Official Report 314KB pdf
The next item of business is a debate on motion S6M-20653, in the name of Murdo Fraser, on saving Scottish hospitality. I invite those members who wish to speak in the debate to press their request-to-speak buttons, and I call Murdo Fraser to speak to and move the motion.
14:47
Today pubs, hotels and restaurants across Scotland face a crisis situation due to rising costs and flat customer demand. The latest blow comes in the form of the 2026 revaluation, which hands down crippling increases in bills that are simply unaffordable. Today, the Scottish Conservatives are calling for real, positive and immediate action from this Scottish Government to prevent the meltdown of a sector that is so important to the Scottish economy.
The background to this is the difficult trading position that has hurt hospitality over a number of years; the rising cost of wages, which is not helped by Labour's tax on jobs in the form of increases to employer national insurance contributions; rising energy costs; and the burden of non-domestic rates. All of that while customer demand is hit by cost of living pressures, meaning that prices cannot be increased to accommodate rising cost pressures.
On top of that, we now have the catastrophe that is the latest non-domestic rates revaluation. According to figures from the trade group UKHospitality Scotland, the current revaluation will see the average pub in Scotland face a rates bill increase of £36,523 over the next three years, while the average increase for hotels is even greater, at £68,007.
If those increases go ahead, it will mean the end of many small pubs and hotels across the country. This is a potentially catastrophic situation for a vital sector. Already, pubs in Scotland are suffering a closure rate more than 50 per cent higher than their equivalents south of the border, with one pub a week forced to close throughout 2025. It is only going to get worse.
This is an economic issue, because of the employment that is provided, but it is also more than that—because as well as playing a vital part in the tourist economy, pubs and hotels also act as a social hub for communities, particularly in rural areas. Over the years, too many rural communities have seen the local school close, followed by the newsagent and the grocer’s shop. Now, the local church might be about to close its doors. That leaves the pub or the hotel as the last place where the community can gather, and even that is now under threat.
Last week, the United Kingdom chancellor, Rachel Reeves, announced a £100 million-a-year package of support for pubs south of the border, including a 15 per cent cut in rates. That will generate Barnett consequentials for the Scottish Government—we still await hearing from the Scottish Government exactly how that additional money will be spent—but that will not go far enough. In line with our colleagues in England, we want to see 100 per cent rates relief for hospitality businesses with a rateable value below £100,000, which would cover the vast majority of small and medium-sized enterprises.
More urgently, there needs to be action on the current revaluation, which will deliver staggering increases in rateable value from April. It is clear that the current methodology that is applied to assessing rateable values for hospitality is simply no longer fit for purpose, based, as it is, on projected turnover figures and taking no account of profitability.
Does the member agree that the issue is not just about the hospitality sector? There is a fundamental problem of a lack of transparency in how rates and rateable values are arrived at for all businesses that are charged them, and there needs to be a fundamental review.
I understand Mr Johnson’s point. Our focus today is very much on hospitality, but I am aware of other sectors, such as the self-catering sector and small-scale hydro schemes, that are also affected by the revaluation. I know that the Scottish Government will say that the assessors and the work that they do are independent, but the framework is set by the Scottish Government and is in legislation.
The Scottish Government has indicated a review of the methodology—
Will the member take an intervention?
I will give way to Mr Carson.
I have seen businesses in my constituency go out of business. Does the member agree with me and Tom Hunter that we should bar every Government minister from local pubs and hotels until the business rates situation is fixed?
I am a very generous man and I do not want to see anybody barred from their local establishment, but it is in the hands of the minister and the cabinet secretary to do what Sir Tom Hunter has requested.
Although the Government has indicated that there will be a review of the methodology, which is very welcome, that will not conclude until the end of this year. In any event, any change in methodology will not apply until the next revaluation cycle in 2029. That is simply too late. Scottish businesses cannot afford to wait that long. If the current revaluation is allowed to proceed, we will see a collapse in the sector.
Will the member give way?
If I have time.
Very briefly, Mr Ewing.
Does Mr Fraser agree that the immediate solution is to do what Northern Ireland announced on 29 January that it would do, which is to postpone the revaluation?
I absolutely agree with Mr Ewing. That is exactly the point in our motion. Just last week, the Northern Irish finance minister, John O’Dowd, in response to concerns from the industry there, announced a pause in the revaluation that is affecting hospitality. The coming year’s rates from April will be calculated on the current valuation, and the pause will allow consideration of the revaluation system.
In announcing the change, O’Dowd recognised that those local businesses are the backbone of local economies. He went on to say that, having listened carefully to the concerns that had been raised with him and the Northern Irish Executive, it was only right and proper that the process be stopped at this stage. That announcement was warmly welcomed by the sector in Northern Ireland, which gave the minister credit for listening to its concerns.
If a Sinn Féin finance minister in Northern Ireland can take such action, why can a Scottish National Party finance secretary in Scotland not do the same? Does the SNP not care about the fate of a vital tourist sector? Does it care less than Sinn Féin does about businesses in Northern Ireland?
Just on Monday, we saw the latest edition of the Scottish business monitor, which is published by the Fraser of Allander Institute, with more bad news for the Scottish economy. It shows a strong sense of pessimism among the business community—80 per cent expect weak or very weak levels of growth in 2026, 80 per cent say that their costs have increased and 90 per cent expect further rises. A survey found a decline in levels of employment and weaker sales and revenue during the last quarter of 2025, which for retail and hospitality should be the busiest time of year.
The situation could not be more serious, and Scottish hospitality stands at a crossroads. If the SNP is not prepared to change direction, there will be a catastrophic level of losses, with businesses folding and jobs lost. That is why the Scottish Conservatives have brought this motion to the Parliament to be debated today. We need action now, before it is too late—that is the point that I have made in my motion.
I move,
That the Parliament recognises the pressures facing Scotland’s hospitality sector; calls on the Scottish Government to postpone the forthcoming non-domestic rates revaluation until a comprehensive review of the valuation methodology has been completed, and further calls on the Scottish Government to provide 100% rates relief for all hospitality businesses with commercial property valued up to £100,000.
14:55
I will start with a quote:
“We welcome the move from five-year to three-year revaluations, which is supported by the business community.”
That is a quote by Murdo Fraser from the stage 1 debate on the Non-Domestic Rates (Scotland) Bill. He also said that
“There is much in the bill that we welcome”.—[Official Report, 10 October 2019; c 114.]
At that point, the bill was also widely welcomed by the business community.
As members of this Parliament will be aware, the revaluation process is administered by Scottish assessors, which are independent of the Scottish Government and local government. It is right that that is the case and that we maintain the process as it operates.
