SNP ministers warned Scottish hospitality risks being left behind England
SNP ministers have been warned Scotland’s pubs and restaurants risk “being left behind” their counterparts in England unless action is taken in the upcoming Budget.
Stephen Montgomery, director of the Scottish Hospitality Group, said reform of the business rates system is “vital” .
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Hide AdHe said hospitality firms are “often the last vestiges of declining high streets” but the existing system “unfairly penalises” the sector.


He added: “But by providing immediate relief for non-domestic rates in the way of a 35p lower poundage cost in the coming Budget – and acting on its commitment to providing a long-term, sustainable solution to the current system – the Scottish Government can not only help the industry to recover but help it to expand.”
It came as a new study found the vast majority of businesses in Scotland are concerned about the economic and political uncertainty facing the country.
Mr Montgomery said the UK Labour Party had previously pledged to reform the business rates system, with details expected on October 30 when Chancellor Rachel Reeves unveils her first Budget.
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Hide AdWriting in The Scotsman, he said: “Whatever the new Chancellor of the Exchequer announces, it is vital that the Scottish Government enacts significant reforms of non-domestic rates too. The existing system unfairly penalises the hospitality sector in Scotland, which must pay business rates on its turnover, rather than square footage, which is the case with retail.”
With the UK Government committed to reform, Mr Montgomery said there is now an “even stronger case” for Scottish ministers to act.
“In doing so, ministers would not only be addressing a fundamental inequality and unfairness in the tax system but would be helping to support jobs and economic growth too, along with restoring some business confidence,” he said.
He argued supporting hospitality would have “a knock-on impact on other key economic sectors, notably tourism, which is heavily reliant on Scotland’s international reputation for good food and drink”.
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Hide AdMr Montgomery added: “But supporting Scotland’s hospitality industry is not just about providing more employment and increasing the government’s tax base. It is also about supporting rural and underserved communities.
“Hospitality businesses are often the last vestiges of declining high streets and - in the age of large-scale online retail - the main reason for families and friends to travel into city centres. Equally, they are often the centre of rural communities, playing a key social and societal good in helping to support marginal and isolated towns and villages.”
He continued: “Whatever Rachel Reeves announces later this month, it is therefore vital that we see our own action in Scotland too. The Scottish Hospitality Group stands ready to help ministers design a fairer non-domestic rates policy and – as the Scottish Government looks for political partners to help pass its own budget - support for the hospitality sector must be a central feature of those negotiations. Otherwise, after an incredibly difficult few years, Scotland’s hospitality industry risks being left behind once again.”
Responding, SNP finance secretary Shona Robison said: “While the hospitality industry has faced incredible challenges in recent years, it is recovering well in terms of output and employment.
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Hide Ad“To support the sector we are already freezing the Basic Property Rate in 2024/25 and providing a package of reliefs worth an estimated £685 million, including the Small Business Bonus Scheme which continues to be the most generous relief of its kind in the UK.
“Decisions on non-domestic rates for next year will be considered in the context of the Scottish Budget 2025/26.”
Mr Montgomery’s call came as research by the University of Strathclyde’s Fraser of Allander Institute found more than four in five (85 per cent) firms thought economic uncertainty was a major problem.
The institute’s Scottish Business Monitor reported that 75 per cent of companies also thought political uncertainty was a major concern.
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Hide AdThe research found many businesses in Scotland were in a “wait-and-see mode” ahead of the Scottish and UK Budgets, with the former due to be unveiled on December 4.
The survey of more than 350 businesses found that overall business confidence is expected to hold steady over the next six months. Bosses reported an increase in hiring and a reduction in the cost of running their businesses.
It comes after inflation reached a three-and-a-half-year low of 1.7 per cent last month, making a fall in interest rates more likely.
However, concerns remain around exports, investment and rising employee costs. Some businesses are concerned about reports that Chancellor Rachel Reeves may increase employers’ national insurance rates in her Budget at the end of the month.
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Hide AdJoao Sousa, deputy director of the Fraser of Allander Institute, said businesses in Scotland are showing a “cautious sense of hope” amid a number of challenges.
He said: “Drops in costs and interest rate cuts are good news, but there’s still a lot of uncertainty about the upcoming budgets from the UK and Scottish governments. Many companies are in a ‘wait-and-see’ mindset, looking for clear guidance on what to expect over the next year.
“Scottish firms told us that political uncertainty is still top of mind, and it’s no surprise given some of the more pessimistic messaging from the UK Government on short-term growth prospects and tax rises.
“But there is underlying optimism, and a clearer sense of direction and purpose … the coming Budget might be able to harness that. Will business get that? We’ll know better on October 30.”
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Hide AdThe Scottish Business Monitor found that one in four businesses expected to see moderate growth in Scotland’s economy over the next 12 months. Only 4 per cent of firms expected “strong” growth, while many expected the economy to perform below par.
The study also found firms were worried about staff availability, with 78 per cent of those surveyed saying it was a “critical issue” facing them in the next quarter.
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