Scottish Finance Secretary Shona Robison has responded to mounting concern in the pub, retail, and leisure sectors by unveiling a major package of business rates relief.
Ms Robison announced transitional relief from the revaluation of business rates worth £184 million over three years, which should go some way to protecting firms from an expected rise in rates from April.
It came after an intense lobbying effort from the retail, leisure, and hospitality sectors ahead of the Scottish Budget, amid concern the revaluation of non-domestic property may put many firms out of business. Some businesses have seen their rateable values, which determines how much they pay in rates, increase by several hundred percent.
However, the Scottish Tourism Alliance warned the support provided would "fall way short of what is needed now", with similar sentiments expressed by the UKHospitality Scotland and the Scottish Hospitality Group.
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Ms Robison said the overall business rates support relief package would be worth £322m over three years. In addition to transitional relief worth £184m, the Scottish Government has cut the basic, intermediate, and higher property rates in response to the recent revaluation of business rates.
Transitional relief worth £138m will be provided to the retail, hospitality, and leisure sectors over the next three years, including 15% relief in 2026/ 2027, capped at £110,000 per business per year. The small business bonus scheme will be retained for the next three years, while relief for hospitality businesses in the Highlands and Islands will be maintained at 100%.
Ms Robison said her measures mean 96% of retail, leisure, and hospitality sectors will pay zero or reduced rates in the next three years.
And she held out the prospect of further support for the hospitality sector, should the Scottish Government benefit from any further Barnett consequentials as a result of changes to business rates for pubs that the UK Government is reportedly planning.
But the measures did not go far enough for the Scottish tourism and hospitality sectors.
Leon Thompson, executive director of UKHospitality Scotland, declared the Budget "has not sufficiently addressed the challenges that hospitality businesses in Scotland face, and the majority will still be paying higher business rates bills in April".
He said: “While the reduction in the poundage is positive, it does not offset significant increases in business revaluations and the loss of 40% relief. The increases to rateable values, often in excess of 100%, bear no relation to the trading environment hospitality businesses are operating in and they cannot trade their way to paying higher taxes.
“The package of reliefs put forward to help mitigate the impact of these increases is merely a sticking plaster to cap eye-watering bills. The increases facing our local pubs, hotels, restaurants and cafes over the next three years are still staggering."
Marc Crothall, chief executive of the Scottish Tourism Alliance, said that while the Budget "acknowledged some of the intense pressure" facing tourism and hospitality , "the levels of transitional relief and support... still fall way short of what is needed now".
He said: "In the days and weeks leading up to the Budget, tourism and hospitality organisations, business groups, chambers of commerce, small business representatives and Business Improvement Districts were united in warning that failure to act on business rates would push businesses to the brink. While the Scottish Government has responded with a package of modest short-term mitigation, the underlying issues within the system remain unresolved.
"The introduction of transitional relief, reductions to the basic and intermediate rates, and the modest 15% of non-domestic rates relief for retail, hospitality and leisure businesses will provide temporary breathing space for some, but not nearly enough to prevent potential closures and job losses."
Mr Crothall added that the measures "do not respond to the scale of the challenge facing tourism and hospitality businesses across Scotland".
He said: "Relief is capped, time-limited, and does not address the volatility created by revaluation or the cumulative burden of rising costs, leaving many businesses still on the precipice of commercial viability."
Stephen Montgomery, director of the Scottish Hospitality Group, said the "mitigation" of the revaluation of business rates tabled by Ms Robison "goes nowhere near far enough for the larger licensed hospitality premises in Scotland, who in many cases employ the most people".
“We are therefore disappointed the Scottish budget hasn’t helped Scottish licensed hospitality more, with a heavier burden falling on the larger premises yet again," he said.
However, Mr Montgomery welcomed the commitment of Ms Robison to continue to work "apace" on the Gill Review of the methodology that is used by assessors to calculate rates for hospitality businesses.
Colin Wilkinson, managing director of the Scottish Licensed Trade Association, said the Budget has "gone nowhere near far enough to meaningfully help the industry", noting that the 40% relief from business rates that some hospitality firms have enjoyed will be replaced with 15% relief in the 2026/ 2027 year.
“And let’s not forget there continues to be no relief support for businesses paying the higher poundage rate," he said.
“All this on top of the years of financial support disparity between Scotland and businesses in England, which led to Scottish businesses paying between 112% and 176% more in rates than those rated exactly the same in England."