The Scottish budget 2026-27 will respond to the expected outcome of the revaluation by decreasing the basic, intermediate and higher property rates for 2026-27, which will ensure the lowest level of basic property rates since 2018-19. We are also introducing a package of reliefs to business in 2026-27, which are worth an estimated £864 million, to reduce the very bills that Murdo Fraser talked about.
As a result of the decisions that we have taken in the budget, the revenues that will be raised—
Will the minister give way?
Murdo Fraser should listen to this point, because it is important and puts where we are today into context. As a result of the decisions that we have taken in the budget, the revenues that will be raised from non-domestic rates in the next year are expected to be 6 per cent lower in real terms—using the consumer prices index—than the pre-Covid amount. That is despite the number of properties on the valuation increasing over the same time period. Despite what Murdo Fraser says, there are more businesses in the Scottish economy, and they will pay less in rates than they did pre-Covid.
The minister has set out the broader context, but this debate is about hospitality. The reliefs that he has announced will not touch the sides when it comes to addressing the black holes that are being created due to the current revaluation. What action will he take on the current revaluation, and will he do what Northern Ireland is currently doing?
We are offering more than £320 million in support through transitional relief schemes and retail, hospitality and leisure relief over the next three years.
Overall, rateable values are expected to rise by 12 per cent over three years following the 2026 revaluation. Although some properties will have increases in rateable value after the 2026 revaluation, more than 40,000 properties will have decreases in rateable value. Revaluation transition relief will cap gross bill increases for those businesses that will experience the most significant increases. The reliefs will be in place precisely to cap the large increases in rateable value for the businesses that Murdo Fraser talked about.
Does the minister recognise that the methodology for the valuation of hospitality businesses is entirely different from the methodology for other businesses, and that the methodology puts pressure on them because of their high turnover and low profitability?
I have actually talked to assessors about that, and the difference is because of a lack of information from the sector to allow the assessors to be able to conduct the assessment in the same way. That is why, as I will come on to talk about—[Interruption.]
Members, let us hear the minister.
That is why we have responded to the calls from the sector to set up the independent commission that will look at the issue. BJ Gill KC, an advocate depute, was appointed to chair the review, and I confirmed the names of the four members of the review group earlier this week. There will also be an advisory panel for the review, which will include members from the business community. A call for evidence will be issued shortly.
Will the minister clarify that point? The last time that I was responsible for providing such information, there was a legal obligation to provide it for rating purposes. Is he saying that people are not complying, or is the Government just not exercising its powers?
I am saying that the assessors will work it out based on the information that they have available. For the different sectors, that will be based on the information that is available for those sectors.
More than 100,000 properties will remain eligible for the small business bonus scheme, which will continue to be the most generous of its kind in the UK, and thanks to the generous non-domestic rates relief package, we estimate that 96 per cent of retail, hospitality and leisure businesses could benefit from some form of relief in 2026-27.
Will the member take an intervention?
I think that I have taken enough interventions.
The minister should be bringing his remarks to a close.
We recognise that thriving businesses are key to growing the economy, and we engage and communicate regularly on a wide range of issues with businesses, business representatives and trade organisations, including the non-domestic rates consultative group, which I met immediately following the UK and Scottish budgets. I will meet the group again tomorrow, because we give a commitment to it not only to pass on in full the consequentials that are coming from the UK Government’s recent decision on NDR but to engage with the group to hear its perspective and views on how that money should be allocated to best support the sector.
We absolutely recognise that economic growth is at the heart of the Scottish Government’s agenda. We will continue to take the right decisions to support businesses in Scotland, and we must not forget the important role that non-domestic rates revenue plays in funding local services. We heard much from Conservative members earlier about local services, on which we all rely, and on the importance of regular revaluations to maintain the integrity of the NDR system.
I move amendment S6M-20653.3, to leave out from “the pressures” to end and insert:
“that the revaluation process is independent of the Scottish Government; notes the more than £320 million of business support announced in the draft Budget through transitional relief schemes and retail, hospitality and leisure relief over the next three years, and acknowledges the commitment from the Scottish Government to pass on, in full, any Barnett consequential funding from the UK Government’s change to non-domestic rates for pubs and music venues in England to businesses in Scotland.”
15:01
I remind members of my entry in the register of members’ interests, although it is some years since I have been responsible for paying non-domestic rates.
It is a great shame that this Parliament does not sit on Mondays, because Monday was groundhog day. Here we are again, having the same debate, yet, on this important issue, we are barely getting even a difference in nuance from the minister. I understand that it is complex, and the minister is right to reflect on the fact that the revenue that is raised pays for local services, but he must also acknowledge and address the deep flaws in the rates system.
When Kate Forbes was finance secretary, she was quite right to repeatedly restate Adam Smith’s principles of taxation—equity, certainty, convenience and economy. At least two of those are probably being broken, certainly when it comes to hospitality and the rates system.
However, the issue is not just with hospitality. If members will indulge me a little, the problem is that, in many sectors, the revaluations just do not make sense. For example, Edinburgh airport’s rateable value has increased by 300 per cent, whereas Glasgow airport’s has increased by just 50 per cent and Prestwick airport’s has increased by 39 per cent. I imagine that the owners of Prestwick airport might be taking that up with the assessors if the rates bill is increasing by that amount.
The important bit here is the explanation of assessors: not only are assessors making different assessments; they are basing them on revenue. Rates are not supposed to be assessed on that basis; they are meant to be linked to rent—what a property could be rented out for. Assessors are unilaterally changing the methodology and explaining that after the rates bill has arrived.
Most critically, on the point of equity, the fundamental issue with the rates system is that it does not correlate with the economic contribution of different sectors, with some sectors paying significantly more than the contribution that they make to the overall economy. For example, retail—my old sector—makes an economic contribution of 11 per cent but pays a 24 per cent share of the rates bill. The position for hospitality is even worse—its gross value added is 3 per cent, but it contributes 9 per cent to the rates bill. That is the fundamental issue.
I accept the technicalities and the complexity. I accept that the minister has, in a sense, inherited the system, but the Scottish Government is in a position to change the system were it to acknowledge the issues that exist. It seems to acknowledge those in part, but the problem is that it is far too slow to do so. Even within the existing system, the Government is simply not being as generous as other parts of the United Kingdom. The UK Labour Government is putting in place a £4.3 billion support package, capping increases at 15 per cent for most small businesses with a value of under £100,000.
Will the member take an intervention?
The Government has previously made a commitment that it will examine the consequentials that are available. I would be grateful if the minister could explain how and where the Government is introducing measures that reflect those Barnett consequentials.
Briefly, minister. The member is in his last 30 seconds.
Daniel Johnson said that the UK Labour Government is putting in a support package of £4.3 billion. The Scottish Government is putting in a support package of £864 million. If that was scaled up to the size of the UK economy, it would be closer to £10 billion.
The reality is that, for many hospitality businesses, in particular, because of the caps and, critically, the transitional reliefs, that package will make a measurable difference. There will be significant differences for comparable businesses north and south of the border.
