Over 100,000 businesses ‘short-changed’ by SNP Budget, say Tories

Friday, 16 December, 2022

By Lucy Ashton 

The Conservatives have accused the SNP’s stand-in finance spokesperson John Swinney of ‘short-changing’ over 100,000 Scottish business properties compared to their counterparts in England and Wales.

Shadow finance and economy secretary Liz Smith has highlighted how the acting SNP Finance Secretary’s Budget on Thursday failed to outline any specific business rate relief for retail, hospitality and leisure businesses.

Chancellor Jeremy Hunt’s Autumn Statement saw him confirm that these sectors would receive business rates relief for another year and it was increased from 50 per cent to 75 per cent of their rates bill. The Welsh Government mirrored this scheme on Monday.

However, the SNP failed to commit to any specific sector relief for the 2023/24 financial year having also ended this scheme for retail, leisure and hospitality businesses in June 2022.

The Scottish Grocers Federation have hit out at the lack of support, saying plans to cut the 100% business rates relief rateable value threshold from £15,000 to £12,000 will hit small retailers badly.

The Fraser of Allander Institute also accused John Swinney’s Budget of taking a “hardline” approach towards business.

In charge of the finance – Liz Smith, John Swinney and Jeremy Hunt.

While Liz Smith welcomed the freeze in the basic rates of business rates, she says this lack of specific support for these sectors will have a “potentially devastating impact” on businesses that are grappling with the cost-of-living crisis.

She added that these businesses are the “backbone of Scotland’s communities” and that they cannot be disadvantaged compared to businesses in England and Wales.

The extension of the scheme in England cost the Treasury £2.3 billion meaning John Swinney would have had £222 million worth of Barnett Consequentials – a proportion of money spent in England which is allocated to Scotland – to support these sectors.

Conservative Shadow finance and economy secretary Liz Smith MSP, said: “While I am pleased John Swinney listened to repeated calls from the Scottish Conservatives, to freeze basic business rates, he has completely forgotten to deliver other aspects of crucial support to these sectors.

“Not only did the SNP end specific rate relief for retail, hospitality and leisure business in June, the Budget now offers them no support at all compared to their counterparts in England and Wales.

“This is a hammer blow in the run-up to the busy festive trading period and as businesses continue to grapple with a cost-of-living crisis and the effects of the Covid pandemic.

“The lack of rate relief support will have a potentially devastating impact on many of our small businesses who form the backbone of our high streets and communities across Scotland.

“Both Chancellor Jeremy Hunt and the Welsh Government in recent weeks have stepped up and outlined an extension of the rates relief scheme in England and Wales, so why did John Swinney not follow suit?

“It is little wonder the Fraser of Allander Institute have described John Swinney as taking a hardline approach, when he has short-changed over 100,000 Scottish businesses.

“Jobs and economic growth are on the line if the interim Finance Secretary does not use the record funding grant he has at his disposal from the UK Government to offer urgent support to retail, leisure and hospitality businesses.”

According to Scottish Assessors there are over 100,000 business properties in Scotland classed as retail, hospitality or leisure. This includes 54,537 shops, 5,715 hotels, 3,543 pubs, 27,276 leisure, entertainment, caravans & holiday sites and 14,618 sporting subjects (Scottish Assessors, Report 2 General Statistics, Accessed 11:27, 16 December 2022, link).

This year (2022/23) the SNP Government gave business rates relief to leisure, hospitality and retail businesses for the first three months of the financial year. This relief was capped at 50% (SG, Budget 2022-23, December 2021, p9, link).

In England and Wales this relief was extended for the whole year. It was again set at 50% (WG, Non-Domestic Rates – Retail, Leisure and Hospitality Rates Relief in Wales – 2022-23link).

In the Autumn Statement, the Chancellor announced a range of schemes to reduce the rates burden on businesses in England, which included increasing relief to 75% from 50% for retail, leisure and hospitality businesses for the year up to £110,000 per business. A tax cut worth £2.3 billion for 230,000 businesses (HMT, Autumn Statement 2022, November 2022, p59 link).

This measure cost the Treasury £2.3 billion so would have resulted in Barnett Consequentials of £222 million for the Scottish Government (HMT, Statement of funding policy: Funding the Scottish Government, Welsh Government and Northern Ireland Executive, October 2021, p41, link; HMT, Autumn Statement 2022, November 2022, p59 link).

On Monday, the Welsh Government announced their own package of business rates support, which included increasing relief from 50 to 75% relief for retail, leisure and hospitality businesses (WG, 12 December 2022, link).

However, there was no sector specific relief in the SNP Government’s budget for leisure, retail and hospitality businesses (SG, Budget 2023-24, December 2022, link).

The Fraser of Allander Institute described Swinney’s budget as “hardline” for business. “At the Budget last year, we were surprised to see Kate Forbes take an approach to reliefs that was less generous than the UK system. This year, John Swinney has seemingly taken an even more hardline approach and there are no additional reliefs applied to hospitality and retail as is the case south of the border” (FAI, 15 December 2022, link).

Emma McClarkin of the Scottish Beer and Pub Association described the lack of sector specific relief as “hugely disappointing (Insider, 15 December 2022, link). 

The Scottish Grocers’ Federation said the plan to reduce the threshold for 100 per cent rates relief, from a rateable value of £15,000 down to £12,000, could “punish struggling” small businesses and retailers who are already “struggling to make ends meet”. https://www.talkingretail.com/news/industry-news/scots-cry-foul-over-cut-in-business-rates-relief-threshold-16-12-2022/

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