Pressure mounts on Rishi Sunak after rates holiday extended in Scotland

The Scottish government has announced a three-month extension of business rates relief for Scottish hospitality and tourism businesses.

Presented as part of today’s Scottish Budget, the move gives hospitality businesses north of the border respite from business rates until July.

Finance secretary Kate Forbes (pictured) said that the support amounted to £185m and would be paid for by cash returned by high street retailers who did not need the aid.

She said: "This Budget is focused on delivering tax policies that will support economic recovery and maintain our commitment to creating a fairer and more progressive tax system. It is about striking the right balance between raising the revenue required to fund our public services and supporting the economic recovery through targeted interventions.

"This includes using the rates relief handed back by businesses to help fund a three-month, 100% rates relief extension for the sectors that have been hardest hit by the pandemic."

Forbes added that if the UK government brought forward an extension to its equivalent rates relief, the funding generated would increase the relief period in Scotland further.

There are now calls for chancellor Rishi Sunak to commit to a similar extension. According to the Altus Group’s analysis, £2.16b of the original package in England was returned by retailers, including the big four supermarkets, indicating that a more targeted approach was required to help those businesses most in need.

The Scottish Licensed Trade Association's managing director Colin Wilkinson said that further support from Westminster was crucial.

He added: "Our hope is that UK chancellor, Rishi Sunak, steps up to the mark by extending the current furlough scheme, committing to retain the Commercial Rates Relief and the temporary 5% reduced rate of VAT for hospitality beyond March 31 and well in to 2022.

"Our sector is battered and bruised and the sooner both the Scottish and UK governments can provide clarity on support and an indication of an exit strategy out of this pandemic the better.”

Robert Hayton, UK president of adviser Altus Group, added: “If the end of the pandemic is indeed in sight, it has never been more important than now to ensure that viable businesses are supported adequately during these final months. The chancellor has to avoid a cliff-edge through withdrawing reliefs too early, but he also cannot risk repeating the mistakes of the past, where support was arbitrary rather than targeted to those most in need.”

Meanwhile, the Federation of Small Businesses (FSB) said that the Scottish Budget did not go far enough.

Andrew McRae, Scotland policy chairman at the FSB, said: “While the cabinet secretary offered stability for business on several important fronts, we heard too little about closing some of the big holes in grant support.

“It was important to see the three-month extension of the 100% Covid rates relief and the continuation of small business rates relief, but these only goes so far.

"We need to avoid any scenario where businesses face property tax demands on premises the government has barred them from using."

Photo: Scottish Government Flickr