Do I need to wind up, Presiding Officer?
Yes.
The Government must acknowledge that there is a repeated issue with a lack of transparency and a tax that does not reflect economic contribution. The Government must pause and undertake a radical review, so that we do not hammer businesses that are the very lifeblood of many communities in Scotland.
I move amendment S6M-20653.2, to leave out from “, and further” to end and insert:
“; acknowledges long-standing criticism of a lack of transparency within the non-domestic rates system; recognises that hospitality businesses pay proportionately more in rates as compared to their share of the economy, and calls on the Scottish Government to overhaul the system.”
15:05
The issue is central to what the Government is about. When John Swinney became First Minister, he was determined to reset the relationship with business. Step by step, the Government is undermining the commitment that the First Minister gave to the country, and this is just another example.
Tourism and hospitality are an essential part of our advert to the world. I represent a part of the country that welcomes people from across the globe for its tourism offer, which goes from the east neuk to golf and the wonderful countryside. However, that advert is under threat because of the Government’s reckless approach to taxation. The minister is right that there is a cumulative impact of a number of issues, including the increases in tax and energy costs and the scarcity of staff, which has meant that many hospitality businesses have had to cut their hours. The sector is already under incredible strain, and tax increases are coming. That is money going out the door before businesses even open the door. It is therefore essential to build confidence in the sector by addressing the issue quickly.
I welcome the fact that the Government listened and put extra compensatory measures into the budget, to try to deal with some of the issues with, and excesses of, the revaluation. We raised the issue in the budget discussions, as I am sure others did, and I was pleased that that happened, but it does not touch the sides. Much more needs to be done if the action is to be meaningful, and it has to be meaningful. This is not just about a political offer; it has to make a difference to the bottom line of businesses, because, otherwise, they will not be here to serve as an advert to the world.
That is why the central part of my amendment says that I want us to follow the steps of the Northern Ireland Executive and have a pause, to allow us to consider and have the structural review that I think is essential.
The minister is right that the assessors are independent, but they are not lone wolves. They do not decide everything by themselves—they have a framework in which they need to operate, which sets out things such as the method and the timetable. All of that is a political decision under which they operate. They are not lone wolves. They are independent, but they need to be given clear guidance about what to do next.
If we cannot do that, do we not have a much more fundamental problem with transparency and accountability in the way that the system works?
Absolutely. Many people are calling for much more radical reform in relation to the transparency issue with the assessors. I have had lots of interaction with the assessors in my part of the world, and at the end of the discussion I am none the wiser than I was at the beginning as to what they are trying to do and how they have come up with the calculations. I have challenged them over the years. I am not qualified to be an assessor, but I would like to understand what they are about, and I simply cannot. Many people, including the likes of John McGlynn, have argued for a much more radical reform of the process, and we should consider that. A pause would give us the opportunity to do so.
In addition to the Barnett consequentials that will, I hope, come through as a result of the UK Government measures, which should go some way to dealing with the problem, we need to look at proposals such as the one that the Conservatives have produced today, which is for 100 per cent relief on properties with a rateable value of under £100,000. Measures such as that need to be considered seriously, because we cannot keep going through this repeated knocking of the sector that happens periodically. We seem to return to this topic as a groundhog day—on a repeated basis.
I will conclude on that point, and I will sum up at the end of the debate.
I move amendment S6M-20653.1, to leave out from “, and further” to end and insert:
“; believes that business rates should support growth and employment and that sudden steep rate hikes threaten the survival of successful businesses; notes that the Northern Ireland Executive has paused its business rates revaluation to avoid large rates increases for many in the hospitality sector, and urges the Scottish Government to pause the implementation of Scotland’s revaluations, open the appeals process immediately, and provide additional relief to businesses using the extra funding expected following the UK Government’s announcement of relief for pubs and music venues.”
15:10
It is less than a month since we had pretty much the exact same debate in the chamber, and I did not expect that we would hear anything new today that we had not heard several times before, so I am delighted to hear Willie Rennie call for “radical reform”. That is absolutely something that the Scottish Greens could applaud.
The Tories would like to believe that lower taxes will magically create growth, conveniently forgetting that suddenly threatening to lower taxes, as Liz Truss did, panicked the markets, tanked the pound and drove up mortgage costs—so, oops! Perhaps that was just because her tax cuts were unfunded.
Just last week, at First Minister’s question time, Russell Findlay proposed that the way to pay for tax cuts was to reinstate the two-child cap on benefits. The Child Poverty Action Group has said that, in its first two years, 2017 and 2018, the two-child cap pushed an additional 300,000 children into poverty—which I think makes the Tories the only party represented in the chamber that is campaigning to increase child poverty in the coming election campaign.
Ms Slater, we are dealing with a debate about hospitality and rates issues.
Understood.
If we could get back to that, it would be very helpful.
If we want properly funded public services in Scotland, we need to raise those funds, and we do that through taxation. If we want Scandinavian levels of public services in Scotland—which, judging from all the questions from various parties across chamber, we do—we must be aware that we need to raise Scandinavian levels of taxes. I would not be the first to argue that the limited taxation powers that we have in Scotland do not allow us to raise taxes as fairly as I would want. The UK reserves powers to tax wealth, carbon emissions, luxuries, air travel, inheritances and capital gains.
Will the member give way?
Let me finish my point.
That is one of the reasons why I support Scottish independence. However, I would also argue that we do not do enough with the tax powers that we have, and that—
Ms Slater, please resume your seat. As you know, I give a lot of latitude to members in relation to what they say, but I am looking at the motion and the amendments, and we are really supposed to be talking about the hospitality sector and the forthcoming non-domestic rates revaluation. Could you please address your remarks to that?
I absolutely think that our non-domestic rates system needs to be changed. For example, if we put a new band in place for properties worth over £1 million, that would raise a lot of money. [Interruption.]
Members!
It would apply, for example, to Amazon distribution centres and massive, super-profitable supermarkets. We could be using that money to offer more relief to small hospitality businesses.
To help Lorna Slater, let me ask her: would she put taxes on hospitality up or down?
I support Willie Rennie’s earlier proposal for “radical reform” on non-domestic rates.
Those are political choices. We could tax the wealthiest, support the little guy and balance the playing field between massive multinational corporations and small businesses. I have said it before: the regular revaluations are a feature of our rates system, not a bug. It is a system of roughly proportional taxation: ratepayers pay rates on the basis of the value of their premises, so accurate valuation is really important. We just have to look at the mess that our council tax system is in to see the distortions that are created by the failure to undertake regular revaluations.
Having everyone pay taxes on—
Will the member take an intervention?
The member is concluding.
I am sorry, but I must conclude.
