Hospitality boss warns: 'The Scottish Government is strangling me'

The head of one of Scotland’s oldest family-owned hostelries has said government needs to “take their hands off my neck” and allow the hospitality industry to re-invest for the future.

Kris Clark of the George Hotel in Inveraray, which has been run by his family since 1860, said there appears to be a “lack of political will” to address the extreme pressures bearing down on pubs, restaurants and accommodation providers. These include surging energy prices, steep wage increases and rampant food inflation.

While it is not within the gift of politicians to control global economic forces, Mr Clark said UK and Scottish leaders are failing to address what is within their control.

“At the moment the government has got its hands around my neck and they are strangling me, so they need to take their hands off my neck and they can do this by reducing VAT on food and accommodation, and they can increase [business rates] relief for hospitality,” he said.

Business rates – the equivalent of council tax for domestic residences, which is used to pay for local services – have long been a bone of contention in the hospitality and wider small business community. However, they have taken on greater bearing as last year’s re-introduction of what is formally known as “non-domestic rates” coincided with the start of the inflationary surge currently strangling the UK economy.

A 100 per cent relief on business rates introduced to support firms during the pandemic came to an end in Scotland on March 31 of last year. This was replaced by a temporary 50% relief that was available in April, May and June – capped at £27,500 per rate payer – that has also now come to an end.

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Figures released last month show that thousands of firms in Scotland will collectively pay nearly £60 million more on property tax than their counterparts down south in the coming financial year. Mr Clark noted that rates relief in Scotland is far less generous than elsewhere in the UK.

“There’s a big disparity between the relief given to the English and the Welsh against what is given to the Scots,” he said. “Now you can read into that any which way you want, but why are we not getting the same rate of relief as the English and the Welsh?”

Brian Flynn, founder and co-owner of Behind the Wall in Falkirk, said his business is faring reasonably well with footfall nearly back to pre-pandemic levels despite prevailing economic difficulties. However, he agrees that business rates should “definitely be addressed”.

“The whole rates system needs completely re-vamped,” said Mr Flynn (pictured right). “It is not fair and reasonable what we have to pay.

Brian Flynn (Image: BTW)

“During the pandemic we got full 100% holiday payment from the Scottish Government, funded and subsidised by the Scottish Government, which was great for us – that made life so much easier, and was probably one of the main reasons why we survived that whole carry-on.”

He added: “Right now the Scottish Government could be looking at some form of holiday or rebate or something like that to keep us going because our rateable values are something like £75,000 a year. But our business is not always fully open – we have got areas that we close down during the week so that we keep everybody warm and cosy in the main seating areas, so we don’t use all of it all of the time.”

Renowned Glasgow restaurateur Alan Tompkins told The Herald earlier this week that cutting VAT is an “investment government could make” as operators struggle with costs. The rate of VAT applied to hospitality businesses was reduced to 5% shortly after the pandemic took hold but was restored by the UK Government to the normal rate of 20% in April of last year.

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Mr Clark said the George Hotel posted an increase in turnover of more than 30% during the first two months since its new financial year started in November. That came on top of a record-breaking performance in the previous 12 months when revenues hit £3.3m excluding VAT.

However, the combined squeeze from higher taxation on the one hand and surging inflation on the other means he must maintain that pace of growth just to stand still.

“The knock-on effect is I re-invest less money in my business because I’m being cautious,” he said.

“I don’t want to be putting money to projects that are sitting waiting in the wings – I’ve got a four-bedroom development on top of the hotel that I’m not willing to put any investment into because I’ve got to reserve all my money. That’s the way a lot of businesses are operating at the moment.”

With 24 bedrooms, a bar, restaurant and large outdoor garden area, the George currently has 74 members of staff. Most come from Inveraray’s local population of about 600 people.

As an important component in the local economy, Mr Clark declared that he will not cave in despite difficult circumstances.

“It’s the family business and I ain’t letting go of it. I will fight and I will fight harder and longer than most others...I won’t chuck in the towel.

“I know the business inside-out, I know every single floorboard, every fuse board, every creak, every water supply – I know everything about my building, so I’m kinda well-placed to fight for it, but it’s certainly dispiriting because you scratch your head and say hold on, I’ve been doing this for 20 years, and this ain’t working any more.”

Tomorrow: City patrons head home early as transport strains take their toll