SNP accused of “reckless disregard” for businesses over tax breaks refusal

In common with thousands of businesses across Scotland, Begg Shoes – Britain’s oldest independent shoe retailer – is counting the cost of the SNP’s refusal to pass on UK-funded tax relief for those in retail, hospitality and leisure.

In England, annual charges levied on most non-domestic properties have been slashed by 75 per cent for this financial year and the next.

Rates relief at 40 per cent is to be introduced in April in Wales but the Scottish government refused to follow suit in its own Budget.

Donald Begg, the director of 158-year-old Aberdeenshire firm Begg Shoes, which has nine branches across Scotland, said: “We’re paying the price of our physical stores being in Scotland.” He said a comparable retailer in England is around £120,000 better off.

“The SNP’s failure to pass on the same tax relief to retailers in Scotland, when it has been financed by the UK Government, is deeply frustrating and a massive financial blow.

“As things stand, there is no commercial rationale for expanding our business in Scotland, when the government is actively opposing town centres.”

The issue is a running sore in the wake of the Scottish Budget, which is set to pass its first stage at Holyrood today.

Humza Yousaf, who is also hiking income taxes, is increasingly facing claims that his promise of a “new deal” for Scottish businesses was nothing more than PR spin.

According to interviews conducted with business leaders and entrepreneurs by Scottish Business UK, the pro-union group, insolvencies are set to escalate.

Last week, Steve Drew, managing director for Innis & Gunn, cited the absence of rates relief as a reason for the closure of one outlet, The Shore, in Leith.

Struan Stevenson, SBUK’s chief executive said: “The SNP/Green government’s reckless disregard for the needs of the business community is not only detrimental to the Scottish economy but also an affront to the principles of free-market capitalism. It is high time for a change in strategy.”

According to UKHospitality Scotland, the rates relief disparity means that a medium-sized hotel in England is about £30,000 a year better off than one in Scotland. A pub south of the border benefits to the tune of about £15,000.

Michael Bergson, who owns Buck’s Bar, a restaurant chain of five sites in Glasgow and Edinburgh, estimates that 75 per cent rates relief would save him £100,000 a year.

He said the business rates stance “could be the straw that breaks the camel’s back and puts a business down”.

In Glasgow, Becky Lumsden, who owns Pure Spa with 23 UK outlets, has been forced to close a branch in the Silverburn retail centre because “the numbers no longer add up”.

She said her branch in Cults, Aberdeenshire has an annual rates bill of £8,341 yet her larger branch in Bristol has a yearly bill of just over £3,500.

Karen Forret, the managing director of Wilkies, a family-owned fashion and homewares retailer founded in 1898, said she is baffled by the lack of support for businesses.

The chain closed five of its 11 stores last year, including a branch in North Berwick that was costing £10,000 a year in business rates – almost four times as much as the firm’s branch in Berwick-upon-Tweed which had an identical rateable value.

“It’s not about hand outs, it’s about protecting the vibrancy of the high streets which are the life blood of Scottish communities,” said Ms Forret, also Scottish spokesperson for the British Independent Retailers Association.

Another entrepreneur who owns licensed premises in north-east Scotland, described the situation as a “car crash”.

“I was a great believer in independence but the SNP has run the country to the wall,” he said. “Don’t be surprised if hundreds of pubs, clubs and restaurants go under this year.”

The Scottish Government said that in 2024-25, the Basic Property Rate for non-domestic properties with a rateable value up to £51,000 will be frozen.

It claimed over 95 per cent of non-domestic properties will attract a lower property tax rate than anywhere else in the UK.

A spokesperson added that replicating the UK Government rates relief policy would mean it “could not provide the NHS, schools, or emergency services with the funding they require.”

However, David Lonsdale, director of the Scottish Retail Consortium, said the testimonies of business owners gathered by SBUK exposed the gulf in rates relief available either side of the border.

“It’s a really dire picture that is hard to convey by looking at insolvencies,” Mr Begg said. “The attractiveness of the industry to entrepreneurs is non-existent right now and business rates play a big part in that.”

Originally published in The Daily Telegraph on 8 February 2024

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