The revaluation that is being undertaken simply reflects increases to the rateable values of properties. It is a sound principle. As the relative wealth of a business increases through the effective inflation of property prices, so does its contribution. In practice, however, the NDR system disproportionately benefits the owners of premises and disadvantages their tenants. It lets big businesses off the hook and makes life difficult for small businesses. That needs fixing.
We will now move to the open debate. I ask for back-bench speeches of up to four minutes. There is no time in hand, so any interventions will have to be absorbed into members’ agreed speaking allocations. I invite those members who have not yet pressed their request-to-speak button to do so if they wish to speak.
15:14
I am not quite sure what that previous contribution related to, but I am sure that it looked good on the computer.
As MSPs who visit businesses large and small, we hear from employees and employers alike, we talk to the people who deliver public services in our areas, and we meet the organisations and groups that keep our constituencies and regions functioning. I am sure that all of us across the chamber have those experiences. That is why I cannot understand why there are members sitting in this chamber—obviously not SNP members, as hardly any of them are here—who believe that businesses in their area can absorb the consequences of the rates revaluation. How can they possibly believe that many of their local shops, pubs, hotels or cafes are in a place right now to meet and accept the sort of shock that the revaluation represents to many? Have they not heard the concerns of those who have been assessed? Those people simply cannot fathom how the methodology employed could possibly arrive at the figures that they have been given.
In the Highlands and Islands, in particular, we have a disproportionate number of small and micro businesses. Our dependence on the visitor economy also means that hospitality is the lifeblood of many of our communities. Like those of many members, my inbox is filled with small businesses telling me that they are being expected to find thousands of pounds to pay their rates bills. That money will come directly out of the hands of small business people—in other words, it will come out of the hands of families and communities across Scotland.
I will briefly paraphrase a famous sign: when you buy from a small business, you are not helping a chief executive officer buy a third home; you are helping a child to get dance lessons or a football shirt and helping their parents to put food on the table or pay their mortgage. The reverse is also true, because, for many, that is where the money will come from—if the business survives at all. The revaluation comes at a time when the challenges facing business could not be more pronounced.
Ministers should be aware of the wider costs of their changes, beyond those that are simply economic. Outside the cities and large towns, hospitality businesses, in particular, are at the traditional heart of rural communities across Scotland. We know the value that a good local high street or a village pub can bring to the wellbeing of our towns and villages. However, around 300 pubs have closed their doors in Scotland in the past five years alone—a rate of closure that the Scottish Beer and Pub Association suggests is 50 per cent higher than that in England.
We often talk in the chamber about things such as place-based initiatives, building enduring communities and social engagement. However, for many communities across the Highlands and Islands, the experience of recent years has been a hollowing out as premises shut down and promises that the high street will evolve to match changing times give way to “To Let” signs.
Will the member take an intervention?
I am afraid that I do not have the time.
That experience will be the consequence of large hikes in business rates. It will hit regions such as mine hard, because rural businesses routinely operate on tighter margins with lower footfall and greater seasonal fluctuations, with owners often surviving by taking less out of the business to support themselves.
Business groups have been vocal on the issue. The Association of Scotland’s Self-Caterers has spoken specifically about rural and island businesses being at “breaking point”. The Scottish Hospitality Group has said that the sector
“cannot survive another tidal wave of unaffordable rates hikes”.
If Richard Lochhead, Ivan McKee, Kate Forbes or even John Swinney thinks that those businesses and business groups are crying wolf, let them have the courage of their convictions and say that in the chamber.
Ministers should look at what has happened in the past five years. The pandemic cost so many businesses their stability and so many people their livelihoods. It cost many their savings and the resilience that they had built into their businesses in order to protect them from fluctuations in market trends and behavioural change. Should those people really have expected to have to protect their businesses from the impact of Governments that are reckless in relation to the impact of the decisions that they make?
Government can never fully compensate for tougher economic times. However, in such times, it has a choice: to help or to turn a blind eye. More tax, more regulation and more red tape are the choices of the Scottish Government. However, it has an opportunity in the final months of this parliamentary session to turn that around. Now is the time to create some breathing space, pause revaluations and look seriously at what can be done to help businesses that are facing the prospect of massive rises in their bills.
15:18
No one in the chamber underestimates the importance of Scotland’s hospitality sector. Those businesses breathe life into our communities. As the convener of the Constitution, Europe, External Affairs and Culture Committee, I know their impact on the wellbeing of our communities and the support that they give. However, what the motion that is before us proposes risks having unintended consequences for businesses and public services.
The debate must be seen in the context of serious pressures facing Scotland’s night-time economy.
Late-night venues are operating on tight margins, and they face rising energy costs, staffing pressures and changes in consumer behaviour. Some of those issues are not within the gift of this Parliament to fix. The increase in employer national insurance contributions has had a dramatic impact on such businesses, and, as has been mentioned, Brexit has had a significant impact on staffing availability, as fewer and fewer European nationals come to work in our night-time economies.
Will the member take an intervention?
No, thank you.
The Government’s plan is targeted and sustainable, and it supports businesses. It is worth comparing Scotland’s approach with that of the rest of the UK, where hospitality businesses face higher rates, patchier relief and less certainty beyond short-term funding. The small business bonus scheme has already been mentioned. We give significantly more support to our small businesses than is the case in the rest of the UK.
Mr McKee spoke about the value of the £864 million of relief that the Government is putting in. [Interruption.] No, thank you. The Scottish Government recognises the pressures that exist, which is precisely why the budget for 2026-27 delivers a package of £864 million of rates reliefs, which will benefit around 96 per cent of retail, hospitality and leisure businesses. [Interruption.] I will not take an intervention—I have only four minutes, thanks to the Conservatives’ scheduling.
The Government is not sitting on its hands. It is reducing property rates ahead of revaluation and delivering the lowest basic property rate since 2019. It is continuing the small business bonus scheme, guaranteeing certainty through transitional reliefs for the next three years and providing crucial relief for hospitality businesses, including 100 per cent support in our island and remote areas. That will save ratepayers £322 million over the next revaluation period.
We must be honest about what a blanket postponement of revaluation would mean. Revaluation is an independent process that cannot be switched off by ministers for political convenience, and delaying it would create prolonged uncertainty for businesses, which is the very thing that the sector has repeatedly told us that it does not want to happen. That is why the Government has taken a more responsible approach by commissioning an independent review of the valuation methodology for licensed hospitality properties. That review, which is already under way, will report later this year.
The Government has already stated that any Barnett consequentials arising from the UK Government’s business rates support for pubs and live music venues will be passed on in full to Scottish businesses. Ministers are actively seeking clarity from the UK Government on how much funding will be available and when it will materialise.
15:23
Scotland’s hospitality businesses are a vital part of our economy. Serving visitors and locals alike, they are the lifeblood of our high streets and the cornerstones of our communities.
