WITH each passing week, it seems First Minister Humza Yousaf’s commitment to forge a New Deal for Business is increasingly moving from an achievable reality to a forlorn hope.

Mr Humza’s administration was never going to win high praise for the contents of the Scottish Budget for 2024-2025, which was passed by the Holyrood parliament on Tuesday. The pressure on public finances meant hard decisions inevitably had to be made in order to prioritise spending on focus areas such as the NHS.

But the reaction from one part of the Scottish business community seems to have been particularly scathing.

The hospitality industry has in recent months been frustrated as its calls for Scottish ministers to follow Westminster and provide 75% relief from business rates have gone unheeded, with the government in Scotland favouring a different approach when it comes to easing the burden from the non-domestic tax on commercial property.

Finance Secretary and Deputy First Minister Shona Robison confirmed the Edinburgh administration would not be emulating Westminster on rates when she announced the Scottish Budget in December, and there was no change to that position when the Budget was passed by the Scottish Parliament on Tuesday.

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Regardless of whether there had been any realistic chance of the Scottish Government performing a volte-face, the reaction from UKHospitality Scotland was excoriating. For executive director Leon Thompson, it proved that Mr Yousaf’s attempts to smooth relations with the business community – a commitment made in his pitch to become SNP leader in March last year – have been futile.

“The Scottish Budget passing, unchanged, is the clearest sign yet that the Scottish Government has decided to abandon its self-proclaimed reset with business,” Mr Thompson declared. “Instead, it is continuing on the same worn path of warm words and no action.

“Businesses up and down the country, across hospitality, leisure and tourism, have put forward the strongest possible evidence that the lack of business rates support is stifling growth, deterring investment, reducing trading capacity and, ultimately, forcing businesses to close.

“With our sector being so integral to Scotland’s culture and offering on the world stage, using the additional funds resulting from 75% rates relief in England to put them on an equal footing was a no-brainer. Instead, for the second year in a row, our businesses in Scotland have been left at a significant competitive disadvantage.

“If the Scottish Government wants to regain any semblance of trust from the sector, it now needs to make good on its publicly declared commitment to reform business rates for hospitality.”

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While Mr Yousaf was instinctively right to have identified improving links with Scottish business in his leadership pitch – and there were encouraging signs early on, for example when he kicked the flawed deposit return scheme into the long grass, and rowed back on proposals to further restrict alcohol advertising – his pledge for a New Deal for Business has become a stick to beat him with.

Rightly or wrongly, it seems, each time Mr Yousaf’s government disappoints a business sector with a policy decision it is held up as a blow to hopes for the New Deal. That is not in any way to dismiss the concerns of an industry such as hospitality, which has suffered more than most from the impact of Covid and the upheaval which has trailed in its wake. Its representatives are well within their rights to call for support at a time when cost pressures are forcing the closure of businesses right, left, and centre.

Moreover, the hospitality sector feels aggrieved that the Scottish Government has not invested the £230 million that flowed into its coffers from Barnett consequentials from the UK Government’s Autumn Statement into rates relief, instead using the cash for other spending priorities. Such anger is understandable, but so equally, perhaps, is the stance taken by the Scottish Government, which says its block grant funding from the UK Government has fallen in real terms since 2022-2023 and has decided the money it has available would be put to better use in areas such as the NHS.

Ms Robison also, when the Scottish Budget was originally presented, pointed to a range of ways through which ministers were providing support on rates, including by maintaining the small business bonus scheme and introducing 100% relief for hospitality firms on the Scottish islands.

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The Scottish Government, in addition, froze the main business rate poundage but, while this was broadly welcomed, its decision to increase the intermediate and higher property rates in line with inflation has caused considerable gnashing of teeth in the retail sector. Retailers have also been angered by a proposal to reintroduce a surtax on large grocery retailers, with the Scottish Retail Consortium winning support from Usdaw, the Union of Shop, Distributive and Allied Workers, and the Confederation of British Industry in calling for the idea to be binned.

“A new surtax would be a retrograde step and firmly at odds with the [Scottish] Government’s New Deal for Business,” said SRC director David Lonsdale earlier this month. “Grocers already face a swathe of upcoming new regulations and have also been lumbered with huge costs as a result of the deposit return scheme farrago. Now they face an additional tax which even the Scottish Government admits is little more than a cash grab.”

Unhappily for Mr Yousaf & co, it was not only the retail and hospitality sectors which have been left disappointed by the Scottish Budget.

Homes for Scotland, which represents firms in the housebuilding sector, declared that cuts to the housing and building standards budget, and further reductions in the affordable housing supply programme and planning budget will limit the supply of new homes of all tenures at a time when there are acute shortages of homes in certain areas.

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“Whilst we welcome the Deputy First Minister’s commitment that housing will be treated with priority should further funds become available as a result of announcements by the Chancellor next week [in the UK Government Budget], the Budget passed [on Tuesday] will only serve to deepen the housing inequality being felt across the country and risks losing the significant socio-economic benefits that come through increased home building across all tenures,” said director of policy Fionna Kell.

Of course, no government can ever please everyone with the spending decisions it makes, even at the best of economic times. But when so many sectors are struggling because of the tough economic climate, it is no surprise the sense of disappointment is all the more acute among business groups when the support they are calling for is not completely forthcoming.

The challenge for Mr Yousaf and his team is to find a way to soften that disappointment while convincing stakeholders that his government really is on the side of business.

And it is something his local government colleagues in Glasgow perhaps ought to consider, given the fierce reaction which has met the council’s proposals to extend car parking charges in the city centre.