Following the chancellor’s Spring Forecast yesterday (3 March), it was confirmed that the Scottish Government will receive an extra £900m through Barnett consequentials.
He said: “With the Scottish Government receiving almost a billion pounds in additional funding, it should now urgently expand its hospitality business rates support to ensure the whole sector can benefit.
“Currently, thousands of businesses are excluded from existing support due to the £110,000 cap per business. This is particularly detrimental to operators running multiple sites and employing large numbers of people.
“The Scottish Government should use this windfall to remove the cap and extend support to all businesses, including those paying intermediate and higher property rates. That would help bring down the sector’s cost burden.”
Barnett consequentials are automatic adjustments to block grant funding for the Scottish, Welsh and Northern Irish governments, triggered when the UK Government changes planned spending on devolved services in England. The mechanism ensures devolved nations receive a population-based share of funding changes.
Last month, the Scottish Government announced it would increase business rates relief to 40% for licensed hospitality premises. The relief will apply to Scottish operators for the next three years and is subject to a £110,000 cap per business.
Responding to that decision at the time, Thompson said the increased relief would ease pressure on struggling operators.
However, he warned that significant challenges remain. “The sheer scale of rateable value increases has driven rate bill hikes to such an extent that business rates bills will still increase for the vast majority,” he said. “This is particularly true for businesses in the higher property rate, which have not been included in the relief.
“The need for this urgent support is yet another demonstration that the business rates system is completely broken and in need of serious reform.”