How quickly the Scottish Budget has aged. Written with business growth as a top priority and announced by Cabinet Secretary Kate Forbes last Thursday in Parliament, barely two hours later Public Health Scotland called for the postponement of Christmas parties and hospitality businesses were plunged back into the mire. Travel businesses had already been hit with the re-introduction of international travel restrictions. Cancellations leave big gaps in cash flow forecasts, eat up staff time on administration and will leave many with unusable stock.
The Budget centrepiece for business was an extension of rates relief for retail, hospitality and leisure at 50% for the first three months of the 2022 financial year capped at £27,500 per ratepayer. That support is to be warmly welcomed. Glasgow Chamber of Commerce asked for further rates relief and it was given but our request was made before Omicron emerged and it focused especially on the independent businesses in our city centre.
We had taken the view that the cliff edge re-commencement of non-domestic rates in April was coming too early for many financially stretched businesses to swallow. We are concerned at the cumulative impact of nearly twenty two months of restrictions on Glasgow’s city centre where footfall has never managed to get beyond two thirds of its pre-Covid levels in February 2020 and is now guaranteed to fall back again under the fresh guidance on working from home
There was little else that was new in the budget for them. The continuation of the small business bonus scheme for all properties with a rateable value of up to £15,000 was hailed as a measure of support for high streets. In Glasgow City Centre that is barely relevant. I suspect the public are broadly unaware of the size of rates bills for SME’s in our city centre. I can immediately think of one well known restaurant, independent and relatively small in terms of seating covers that has a rateable value over £250,000. Or an independent hotel with just over 100 rooms whose rateable value is over £400,000.
And much as I admire so many of those who work in Scottish Government agencies like Scottish Enterprise and Skills Development Scotland, the Cabinet Secretary’s listing of their largely unadjusted funding allocations as a demonstration of the commitment to business was a little thin.
The political reaction to Omicron is chasing customers back into their homes and so the Scottish Government is right to argue that Chancellor of the Exchequer Rishi Sunak must revisit the UK Government’s financial support for business.
The British Chambers of Commerce has written to the Chancellor setting out options for that support. As a consequence of Plan B the VAT for hospitality and tourism should revert back to its emergency rate of 5%, 100% business rates relief for retail and hospitality should be re-instated and additional grant funding for the most severely affected sectors like aviation and travel should be made available. Should further restrictions be needed – some form of Plan C – then the return of furlough would be recommended.
If as some assessments suggest we can expect to see permanent changes in retail and office activity in our city centres then those enormous rateable values will have to come down and come down fast. Larger corporates may be able to absorb those costs for a while; our independent businesses cannot. On last Sunday’s GO Radio Hunter & Haughey show Ms Forbes suggested she would be open to considering moving away from a property based business tax though a new tax would need the UK Government’s permission. In the meantime let’s get those rateable values down.