SCOTTISH Finance Secretary Kate Forbes was given a golden opportunity to make political capital after Chancellor of the Exchequer Rishi Sunak announced the details of the Autumn Budget last month.

Within hours of Mr Sunak revealing plans to give retail, hospitality and leisure firms in England a 50 per cent cut in business rates in the next financial year, Ms Forbes promptly declared that it was “interesting to see the UK Government belatedly adopting our ideas”.

In Scotland, firms in those sectors, as well as aviation, are currently fully exempt from the burden of business rates under measures brought in to ease the pressures arising from coronavirus.

The exemption has rightly been widely welcomed by the business community, and will have played no small part in helping to safeguard the survival of many firms as they have negotiated the difficulties of the last year-and-a-half.

However, with the relief due to stop at the end of the current financial year on March 31, less than five months away, Ms Forbes now has some thinking to do.

Does she strive to find room in the forthcoming Scottish Budget in December to continue providing some relief from business rates?

Or will businesses have to begin paying the full percentage of what has typically been one of their biggest overheads once again come the start of the new financial year?

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Groups representing sectors such as hospitality and retail were quick on UK Budget day last month to call on Ms Forbes to continue providing rates relief once the current measure ends.

And on Monday this week, the pressure on Ms Forbes to act was ramped up further, when groups representing a large chunk of the retail sector implored the Finance Secretary to provide a business rates “discount” in the 2022/23 financial year.

The call was made by 13 organisations representing retailers, trade unions and landlords, in a letter sent to Ms Forbes before she announces the next Scottish Budget on December 9.

Looking at the current travails of the retail sector, it is easy to see why its representatives are pressing home the need for continued support.

Figures released by the Scottish Retail Consortium yesterday underlined the extent to which the sector has still to make up the ground lost to the pandemic as a result of being placed in lockdown for long spells during the last 20 months.

The latest Scottish Retail Sales Monitor, published by the SRC in partnership with KPMG, found total retail sales in October were down 11.3% compared with the same month of 2019, regarded as the more meaningful comparison given the huge upheaval in the economy this time last year.

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According to the SRC, retail sales and footfall have only recovered to around 80% to 85% of pre-pandemic levels.

And with inflation having surged to a near 10-year high of 4.2% in October, as official figures disclosed yesterday, the industry is approaching the vital festive period at a time when household budgets are under severe pressure.

David Lonsdale, director of the SRC, told The Herald that a further discount would provide a “bridge” for the industry until spring


By that time, the next revaluation of commercial property in Scotland – a key factor in determining how much businesses pay in rates – will have taken place and presumably be more reflective of the post-Covid landscape.

“The key thing is to bridge to that over the next 16 months,” he said.

“That is why we have put forward this proposal for a discount for the coming financial year. It’s not a 100% discount that we have had in the last year – it is a proposal for a discount of sorts.

“Retailers are keen to get back to paying their way, making their contribution, but sales are falling short still, even though it is six months or so since lockdown ended. Footfall is obviously still falling well short as well.”

With business rates having typically raised around £3 billion for local government coffers each year before coronavirus struck, the sums involved in providing further relief from the property-based tax are certainly significant from a public finances perspective.

Ministers will have to calculate if they can afford to continue providing relief and, if so, to what extent. And should the Government decide it is important to carry on providing support, it must find a way of doing so while funding other public services – an unenviable task.

However, the Federation of Small Businesses in Scotland suggests there could be a way of targeting relief at the firms that are most in need. Stuart Mackinnon, head of communications and public affairs at the organisation, acknowledged the difficulty of the decision facing the Scottish Government in the Budget, given the strain the public finances are under.

But he suggests there could be leeway if support is diverted away from those businesses which have received public funds in the last 20 months but have been able to trade continuously and in some cases profitably amid the pandemic.

“We would suggest excluding them from any future scheme might be a means to free up funds to provide additional help for local and independent firms,” he told The Herald.

Without the continuation of support, Mr Mackinnon said the coming months would be extremely tough for many small businesses in Scotland. “We’re making the case for continued support for small businesses outside of the scope of the small business bonus scheme in the next financial year,” he said.

“We accept it might not be possible to provide 100% relief, or help to the same scale, but it will be tricky for businesses to manage if it goes from 100% to 0% [relief] overnight.”

Should Ms Forbes be in a position to announce further rates relief when she unveils the Scottish Budget for 2022/2023 next month, she might find herself receiving a few more Christmas cards than usual this festive season.