In Dundee, it might be the V&A, Verdant Works, the Discovery or our beautiful scenery that brings people to the city, but our excellent hospitality businesses are an essential part of any visit. There is more to them than just the economic value that they provide. In a society that seems ever more fragmented, those third spaces—the high street cafe, the local pub and the favourite restaurant—are essential to our sense of place and community. I am thinking of Mennie’s on Perth Road on a Friday night, packed with Dundonians sharing a drink in good company after a week of hard graft.
The importance of hospitality to our economy and our communities cannot be overstated.
Will the member give way?
I want to make some progress.
That is why the debate is about more than the technical details of business rates. Governments have a responsibility to get those details right to allow businesses to flourish and remain at the heart of their communities.
Frankly, this SNP Government seems determined to get it all wrong. From speaking to hospitality businesses across the north-east, I know that the looming revaluation is a real cause for concern. Some businesses’ rateable values will double or triple overnight. The increases are staggering and, for many businesses, they will be far too large to absorb.
Scottish Labour supports an immediate pause in the new rates revaluation and an extension of reliefs to retail, hospitality and leisure businesses.
I agree with much of what Mr Marra has said. However, is he also aware that acute pressure is being put on the hospitality industry because of the changes to employer national insurance contributions? What representations has he made to the UK Government on that issue?
Mr Hoy is correct in saying that businesses are absorbing the employer national insurance contribution increase. The quid pro quo for that has been an additional £5.2 billion of funding for the Scottish Government, which can choose how it wants to spend that money and whether to put in place the reliefs.
The other thing that comes from the UK Government is the system of reliefs that is being put in place across the UK. We are yet to hear from the Scottish Government how it will pass that on, particularly to pubs, which we have heard about in the past week.
I welcome the announcement that there will be a 15 per cent cut to new rates bills from April, followed by a two-year real-terms freeze in other parts of the UK. The SNP finance secretary has said that she will pass on additional support, but we are yet to hear what that will actually mean.
Will the member give way?
Sorry, but I would like to make some progress.
In 2024-25 and 2025-26, the SNP failed to pass on rates relief from the UK Government in full, which left many businesses on the brink, even though it had the funds to support them. Indeed, since July 2024, the increase in the Scottish Government’s budget has been £10.3 billion across the spending review. Failing to support our hospitality businesses is a choice that the Scottish Government has made.
The debate gives us an important opportunity to listen to the voices of those in the hospitality sector, and the SNP must heed the strength of feeling before it does even more damage to one of the key sectors of our economy.
As Daniel Johnson set out, Labour is committed to a fundamental overhaul of non-domestic rates. Tinkering around the edges will not cut it, and we are way past the point at which that approach will work. From the calamity of the deposit return scheme, the repeated failure to pass on reliefs and the refusal to reform rates, it is clear that only a change of Government will deliver the change that businesses in Scotland need.
15:26
The SNP’s lack of interest in this subject is glaring. Only three back-bench members of the SNP have bothered to turn up for this debate. I hope that the people who make their living in the hospitality sector will become aware of the lack of interest that the party in government has in their welfare.
I cannot make up my mind whether we are looking at disinterest, ignorance or wilful destruction on the part of the SNP. Frankly, if we want an object lesson of a party that has been in government for too long and has become insulated from reality, there it is in the form of the front bench of the SNP Government.
Whenever something comes up in this chamber, and we say that the Government has some responsibility for it, the Government always says that it is the responsibility of an independent body. It is someone else’s responsibility and has nothing to do with the minister. Why do we have 25 ministers in this Government? They are not responsible for anything. Nothing lands on their desks. They do nothing about anything. Everything is always someone else’s fault.
This is a serious situation. An entire sector of the Scottish economy is heading for the cliff edge. Hospitality in Scotland is not facing a minor downturn; it is facing what its own sector leaders describe, without exaggeration, as “brutal” trading conditions. Around seven in 10 hospitality businesses are reporting that they are in decline and are actively considering closure. A majority expect to make a loss this year. Profitability has collapsed while costs have exploded. Those are not the words of Opposition politicians; those are not our talking points: that is what the sector is saying. If the Government cannot hear what the sector is saying, it is being wilfully negligent in its responsibilities as the Government of this country.
Does Mr Kerr agree that we must identify the individual businesses that are being affected by this, such as the Cartvale pub and restaurant in my constituency, which was once derelict and was taken over by a family that has built it up into a superb local business that employs 51 people whose jobs are now at risk? That is more jobs at risk than members of the SNP who turned up for their Eastwood Burns supper. Is that not a calamity for those employees and a disaster for the country?
Jackson Carlaw has summed it up beautifully. That is exactly it. The sector is not asking for sympathy but pleading for its survival, yet the SNP Government’s response—which we have heard again today—is just more spineless tinkering at the edges.
The sector is crystal clear. Leon Thompson of UK Hospitality Scotland has warned that asking pubs and restaurants to find thousands of pounds more in rates within weeks bears “no relation” to the trading environment that they are operating in. Stephen Montgomery of the Scottish Hospitality Group has described the business rates system as “broken”, “inflation-busting” and “unaffordable” for hospitality, and has explicitly called for the revaluation to be paused.
I could not understand Clare Adamson’s speech—that is not a first time for me—when she said that ministers cannot stop this. Of course ministers can stop it. The Northern Ireland Executive minister—the Sinn Féin minister to whom Murdo Fraser referred—has stopped it.
Let us get real. Those are not isolated voices. Colin Wilkinson of the Scottish Licensed Trade Association has warned that
“There has never been so much … uncertainty”
about the future of the licenced trade.
Those voices are not isolated but united, consistent and unequivocal. They are telling ministers—
Mr Kerr, you will need to bring your remarks to a close; you are over time.
They are telling ministers that what is being proposed will not work.
I will conclude on time to please you, Presiding Officer.
Thank you very much. I call Keith Brown.
15:31
I think that we are all agreed about the importance of the hospitality sector. I worked in the sector for a number of years—
I will watch the clock for the others.
Please resume your seat, Mr Brown.
Mr Kerr, I asked you to bring your remarks to a close. You then continued. You were over time. I explained—[Interruption.]—I am speaking, Mr Kerr. Please resume your seat. I did all that and, notwithstanding, you continued. The latitude that has been given in the open debate has been about seven seconds. You got that. You did not indicate that you were stopping any time soon. I have to protect the rights of other members and the rest of the day’s business. That is what I am doing, further to the timetable that was proposed by your business manager, approved by the Parliamentary Bureau and subsequently ratified by the Parliament. [Interruption.] Does Stephen Kerr wish to make a point of order?
