Scottish business declares more Covid cash is needed as rates relief extended

Finance Secretary Kate Forbes granted the temporary extension to the 100 per cent relief for firms in the retail, hospitality and retail sector, introduced for one-year as an emergency measure in March, as she delivered the Scottish Budget at Holyrood yesterday.

Ms Forbes, who also cut the poundage rate used to calculate bills to 49p from 49.8p, told the Scottish Parliament that she would have preferred to extend the “crucial” relief further, noting that it had been the “number one ask” of business in the run-up to the Budget.

But she said she was prevented from doing so by the “absence of clarity” on UK Government policy on non-domestic rates, stating that the current level of funding from Westminster was insufficient.

While it would cost £900 million to extend 100 per cent business rates relief, Ms Forbes said the UK spending review had provided £11.5m “as a result of NDR policy decisions.”

The extension to the relief will be funded by cash returned by major supermarkets and other retailers which had benefited from the measure after the pandemic took hold.

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Groups representing a wide range of sectors welcomed the extension of the relief into the first quarter of the Scottish Government’s 2021/2022 financial year, with the Scottish Retail Consortium declaring that the measure provides “vital breathing space”.

But, along with other groups, the SRC said business needs more support to get firms through the crisis. Director David Lonsdale said: “Reopening alone will not be a panacea for the industry as shops will be unable to trade at capacity due to physical distancing and caps on the number of customers in stores.”

Liz Cameron, chief executive of Scottish Chambers of Commerce, said: “The Cabinet Secretary has listened to us and has delivered a reduction in the non-domestic rate poundage rate. However, longer-term, we believe the system is rotten and needs significant reform.

“Plans for a three months’ extension of rates relief is a too short a reprieve. We need commitment to a 12-month reliefs package to provide the certainty business needs.

“Clearly there is more to do, and we await further announcements from the Chancellor to see what further support can be made available and expect Scottish Government to pass on the equivalent consequential funding to businesses.”

Ms Forbes, who called on Chancellor Rishi Sunak to extend the furlough scheme beyond April before the UK Budget in March, had earlier confirmed that the local authority discretionary fund to support businesses would be doubled to £60 million in this financial year. Businesses eligible for the Strategic Framework Business Fund, which gives grants of up to £3,000 to firms affected by Covid restrictions every four weeks, will receive full level 4 payments, regardless of future changes to local restrictions.

But, responding to Ms Forbes’ statement, Andrew McRae (pictured), policy chair of the Federation of Small Businesses in Scotland, said “we heard too little about closing some of the big holes in grant support.”

Mr McRae added: “It was important to see the three-month extension of the 100% Covid rates reliefs and the continuation of small business rates relief. But this only goes so far.

“We need to avoid any scenario where businesses face property tax demands on premises the government has barred them from using.

“Full rates relief for all smaller firms must be confirmed for the year, allowing local shops, pubs, hotels and restaurants to get back on their feet. Similarly, the Scottish Government and the wider public sector should pledge to freeze and reduce other fees and charges. ”

Marc Crothall, chief executive of the Scottish Tourism Alliance, said the extension of rates support “will come as a relief for businesses in the short-term.” But he warned “this won’t go far enough in terms of supporting tourism businesses to a point of reopening and financial viability.”

Mr Crothall said it was crucial more funding comes from Westminster to extend rates relief further.

Colin Wilkinson, managing director of the Scottish Licensed Trade Association, called for the Chancellor to extend furlough and the temporarily reduced value-added tax rate of 5% for hospitality “beyond March 31 and well into 2022.”

He added: “Our sector is battered and bruised – and the sooner both the Scottish and UK Governments can provide clarity on support and an indication of an exit strategy out of this pandemic the better.”

Tracy Black, director of the Confederation of British Industry (CBI) in Scotland, said: “The private sector is critical to a successful recovery and moves to protect firms’ immediate futures are welcome.

“Continuing rates reliefs for the hard-hit hospitality, retail and tourism sectors is welcome, however a three-month window remains a challenging timetable for firms under real pressure.”