Finance Secretary Derek Mackay bowed to mounting pressure yesterday and announced nearly £45million of relief for firms facing soaring business rates.
The upcoming changes to Rateable Value (RV) have provoked outrage across the north and north-east, with many traders facing rises of up to 250% – prompting warnings of job losses and closures.
There has been a particular backlash in the north-east, as the proposed increases are based on property values in 2015 – before the full effects of the oil and gas downturn were felt.
Across the north and Moray, fears were raised about the impact the rises would have on the all-important tourism industry – and the Press and Journal was the first to highlight the plights of businesses across the region.
Scottish Government ministers have long said that they could do little to offset the rise – arguing it was in the hands of independent assessors.
But yesterday the embattled finance secretary unveiled a £40million package which will mean rates rises on all hotels, cafes and pubs across Scotland will be capped at 12.5% for a year.
Some £4.9million of the fund will go to Aberdeen and Aberdeenshire offices – which will also have their increase capped at 12.5% – with Mr Mackay admitting he “recognised” the struggles of the north-east.
It is understood the relief will come from other government funds.
But there was anger in the chamber that relief was not being offered to the NHS or the oil and gas sector.
Last night, opposition groups and businesses welcomed the announcement but said Mr Mackay had been “forced” to make an “embarrassing U-turn” on the issue after constant pressure.
The announcement comes hot on the heels of another SNP climb down, where the government had to scrap controversial council tax plans and find more funds for councils.
Welcoming the announcement James Bream, the research and policy director at the Aberdeen and Grampian Chamber of Commerce, said: “The measures cannot take away all of the pain of the revaluation but are very welcome, it would be churlish to argue about the scale of support at this stage.
“The chamber has been working on this issue since last June representing members and therefore around 130,000 people in the north-east.
“The Scottish Government has taken the time to listen and we can now work locally to implement solutions.”
SNP politicians also welcomed the changes, saying they had been “lobbying” the government behind the scenes to get the concessions.
Kate Forbes, MSP for Skye, Lochaber and Badenoch, said: “A significant majority of Highland businesses’ rates will fall or not change, as the Highlands stands to benefit enormously from the Scottish Government’s expansion of the rural relief and small business bonus schemes.
“But I fully accept that some businesses have been facing huge, overnight increases in their rateable values and this could have had an enormously detrimental impact on the tourism industry in particular.
“The tourism industry is critical to the Highland economy and I’m pleased that the government recognises this and has acted to support and reward businesses in the Highlands.”
Moray MSP Richard Lochhead added: “The cabinet secretary has clearly listened to businesses in Moray and the north-east and has come to the rescue by providing substantial support to those most affected, and I know that local businesses will welcome the 12.5% cap on increases for the hospitality sector – especially given that some were facing hikes of over 200% following the independent revaluation.
“This action from the Scottish Government to help our hospitality sector is of huge importance given the significance of tourism to Moray’s economy.”
But although he broadly welcomed the announcement, Tory Highlands and Islands MSP – and Moray councillor – Douglas Ross, said the government should have acted sooner.
He said: “This announcement for the hospitality industry is very welcome. I can only commend the many businesses that highlighted the plight they would have faced had the proposed increases gone through. I spoke to many hotels and pubs who were facing staggering increases.
“It’s not all good news however. This cap is only in place for one year so we need to ensure that the Barclay review into rates recognises the impact huge business rate increases will have and what actions it will take to tackle this.
“There are also many businesses who will continue to see their rates increase and I want to have confidence that any appeal will be dealt with a swiftly and efficiently as possible.
“The Scottish Government has done the right thing for the hospitality industry over business rates. It would have been far better and saved a lot of anguish had they acted sooner but ultimately it is important that all the businesses who were facing huge increases know these will be capped at a maximum 12.5% this year. A 12.5% increase in itself is not an insignificant sum but hopefully far more manageable than some of the earlier hikes which were being proposed.”