Scottish Budget will cause ‘self-inflicted economic harm’ to retailers, ministers warned

The Scottish Retail Consortium has spoken out against the ‘economic harm’ created by last month’s Budget

The impact of Scotland’s Budget on retailers is a “recipe for self-inflicted economic harm”, industry leaders have warned ministers.

In a seven-page submission, the Scottish Retail Consortium (SRC) has published a detailed response to what it described as a “muddled” Budget for 2024-25. David Lonsdale, director of the SRC, said the announcements were particularly disappointing given the “low ebb” of retail sales in recent years.

The consortium previously criticised Scottish Government ministers for failing to plug the estimated £1 billion deficit through cuts to Government costs amid expanding civil service numbers. Instead, the SRC has argued the buck is being passed to retailers as the freeze to the basic property rate falls to medium and larger commercial properties.

Shoppers in the lead-up to Christmas in Glasgow. Picture: John Devlin

Deputy First Minister Shona Robison announced the poundage on the basic property rate would be frozen for small businesses with a value up to £51,000. The SRC analysis estimates 22,120 commercial premises, including 4,550 retailers, will have to pay considerably more from April – a 6.7 per cent rise.

“It puts added pressure on those retailers striving to trade profitably and pushes up the cost investments which stores up problems for the future,” the analysis said. “An uplift of this magnitude is at odds with the Scottish Government’s pledge to ‘use business rates to boost business’. It could undermine efforts at high street and town centre rejuvenation.”

The SRC also raised alarm that retailers will fear future “cash grabs” from ministers in coming years as the Government considers reviving the Public Health Supplement – a levy on large stores selling alcohol or tobacco. The report brands the proposals a “recipe for self-inflicted economic harm”, adding: “A new levy smacks of incoherent policy-making within Government.”

Mr Lonsdale said the “oblique, unclear and not-consulted-upon threat” would be a “retrograde step” at odds with the New Deal for Business.

He said: “Grocers, who already face expensive regulatory interventions on alcohol, high fat, salt and sugar foods and the troubled deposit return scheme, now face an additional tax – one which even the Scottish Government admits is nothing more than a cash grab.

“The combination of new taxes, increasing business rates, and cuts to skills funding makes it hard to discern a coherent plan to grow the Scottish economy in this muddled Budget. Scotland’s economy isn’t in great shape and the Budget seems set to make things more challenging.”

Liz Smith, Scottish Conservative finance spokeswoman, said: “It’s no wonder the SRC are concerned by this disastrous Budget, which might have been designed to stymie growth and hammer retail businesses. Thanks to the SNP’s failure to pass on the funding support for business rates, quarter of a million Scottish workers and 4,500 shops are disadvantaged compared with the rest of the UK.”

A Scottish Government spokesperson said: “We are committed to ensuring that engagement with the New Deal for Business non-domestic rates sub-group continues to explore how the non-domestic rates system can best support business growth, investment and competitiveness, while acknowledging the important role income from non-domestic rates plays in funding public services.

“Representatives from the retail sector will also be consulted around the potential reintroduction of a Public Health Supplement.”