CBI Scotland has joined several other sector bodies to call for the Scottish Government to follow Wales and the rest of the UK and freeze business rates in Thursday’s Scottish Budget.
Scottish businesses face the prospect of rises of around 10% in the Uniform Business Rate (UBR) from 1 April, unless a freeze is implemented by the Deputy First Minister and interim Finance Secretary John Swinney.
Ahead of the country’s own draft Budget, the Welsh Government released details of a freeze in business rates as part of a £460m support package for the business community over the next two financial years.
It follows Chancellor Jeremy Hunt’s decision to freeze rates in England in last month’s Autumn Statement.
Mags Simpson, deputy director of policy at CBI Scotland, said: “Many Scottish firms are on a cliff edge with business rates set to spiral next April.
“Business rates, as a tax on property values rather than profits, bear no relation to a firm’s ability to pay and firms are already struggling with high energy costs and wages.
“Scotland cannot afford to be an outlier for higher business rates, especially now that the devolved Welsh administration has gone the same way as Westminster and decided to protect businesses and give them certainty to plan their recovery.”
In August, the Scottish Retail Consortium (SRC) published Scottish Budget recommendations paper and last month co-ordinated a joint letter from 19 industry bodies to Swinney calling on him to rule out any uplift in the business rate, which is already at a 23-year high.
SRC director David Lonsdale said: “After two turbulent years of the pandemic trading conditions remain challenging, the cost of doing business is spiralling, and the near-term economic outlook is weak.
“Given the decisions taken in Wales and England the bare minimum retailers should expect from Scottish ministers is they follow suit and similarly freeze the headline business rate poundage in the coming financial year.
“Over and above this, the fact remains that 3,000 retail premises in Scotland - and 12,000 commercial premises overall - continue to pay a higher business rate than they would do down south, due to the higher property rate.“
He added: “The last thing Scotland’s economy needs is for the headline poundage rate to follow this uncompetitive model, that’s why the devolved government must at the very least freeze the headline business rate in their upcoming Scottish Budget, but also speed up restoration of the level playing field with England on the higher property rate.”
Meanwhile, the Night Time Industries Association (NTIA) also complained that many in the industry are on the brink this winter.
NTIA Scotland chair Michael Grieve said: “Those that survived the calamitous lockdown through the pandemic are now subject to crippling operating costs which have been impacted by inflation, Brexit related supply costs and market volatility, particularly in the energy sector.
“The debilitating industrial action across Scotland’s’ rail infrastructure, coupled with extreme financial pressures and the uncertainty around customer confidence through the festive period will undoubtedly wipe out a significant number of businesses across Scotland leading into the new year.
“Scottish Government cannot delay or water down this vital support, and must ensure we give every opportunity for Scottish businesses to survive with at least the same level of business rates support provided to those in England.”
The Scottish Beer and Pub Association, Scottish Licensed Trade Association and UKHospitality Scotland all sent a combined statement to the Deputy First Minister.
“Not only must the Cabinet Secretary commit to matching a freeze on the UBR in Scotland, but he must also match the support for the sector in England and Wales, where a 75% rates relief package will be in place,“ it read. “The sector desperately needs this to survive, to continue to provide employment for staff and remain competitive with our neighbours.
“The industry expects that the Barnett consequentials coming from Westminster will be ring-fenced to support the sectors still scrambling along the road to recovery.
“The hospitality sector faced the brunt of the pandemic but managed to remain resilient and yet we continue to be held back, in part due to the discriminatory nature of the rating system in Scotland which disproportionately burdens the sector more than any other.“
The letter added: “We repeat our calls for a further review of Scotland’s Commercial Rating System as soon as possible, but right now the Scottish Government must truly see the reality of the situation and lend the same support as that given to our English and Welsh counterparts.“
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