On a point of order, Presiding Officer. You have just taken longer to give me a lecture about timekeeping than it would have taken me to read one more sentence in my speech. I was watching the clock very carefully, because I know how assiduous you are. I got to my allocated four minutes, and seconds past that, you shut me down. Frankly, I consider that you, as Presiding Officer, would have wanted to extend some respect to the fact that I was trying to close my speech.
Mr Kerr, you are coming perilously close to breaching standing orders by challenging the authority of the chair. You might wish to reflect on that. I wish now to continue with the first Conservative Opposition debate of the day.
There is no doubt that we all agree on the importance of the hospitality sector. I worked in the sector for many years and I have a son who works in the pub sector locally. Without question, the sector is facing rising costs, staffing pressures and customers who, because of the cost of living, are having to watch every penny.
We have not heard so much about some of the causes. Brexit has been mentioned by one or two members—in particular, Clare Adamson. It has had a huge impact on the sector. The pandemic has had a massive impact. In fact, we can go back as far as the financial crisis in 2008-09 and, moreover, to the 15 years of austerity budgets that we have had since then and continue to have, as well as the massive waste of public funds through the public-private partnership initiative under the previous Conservative Government, the absolutely appalling budget from Liz Truss and, as has been mentioned by one or two members, the impact of national insurance contributions with regard to the wages of the many people who work in local government.
[Made a request to intervene.]
I am not taking any Conservative interventions; they would not take one from me.
I do not agree that postponing revaluation or introducing a blanket 100 per cent relief up to £100,000 is the right answer because, when it comes to the details, Scotland is already providing a level of targeted, guaranteed support that is simply not matched elsewhere on these islands. The draft Scottish budget sets out a non-domestic rates relief package worth £864 million, which could benefit 96 per cent of retail, hospitality and leisure businesses. Alongside revaluation on 1 April, the basic, intermediate and higher property rates are being reduced, delivering the lowest basic rate since 2018-19. There will also be transitional relief to smooth changes, and the small business bonus scheme is being continued for the next three years, to give certainty.
Specifically for this sector, for the next three years, there will be a 15 per cent relief for eligible hospitality properties paying the basic or intermediate rate, capped at £110,000 per business.
In our islands and in designated remote areas, the relief is 100 per cent, which is a fact that was not mentioned by a previous speaker from the islands.
If we take everything together, we see that 89,000 properties—96 per cent of the sector—will pay zero or reduced rates across the revaluation period, with ratepayers saving an estimated £322 million.
The issue is not whether the hospitality sector is being supported—it clearly is—but whether we throw uncertainty into a live revaluation process by replacing targeted support with a very broad and expensive subsidy.
On the valuation methodology, the Scottish Government has listened to the licensed trade. An independent review, which will involve the sector, is being led by advocate depute BJ Gill, and it will report later this year to inform the 2029 revaluation. That is how we fix the system properly, without pulling the rug out from under businesses in the middle of a revaluation cycle.
We must be honest about where many of the pressures on hospitality are coming from. They are not coming from the Parliament at Holyrood; they are coming from Westminster.
Will Keith Brown take an intervention?
I have already said that I will not take an intervention.
We have already heard about spiralling energy costs, the economic damage of Brexit and, as I have mentioned, the UK Government’s decision to increase employer national insurance contributions by lowering the threshold and raising the rate. That tax on jobs is estimated to cost businesses about £850 per employee and to take more than £2 billion out of the Scottish economy next year. Those are the pressures that are squeezing our pubs, restaurants and hotels.
Members have pointed to England and Wales, but let us make that comparison properly. Down south, there will also be a revaluation on 1 April, but the system there relies heavily on complex transitional schemes and shifting relief packages, which hospitality groups have criticised as being inconsistent and skewed. By contrast, in Scotland, the Government is guaranteeing three years of relief and combining rate reductions, transitional protection, sector-specific relief and the small business bonus scheme in one coherent package.
Mr Brown, you need to conclude.
For those reasons, I support the amendment in the name of Ivan McKee on support for hospitality in Scotland.
I call Fergus Ewing to speak for up to two minutes.
15:36
Let me cut straight to the chase. The revaluation must be postponed. Moreover, the Minister for Public Finance has been given detailed briefings from experts such as Fiona Campbell about how it could be postponed. It could be disapplied for specific sectors, or we could revert to the methodology that applied previously for specific sectors.
In the case of self-catering businesses, without any warning, the assessors moved away from receipts and expenditure and towards rentals. Only about 500 of the 17,500 such properties have any rentals, so the position is absurd. In a blog on 20 February 2023, the Valuation Office Agency—the assessors in England—said that that does not work and is not appropriate. Why is the minister not using the powers that are available to him to disapply the revaluation for the self-catering sector and, probably, for the pubs and hospitality sector? That need not stop the revaluation for other sectors.
I want to ask the minister a couple of specific questions. First, does he agree that, if he continues to do what he is planning to do and thousands of businesses close, the tax take will reduce? Will he publish his estimate of the impact of the loss of businesses over the next few years on the tax take? He must publish those figures if he believes in transparency.
Will Fergus Ewing take an intervention?
There is no time for interventions.
I have two minutes. [Interruption.] I have two minutes, for goodness’ sake. The minister can answer during his time later.
Please resume your seat, minister.
I hope that I will get the time back.
You will not.
Oh.
The Government should also estimate the difference between the tax take if the revaluation goes ahead and the tax take if we reverted to the 2023 revaluation rates. That information should be made public.
This has nothing to do with Brexit. It is nobody else’s fault. This is a home-grown disaster—a home-brewed disaster—but it is not too late to avert that disaster.
We move to closing speeches.
15:39
If it is any comfort to Mr Ewing, I have three older sisters and have faced that experience on numerous occasions.
Mr Rennie, I would advise caution.
Sometimes, the shortest contributions are the best. Fergus Ewing got to the nub of the issue and set out the practical action that is required.
It is important that Government members and SNP back benchers understand this point: it is reasonable to say that energy costs are going up and that Brexit, the pandemic and the increase in employer national insurance contributions have had an impact. All that is true, and it is not unreasonable, as Mr Brown said, to make that point, but businesses are still in the same place after those speeches, and they need practical action to solve the problem that they face today. That is why the more that the minister digs in, the more furious the sector will get. That is why we need a Government that is flexible enough to reflect the problem that businesses face, instead of pointing elsewhere. It must take action now, here at home.
Michael Marra painted a powerful and evocative image of the Dundee pubs, hospitality businesses and restaurants where people enjoy themselves after a hard week at work. The soul of the community is partly what the debate is about. It is not just the advert to the world that I was talking about but the heart and soul of communities. Those businesses face staggering rises, and that way of life is put at threat—the threat is real.
Jamie Halcro Johnston was right to talk about short-term lets and about the detailed, hard work that the Association of Scotland’s Self-Caterers has been doing with the assessor to meet the deadline of 19 February to change the practice notes, which might deliver practical improvements right now. We need a review of whether moving from the long-standing receipts and expenditure model to the rental-based model is the right thing to do, because it has resulted in colossal increases that must be changed.
