Hospitality sector business rate increases capped

FINANCE Secretary Derek Mackay has capped business rate increases for the hospitality sector in response to widespread concern about the impact of a controversial revaluation.

Mr Mackay told MSPs a new 12.5% cap on bill rises for restaurants, pubs, hotels and cafes would also apply to office premises in Aberdeen and Aberdeenshire to reflect the impact of downturn in the North Sea economy.

A package of extra support for the renewables sector was also set out by Mr Mackay in the Holyrood chamber.

He has faced growing pressure to intervene to help businesses cope with the first revaluation of the rateable value of businesses since 2010 amid warnings many facing large increases could be forced to close or shed staff.

Mr Mackay said measures already put in place by the Scottish Government meant seven out of ten business premises would be better or no worse-off after the revaluation, with more than half paying no rates at all.

He added: “It has become clear that there are some sectors and regions where the increase in rateable values is out of kilter with the wider picture of the revaluation.

“I can confirm to the chamber today that we will offer a new national relief that caps increases for hotels at 12.5%.

“Because we recognise that we must maintain fairness between hotels, pubs, cafes and restaurants, this will apply across those businesses too.

“That will benefit around 8,500 premises and provides proportionately more support to the sector in Scotland than is available in the rest of the UK.

“For Aberdeen City and Aberdeenshire, we will also lift the pressure on office premises by again applying a 12.5% cap next year, benefiting more than a further 1,000 premises.”

A package of relief for the renewables sector will include rolling forward current rates relief of up to 100% for qualifying community renewables projects, capping rates bill increases at 12.5% for small-scale hydro schemes and a new 50% rates relief for district heating schemes.

Mr Mackay told MSPs the Government would take early action on the findings of areview being led by former RBS chairman Ken Barclay into business rates which isdue to report in July and would work with councils to introduce a local ratesrelief scheme to support key sectors or areas.

He said the total package of support being offered by the government through rates relief was worth £600 million but faced questions over where the funding for the new measures was being found, and confirmed the cap on rate increases would be in place for one year only.
Conservative MSP Murdo Fraser said: “For weeks the Finance Secretary has been denying there is an issue with the business rates revaluation, for weeks he and his colleagues have refused to act despite all the evidence facing them.

“At last he has been forced to come to this parliament and offer some relief to some of the many businesses affected.”

He said the new measures were “all too typical of the actions of a government that time and time again falls asleep at the wheel and only wakes up when it crashes the car into the wall.”

Labour MSP Jackie Baillie welcomed the “complete turnaround in the government’s view of the crippling rates increases for businesses up and down the country.

“I have to say I’m positively dizzy with the speed of the u-turn but I welcome it nonetheless because at a time of increasing economic turmoil business in my constituency and across Scotland tell us that the rates rises would have led to job losses, and that’s not something any of us want to see.”