FIRST Minister Humza Yousaf’s pledge to reset the Scottish Government's relationship with business appeared to suffer a major setback last night as the hospitality industry claimed ministers had failed to support the sector in yesterday's Budget.

Industry campaigners were dismayed when Finance Secretary Shona Robison announced the Scottish Government would not be matching the 75% relief from business rates that has been granted to firms in the retail, hospitality, and leisure sectors in England and Wales.

Ms Robison, who said the Budget prioritised public services over business tax cuts, introduced 100% relief from business rates for hospitality businesses in the islands, capped at £110,00 per firm, and froze the poundage on the basic property rate, noting that the latter would protect businesses with a rateable value of up to and including £51,000 from high inflation.

The Deputy First Minister also maintained the small business bonus scheme (SBBS), and pledged to examine the methodology used to calculate rates for hospitality businesses, a move described as a “ray of hope in an otherwise disappointing day” by the Scottish Hospitality Group.

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But NTIA (Night Time Industries Association) Scotland declared that Mr Yousaf's New Deal for Business had proven to be “little more than a talking shop” for big business to lobby for the poundage rate to be maintained, leaving small businesses “betrayed” and up to £100,000 a year worse off compared with their counterparts south of the Border.

“NTIA Scotland expresses profound disappointment in the wake of the Scottish Budget release, particularly in light of the prevailing economic challenges faced by Scottish small and medium enterprises,” the group said in a statement.

“Whilst long-term reform of business rates would be welcome, it is sadly the case that for too many businesses, this will be too little too late, as they have been unable to survive the hostile environment businesses currently face in Scotland. And sadly, for those that do survive, cuts to investment, staffing levels and jobs will now be inevitable.”

Groups representing the wider Scottish hospitality and tourism sectors were equally unhappy.

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In a joint statement, the Scottish Tourism Alliance, UKHospitality Scotland, the Scottish Licensed Trade Association and the Scottish Beer and Pub Association said: "With estimated [Barnett] consequentials of around £230 million coming to Scotland as a result of the 75% rates relief afforded to businesses in England, the Scottish Government has squandered a golden opportunity to support one of the country’s most important sectors for the second year in a row.

"The 100% rates relief which has been announced for hospitality businesses in our island communities is welcomed, given the economic disruption these businesses have experienced from years of underinvestment in our ferry infrastructure. However, this measure falls very short of what has been expected. It is an extreme disappointment for tourism and hospitality businesses across Scotland.”

The groups added: “The lack of business support measures will see many thousands of tourism and hospitality businesses facing acute financial challenges in the next year, tipping many into crisis.”

Stephen Montgomery, director of the Scottish Hospitality Group, also expressed dissatisfaction, stating: “We are sorely disappointed that the Scottish Government has not delivered new emergency support for Scottish hospitality. Unless a hospitality business is located on the islands, this Budget offers no new support to Scottish hospitality to survive the unprecedented challenge of rising costs, inflation, and the legacy of the pandemic.

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“The very real implication is that many Scottish hospitality businesses will struggle to survive, and customers will see prices increase. This will be a bitter pill to swallow for thousands of Scottish hospitality businesses, given English hospitality businesses will be benefitting from a 75% business rates discount for the next year.”

The Federation of Small Businesses (FSB) in Scotland welcomed the decisions to protect the SBBS, freeze the basic poundage rate and introduce targeted relief for hospitality businesses in the islands.

But it said the decision to not pass on the targeted reliefs for small firms in retail, hospitality and leisure had put more at risk of closure.

FSB Scotland policy chair Andrew McRae said: "These businesses haven’t had access to this additional relief for 18 months, whereas those in England know they can continue to rely on it until at least March 2025.

“While some of these businesses will qualify for support through the SBBS, not all will. And it’s not as though trading conditions in Scotland in these sectors have been any easier than for those elsewhere in the UK. The latest stats show that we lost almost 3,500 businesses in the hospitality and accommodation sector in Scotland in the last year alone."