all the bases, but if you are unfortunate enough to be in the highest rated city in the country, in the city centre, in the licensed trade, there is a good chance your rateable value is going to be above the threshold.”

He added: “It’s illogical, and it comes across as unfair.”

READ MORE: Scott Wright: Scottish hospitality industry has strong case for more virus support

Business rates have traditionally been higher in the licensed trade, which industry figures say is because assessors use turnover in calculating their rateable values, unlike for other sectors. Industry sources say this has the effect of inflating rateable values for outlets such as pubs, and point out that turnover alone is not a true guide of profitability.

Paul Waterson, spokesman for the Scottish Licensed Trade Association, said the dissatisfaction in the industry over the coronavirus grants is a further example of the business rates system working to its disadvantage. While a pub can have a rateable value of more than £51,000 it does not automatically follow that it is a big business.

Mr Waterson said: “There are a lot of businesses who are in limbo. They are over £51,000 [in rateable value] but they are not big businesses that can afford to take this either.

“Restaurants and bars all over the country that aren’t big businesses have big rates, so it is very unfair to set the bar at that level.”

He added: “It’s very arbitrary and doesn’t do us any favours.”

Willie Macleod, executive director of UK Hospitality in Scotland, said businesses with rateable values of more than £51,000 are “equally deserving of help”. He estimates that around 950 hotels out of a total of 2,400 and 650 pubs from a total 2,500 in Scotland fall into this category.

READ MORE: Thousands of Scottish pubs rush to lodge rates appeals amid virus fears

Mr Macleod said: “We continue to believe businesses with a rateable value in excess of £51,000 have to be supported in a more tangible way.”

He added: “These are not large businesses and their continued ability to operate at the heart of every community, employ significant numbers of people and contribute to government revenues, will be an important factor in economic recovery. UKH has made a case to HM Treasury for the £51,000 rateable value ceiling to be lifted and urges Scottish Government to consider the same request.”

Meanwhile, speculation is growing in the licensed trade that bars and restaurants will be the last businesses allowed to open their doors when lockdown measures begin to ease.

Mr Tomkins said: “Even when we do open there might still be some form of social distancing involved. I feel the licensed trade could really be at the brunt of this. I think the Government has to look at this. It is not a level playing field, that is for sure.”

He added: “We’re really getting nervous now about when we are going to trade in what is perceived to be a normal manner. Certainly, people I speak to in the trade [say that] regardless of when we open, we think it is not going to be normal. There might be an initial blip if we are able to start at full power, but we actually think it is going to be at least 12 months before normality reigns again.”

Business groups across various sectors broadly welcomed yesterday’s move by the Scottish Government to extend grants.

Stuart Patrick, chief executive of Glasgow Chamber of Commerce, said: “This is a victory for common sense that will be welcomed with relief by businesses for whom these grants could be the difference between survival and failure.

“We had been bombarded with complaints from our members – particularly in the hospitality, leisure and retail sectors - about the different approaches being adopted by the Scottish and UK Governments in deciding eligibility for the £25,000 grants, and the impression that companies who were losing out were all larger firms is wrong.”

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