ROBUST campaigning over several months by the Scottish Licensed Trade Association (SLTA) and its coalition partners – the British Hospitality Association (BHA) and the Scottish Tourism Alliance (STA) – has led to the Scottish Government confirming that there will be a 12.5% business rates cap for hospitality and licensed trade businesses for one year.
This will allow the Barclay Review group to report on its findings and for a more equitable process for rates evaluation to be agreed and applied. Almost 8,500 hotels, pubs, restaurants, cafes and other accommodation will benefit from the cap on any increase to bills of 12.5%.
Following the announcement on February 21, representatives from the SLTA, BHA and STA met with Finance Minister Derek Mackay and Economy Minister Keith Brown to gain further of the situation. The high-profile coalition has been campaigning to bring about a reversal in the proposal to increase business rates in the licensed trade.
While expressing appreciation to the Finance Minister for addressing what has been a critical and pressing issue for the industry, the representatives, including SLTA chief executive Paul Waterson, said there remained a need for a more permanent solution and for a fundamental review of the way that hospitality businesses are rated and assessed.
During the meeting the group expressed the need for the Scottish Government to provide clarity around the businesses that will qualify for the 12.5% cap and further understanding on how this will be communicated and applied. Representatives were given assurance that this is high on the priority list for the Scottish Government.
The SLTA, BHA and STA said the meeting marked an important step forward in establishing what will be a more continuous dialogue between the three trade associations and the Scottish Government during the next 12 months on the business rates issue and to inform, influence and shape more enabling and competitive policies for Scotland’s tourism industry.
The coalition will be engaging with the Barclay Review group, currently reviewing Scotland’s commercial rating system, on March 6 when the trade associations will offer further oral evidence to follow their presentations of written evidence submitted in October 2016.
Power of the press
Business rates don’t usually merit front-page headlines but the media coverage in recent weeks brought the controversial issue into the wider public realm, highlighting the threat to Scotland’s pubs, restaurants and hotels, some of which face rates increases of 400%.
A series of articles in The Herald hit home fears that many operators were facing the prospect of closing premises. In a front-page splash in The Herald, Paul Waterson couldn’t have been any clearer: “There are people who are going to lose their business because they can’t afford to pay it. There are a lot of people who say they are not going to pay because they can’t. This is the licensed trade’s Poll Tax moment.”
But while Finance Minister Mackay’s announcement has been welcomed some operators remain cautious and have reiterated the need for radical change to the system. Lanarkshire publican Harry Hood, for example, whose family business Lisini Pub Co runs Angels Hotel and the Castle Rooms in Uddingston, Dalziel Park in Motherwell and the Parkville Hotel in Blantyre, said the 12.5% cap wasn’t enough.
“The system remains flawed and it is totally unfair,” said Hood. “What will happen in a year? We just don’t know and in that time some people might go out of business. The whole thing is crazy.”
Hood pointed out: “Rates are still based on turnover and if your turnover is down you are being asked to pay more at a time when you are less profitable. I also have an issue with the assessors – how many of them have run their own businesses and know what pressures we are under?”
The award-winning operator was also critical of the Small Business Bonus scheme which allows 100,000 properties – half of all business premises – to benefit from 100% rates relief. Agreeing that it was justified in some cases, he added: “I’m sure some of these businesses can afford to pay £20 per week – that would net the Scottish Government a lot of money.”
Financial pressures on the licensed trade have never been greater, he added. “You’ve got Sky Sports increases as well as the National Minimum Wage going up, National Living Wage, automatic pension enrolment, and general rising costs across many other areas your business – it’s tough.”
In Aberdeenshire, Martin Young of the Restaurants Aberdeen group agreed. “We’re doing not too badly but business is tough, there’s no doubt about it and the rates increases are the final straw,” he said. “It just seems to be one thing after another – pensions, rising utilities, Sky Sports increases, the National Minimum Wage going up, the increase in beer prices and the general impact of Brexit on food. It’s hard to keep afloat.”
Young called on businesses to support the SLTA and other trade organisations. “I’ve no idea how people would cope without them,” he said. “I’m one of those people who spout my opinions regularly and write to my MP, MSP and so on – it’s the only way you’ll get heard. But you can’t fight on your own – you need a strong trade association that’s got a louder voice than you.”
With his business comprising a restaurant/bar, a hotel and a pub, Young attracts a varied clientele across the three premises. “We benefit from tourism at the hotel – The Newburgh Inn – because there are 20 golf courses in the area and it’s great to see VisitScotland working hard to promote Aberdeen and Aberdeenshire as a tourist destination – we need to move away from it being all about oil,” he said.
Young’s other sites are the family-focused Mains of Scotstown Inn at Bridge of Don and the White Cockade in Aberdeen’s Torry. “What people don’t realise is that when they buy a pint just over one-third of that pint is taxed – they complain about the price but it’s not our fault. Our hands are tied,” he pointed out.
“We try to keep costs down and have even cancelled BT Sport at one of our premises and are about to cancel it at another. Both Sky and BT have had so many increases I can’t remember them all – all of this compounds to become something that for many businesses is very difficult to maintain.
“Some very good, honest businesses will go to the wall and I’m already hearing people talk about liquidation. It’s not just the rates situation – it’s a combination of a lot of things that keep hitting the licensed trade and we have to bear that in mind.”
The SLTA is urging members in the “strongest terms” to continue to appeal against their new rateable values. This must be done by September 30. If a business does not appeal within this six-month period your appeal rights may be lost until 2022.
Read the Scottish Government’s press release here