I will make an offer to the Minister for Public Finance. Stage 1 of the budget bill is coming up in a week’s time, and I know that there will be further talks between my colleagues and Scottish ministers. We are prepared to discuss further measures that could be introduced in the budget to help the sector and, if he is prepared to do that, we would be more encouraged to vote for the budget at the end of the process. However, we need real movement, with measures that will have a dramatic economic impact. That is a genuine offer to the minister—if he is prepared to move further, we will be prepared to consider voting for the budget.
I am happy to engage, as always, and I look forward to Willie Rennie suggesting proposals on what further support he wants to give for NDR relief and on where that money will come from.
I appreciate that approach, because we need to move beyond rhetoric and get to practical action that will make a difference. If the minister is prepared to do that, we will enter into discussions in good faith and try to reach an agreement. I hope that the other parties will do the same, because this stuff really matters for our communities and our jobs.
Budget action will not be enough. We need structural change, and we need to take the opportunity of what I propose as a pause to get that structural change, so that we do not have to come back here every time that we have revaluations.
15:43
Our rates system can and should be made fair. Our business rates relief scheme for small businesses currently goes to businesses that are anything but small, because we use a totally unfit definition for “small”. It needs to be overhauled into a fairer system, where big businesses pay more, according to their ability to pay. That would allow us to target rates relief to smaller local businesses, such as hospitality businesses that support our high streets and rural communities. For example, why do we give rates relief to businesses that use unfair labour practices?
Non-domestic rates and council tax are—no matter how broken—still property taxes in essence. Reform of property tax has been a long-standing priority for the Scottish Greens. We have made the case for a unified system between residential and non-residential property taxes, with our preference being a tax that is based on land value. We should be using our devolved powers to set property tax rates for domestic and non-domestic properties that are right for Scotland, that are in line with our vision for a fairer and greener Scotland and that help us to implement our wider social, environmental and place-based policies, as other members have suggested.
The next Scottish Government, which will be elected in May, will have the opportunity to fundamentally reshape taxation in Scotland—to finally overhaul the long-broken council tax and combine it with the non-domestic rates system in a unified, progressive and sustainable property taxation system in order to put our public services on a sound financial footing and to tackle inequality. It is absolutely vital that it does so. We have been limping along for far too long with the current system, which—as members have said—has unfairness and lack of transparency baked into it and is not working well for anyone. It is time—in fact, it is past time—for the radical reform that Scottish Greens, as well as Willie Rennie, have called for.
15:45
I find Lorna Slater’s position in the debate somewhat difficult to follow. She is right that the current system is unfair and lacks transparency—too many businesses, in almost every revaluation round, end up with increases in their rateable value that simply do not reflect the business conditions that they and their peer businesses face.
However, one of the issues in the debate is highlighted by the fact that Lorna Slater also, in her opening contribution, implies that the rates system is fair because it relies on rateable value. Rateable value is a synthetic figure that is arrived at by assessors, using methodologies that we cannot interrogate. In fact, if you get to see the methodologies, you find that they are, in essence, made up. I saw how a rates bill was calculated when my business was facing a big increase; there were literally arbitrary inflators and deflators for different areas of my shop floor, which were arbitrarily arrived at.
Rachael Hamilton was absolutely right to ask about the methodology that is used for hospitality rates, because it is different. At the heart of the matter, beyond the idiosyncrasies and issues that we face with the current revaluation, is the fact that the way in which RV is calculated for hospitality businesses is a disincentive to investment. You invest in your premises and increase the capacity for customers, and you will get a bigger bill. That does not make sense. We have a system that, for hospitality in particular, arrives at inexplicable increases in rates bills not only for individual businesses but for whole sectors.
Stephen Kerr and Fergus Ewing were right about two important things. First, ministers must take responsibility—they can, ultimately, direct assessors; there are powers for them to do that. To contradict what Clare Adamson said, it is untrue that ministers cannot intervene, because Scottish ministers have intervened in the past to delay the introduction of revaluations.
Secondly—and most important—we have to make comparisons. We would need to delve into the exact figures, but I do not understand the value of the package that the Government has arrived at. We can look at the substantive benefits that are available south of the border, where reliefs are available for businesses with a rateable value of up to £100,000, in contrast with up to £50,000 in Scotland. Furthermore, there is a much more prolonged period of introduction and tapering.
I am genuinely interested in understanding the analysis, because—to reflect on the interaction between Ivan McKee and Willie Rennie—the issue is too important for us to simply toss figures around. I would be interested in sitting down and looking at what can be done, because when businesses, and certain businesses in particular, are facing increases of 200 per cent, 300 per cent or 400 per cent, we have to get this right—
Will Daniel Johnson take a very brief intervention on that point?
Very briefly—I am in my last minute.
Daniel Johnson is coming to a close, so you should be brief, minister.
Daniel Johnson talks about those big percentages, but he absolutely must recognise that the whole point of the £864 million of reliefs is precisely to prevent businesses from experiencing those increases, which are capped.
Sure, but, for those particular businesses, a 15 per cent discount on a bill that has already increased by 300 per cent—
I see that the minister is shaking his head. I am happy to go through that, but, in essence, those reliefs will not do the work that needs to be done to save those businesses. For many of them, the impact of the increases will be existential. We need reform: we need to pause the revaluation, but we also need to overhaul how the rates system works, and its transparency and accountability, because we cannot keep on doing the same thing.
I call Shona Robison to close on behalf of the Scottish Government. You have up to five minutes, cabinet secretary.
15:49
I start by reiterating the commitment that I have made previously to pass on in full any consequentials following the chancellor’s announcement on relief to pubs and music venues in England in order to provide further support to businesses in Scotland. Clearly, there are choices about how that is done. The Minister for Public Finance met the non-domestic rates consultative group immediately after the budget was published in January and will meet the group again tomorrow. I am sure that members will understand that there may be differing views about where the additional support should go, and it is important that we hear the views of those who are directly affected.
I will come back to a couple of points that have been made in the debate. First, I want to correct something that Daniel Johnson said. The 15 per cent RHL relief that we have put into place is for properties up to a value of £100,000. The package of £130 million in transitional relief is in addition to the RHL relief package as part of the £320 million of support.
I want to correct a couple of other things that have been said. In 2025, the number of businesses in accommodation and food services—in other words, the hospitality sector—in Scotland increased, rather than decreased, in the year to quarter 3. That is not to diminish any of the issues that have been raised, because we know that there are issues. That is why we have put in place £320 million as part of the wider package of £864 million in support.
Will the cabinet secretary take an intervention?
I will in a second.
