More than a third of north-east businesses say they will have to cut staff numbers as spiralling business rate bills begin to bite, the first major survey of the impact shows.
The stark reality facing the region’s economy is revealed in a survey of 169 firms carried out by Aberdeen and Grampian Chamber of Commerce for the Press and Journal.
More than half (58%) said they would have to reduce costs as a direct result of being landed with the huge extra expense even as they grapple with the effects of the oil and gas downturn.
Staff training and development will be pared back by 42% of respondents and 30% are being forced to increase costs for customers.
But most worrying for the region’s workforce is the proportion who say they will have to reduce staff numbers: 35%.
Tory MP Ross Thomson said the findings were “deeply worrying” and business leaders appealed for more action to help cushion them from the heavy blow.
Official government analysis released last week showed that more than half of the rise in business rates across Scotland was being borne by the north-east alone.
Struggling firms are furious that no account was taken of the dramatic slump in the energy sector – with the revaluation used to calculate the new bills based on 2015 property values.
Almost two thirds of those questioned (64%) said the Scottish Government had been “no help at all” while most (58%) praised the role of the local media.
The P&J has run a long campaign which has been referenced in the Scottish Parliament.
After months of pressure, Finance Secretary Derek Mackay in February belatedly capped this year’s rise at 12.5% in the hospitality and office sectors.
Aberdeen and Aberdeenshire councils have also launched their own local rates relief packages to help other outfits.
But the help will only last one year.
The entire business rates system is currently under review by Sir Ken Barclay.
Hotelier Stewart Spence is among the prominent corporate figures facing tough decisions.
The owner of the Marcliffe, who employs 100 people, said he was not surprised at the findings and had told his staff “any possible increases in salaries had to be put on hold”.
He also revealed that as and when employees left, he would be forced to advertise for replacements at reduced wages.
Following an appeal, he will not have to pay the increased rate until next year.
But he added: “I’m paying the same rates now as when my business was turning over £7.5million.
“Turnover is now 40% lower because of the North Sea downturn, but I’m going to be asked to pay more.”
He said the SNP had paid the price at the general election, adding: “There’s a lack of business acumen.
“Derek Mackay doesn’t speak to businesses, neither does Nicola Sturgeon.”
Gordon Brailsford, owner of the Mosset Tavern in Forres, who employs 31 people, said if his appeal is unsuccessful there would have to be “massive efficiencies within his business”.
He added: “Staffing is the biggest cost – that would be an area that has to be looked at.”
He stressed that would be his “last resort”, but continued: “I need to find a way not to pass the cost onto guests, not to lose members of staff, but to find efficiencies in the business.
“I implore the Scottish Government to help us find those.”
Aberdeen South MP Mr Thomson told the P&J the findings proved the Scottish Government “wasn’t interested in the north-east”.
He said: “This survey exposes some deeply worrying facts. Businesses say they will have to cut staff which can only have a terrible effect on our economy here which is already struggling due to the downturn in oil and gas.
“I think the Barclay review is a way to kick the whole issue into the long grass, the rates system needs fundamental re-evaluation not just tinkering at the edges.
“It’s so disappointing that the Scottish Government has not grasped the seriousness of the situation.”
City council finance convenor Douglas Lumsden said the city had seen enough of job cuts in recent years.
He added: “We were able to bring in a comprehensive package of over £4million in relief for businesses neglected by the Scottish Government scheme. Unfortunately, this is only a temporary relief.
“For long-term stability in the economy and certainly for people’s jobs, the Scottish Government needs to be willing to work with the council.”
A Scottish Government spokesman said the revaluation was the first since 2010, had been undertaken by independent assessors and businesses have until September to appeal.
He added: “We are delivering around £660million of business rates reliefs this year, including an extra £9.8million specifically for Aberdeen and Aberdeenshire.
“We have expanded the Small Business Bonus Scheme – which has already saved business around £1.3billion in total – so that it lifts 100,000 properties out of rates, reduced the rates poundage and limited application of the large business supplement.
“That means that overall, seven out of 10 businesses are paying the same or less rates than they did last year.”
