An Argyll estate owner has claimed it is facing a financial crisis after the failure of efforts to have a business rates bill of more than £500,000 for hydro schemes on the land cut.
Ardtornish Estate, on the Morvern peninsula, was one of a handful of small hydro scheme operators to fall outwith criteria to qualify for a 10-year rates relief extension announced by the Scottish Government last week.
Managing director Hugh Raven said yesterday the “unintended anomaly” had left the business as the highest rate-payer proportionate to turnover in Scotland.
The bill relates to five small hydro schemes developed on the 35,000-acre estate that produce a total of 3.4 megawatts of electricity.
Mr Raven said: “In our extensive discussions with the Scottish Government, we were given hope they would use this opportunity to address our problems, and we are extremely disappointed and shocked they have chosen not to do so.
“As well as being the Cabinet secretary responsible, Kate Forbes is also our constituency MSP.
“I will be seeking an emergency meeting with her to discuss what can be done now to stave off very, very serious damage to our business which will, without doubt, impact the local community here if it’s not resolved immediately.
“We were given positive signs by the Scottish Government but our hopes have now turned to dust.”
He added: “We work hard to be a good corporate citizen. We don’t always succeed, but we have followed closely changing government policy and advice – and, as a result, we have been absolutely hammered.
“We think we are the highest rate-payer proportionate to turnover in Scotland, at £380,000 in rates demands for 2020-21. Our appeals for a level playing field and a sensible solution have so far fallen on deaf ministerial ears.”
In addition to the rates bill, Ardtornish faces repayment of £145,000 hydro rates relief wrongly awarded in a previous year.
Mr Raven said the total of more than £500,000 meant its rates were more than 15% of revenue, a figure “well over three times that of retail operators”.
Last year, small hydro operators warned they were facing major economic uncertainty unless Scottish ministers took action to reduce punitive buiness rates levied on the sector.
Although the government introduced the rates relief extension, which will run until 2032, following recommendations of the Tretton Review, the British Hydropower Association (BHA) said it would benefit only 95% of the sector.
BHA chief executive Simon Hamlyn said: “A handful of operators are in a very precarious financial position because of state aid legislation.
“We urge the Scottish Government to listen again to our pleas to help them, and to deal urgently with this issue before those businesses have to consider their futures.
“Essentially, the government is discriminating against a handful of businesses, like Ardtornish, which fall outside the relief scheme for one reason or another. The relief scheme should and must apply to all operators.
“With the political will, particularly in the run-up to COP26 and the government keen to highlight its green credentials, ministers should give hydro operators all the support they need.”
Mr Raven added: “The rates we are paying – at many times the level paid by other businesses – are grossly unfair. For a fragile business like ours, it seems helping Scotland reach net-zero comes at a ruinous price.”
A government spokesman said: “The Scottish Government delivers the most generous non-domestic rates relief for generators in this sector that offer community benefit, as well as to all small-scale hydro generators.
“Responding to the findings of the Tretton Review of Small Scale Hydro Plant and Machinery, the Scottish Budget 2021-22 committed to guaranteeing the existing 60% hydro relief until the end of the 2031-32 financial year, in order to provide investor certainty.
“The new subsidy regime under which reliefs that would previously have been capped by EU state aid rules will now operate was established by the EU-UK Trade and Co-operation Agreement and not the Scottish Government.”