The other point that I want to make is about some of the comparisons that have been made between north and south of the border. The average increase for pubs is 30 per cent in England, 47 per cent in Northern Ireland and 15 per cent in Scotland. There are markedly different average increases for pubs across these islands. That is not to diminish the impact, but that is why we are putting the relief package in place.
If the Scottish Government is providing such a generous package of support for Scotland’s pubs, why is Sir Tom Hunter recommending to publicans across Scotland that they bar Scottish ministers from their premises?
I am sure that Tom Hunter will welcome the additional support that we will put into place to support the sector. It is important that we address the concerns that have been raised. We have already gone some way towards doing that with the 15 per cent RHL reliefs. The transitional relief is a substantial package; all in all, it is £320 million as part of an £864 million package.
I do not believe that delaying revaluation is the answer because, first and foremost, it would be unfair on the 40,000 properties that are expected to see a decrease in their rateable value. Delaying would essentially push the problem down the road. There will always be winners and losers in a revaluation. However, the relief package that we are putting in place will help the businesses that are most impacted to smooth out the additional costs after the independent assessors’ review. Those changes were supported by Murdo Fraser, Mr Simpson, Mr Burnett and many others across the chamber when we debated the Non-Domestic Rates (Scotland) Bill.
I am committed to supporting businesses. Our budget offers more than £320 million of support through transitional relief schemes and retail, hospitality and leisure relief over the next three years—not over one year—so that they will have continuity. I hope that members will vote for the budget because, without it, no one will receive any reliefs and supports.
I will end on a point that Willie Rennie made. As always, he gave a sensible, measured contribution. I am more than happy to discuss with him and any other sensible voices—there are not too many of those in the chamber this afternoon, but Willie Rennie is one of them—how we can go further to support the sector.
You need to conclude, cabinet secretary.
There are choices to be made. I am happy to have further engagement.
15:54
I agree with Stephen Kerr about how disappointing it was to see only three SNP back benchers here earlier. SNP members obviously got the text: now there are an extra three.
Members who have worked in hospitality know that it is an excellent career, and it was good to hear that Keith Brown has done so—good on him. I have pulled a few pints in my time, and I draw members’ attention to my entry in the register of members’ interests: my husband has a pub.
Has the SNP noticed that it is hammering the last nail in the coffin of Scottish pubs? My colleague Murdo Fraser described the situation as “catastrophic”. SNP demands of hospitality are as relentless as a rising tide, and I am pleased that the Scottish Conservatives—the party of common sense—are using their debating time to bring the issue to the chamber. Jamie Halcro Johnston has been listening to businesses. He understands that they cannot absorb any more pressures on their sector.
I want to tell members about a local husband-and-wife team. For the record, I would also like to tell Lorna Slater that it is not about little guys with little businesses; it is about big girls with big businesses. This husband-and-wife team are proud business owners. They have a hotel that has been in their family for 55 years, and they are determined to reach their 60th anniversary. However, with all the closures in hospitality, it is proving tricky for them to remain optimistic. They are willing to put in the long hours, for very little return, because they put their loyal and dedicated employees first. They say that Rachael Reeves’s NI uplift alone represents £40,000 off their bottom line. Thanks to Keir Starmer, duty on beer and wine has increased, and added to those are the headwinds of the increasing costs of ingredients such as meat, fish, dairy and coffee. Now, thanks to the SNP, the non-domestic rates revaluation will impose a further crippling rise. Business rates will rise for them from £85,000 to £115,000, which is an extra £15,000 payable per year. They are not exactly sure what they get for their rates, and they would like to know. On average, businesses in Scotland are facing an 86 per cent rise.
A small-to-medium enterprise in hospitality—
Will the member take an intervention?
I will, in a second.
As Daniel Johnson, who has run a business, recognises, in an SME that has a large turnover and a low profit margin, it is the people who are running the business who actually know what they are doing, and they recognise that the methodology is completely unfair, because how it is calculated is completely different from how that is done in other sectors. The decision makers on the front benches clearly do not understand that.
I will take the intervention.
I will correct Rachael Hamilton. The average increase for businesses in Scotland in terms of rateable value is 12.2 per cent, spread over three years, and not the 80-odd per cent that she is talking about. That compares with an increase of more than 19 per cent south of the border.
Some hospitality businesses are facing increases of up to 300 per cent. The minister needs to look at the stats, because he clearly does not understand them.
Let us hear what the industry thinks. Leon Thompson of UKHospitality said:
“Without action, we will only see business closures accelerate, more jobs lost”—
Will Rachael Hamilton take an intervention?
No thanks. Maybe in a bit.
Mr Thompson continued:
“Scottish communities”
will
“continue to see the loss of much-loved local venues.”
Stephen Montgomery, director of Scottish Hospitality Groups, said:
“Hospitality is the absolute backbone of Scotland’s communities and high streets, but it cannot survive another tidal wave of unaffordable rates hikes.”
Let us look at Clare Adamson’s constituency. The rateable value of the Electric Bar in Motherwell is moving from £26,250 to £45,250, which is nearly double. I wonder whether she has spoken to that business. In Shona Robison’s constituency, the rateable value of the Barrelman in Dundee was previously £38,200, but the new RV is £68,700. Has the cabinet secretary spoken to that business to see how that will impact its bottom line and whether job losses are possible?
We know that doing business in Scotland is more costly overall than it is in the rest of the UK. The cost of doing business in Scotland is the highest on record, and the tax burden is higher than the UK average. Let that sink in as we debate the new revaluations. Let us assess the operating environment in Scotland—or can we, given that the SNP dropped the tourism minister role?
As Willie Rennie pointed out, the First Minister said that he wanted to reset the relationship with business. The SNP’s new deal for business is stale. It has been stuck in the cupboard and it has gone mouldy. The non-domestic rates system for retail, hospitality and leisure is unfair. Fergus Ewing says, “Please publish how much the tax take is going to be.” How sensible would that be? I say to Fergus Ewing, “Come and join us—you, too, are the party of common sense.”
We want to see urgent action on the current methodology of revaluation. It is as clear as day that that has been in the hands of the minister, because the Government sets the framework. Ultimately, we want to see the SNP postpone the revaluation, as the Northern Ireland Assembly has done. We need action now. Labour, Lib Dems and Fergus Ewing agree that a Scottish statutory instrument could be laid to delay the revaluation.
Hiding behind the independent function of the assessors is shameful. It is shameful because hundreds of businesses will close. We need to see action from this Government.
That concludes the debate on saving Scottish hospitality. There will be a short pause before we move on to the next item of business.
On a point of order, Presiding Officer. I acknowledge the error that I made with the figures—I was quoting a previous threshold. I wanted to acknowledge that at the earliest opportunity.
Thank you, Mr Johnson. That is not a point of order, but the matter will be noted on the record.
Previous
Points of OrderNext
Council Tax