Hospitality venues up to £110,000 worse off, as pubs and hotels left behind

Local pubs will be left significantly worse off than in England, due to the lack of business rate support in the Scottish Budget, according to UKHospitality Scotland.

New analysis shows the extent to which hospitality businesses are being financially disadvantaged by a lack of support by the Scottish Government. The figures will be highlighted in an evidence session to the Economy Committee today [Wednesday 24 January 2024].

Venues worse off

An average pub in Scotland will be £15,000 worse off than its equivalent in England, with a medium-sized hotel finding themselves £30,000 worse off. Larger businesses have been denied support worth up to £110,000, the payment cap.

In December, the Scottish Government chose not to introduce any form of business rates relief scheme for hospitality venues. This is in contrast to England, which extended its 75% business rates relief and resulted in millions of pounds being allocated to the Scottish Government.

According to The Fraser of Allander Institute at least 10,000 hospitality businesses are now operating without any financial assistance.

‘Real-life consequences’

Leon Thompson, Executive Director of UKHospitality Scotland, said: “These figures clearly illustrate the real-life consequences of the Scottish Government’s decisions.

“In the current climate, it is almost impossible to fathom a local pub landlord or hotel manager being able to find thousands of pounds to pay a bumper business rates bill in April.

“Many are struggling to keep the lights on as it is, in the face of extortionate rises in energy, food, drink and wages.

“It is an active choice of the Scottish Government not to support these critical venues and leave them significantly worse off than their English counterparts, for the second year in a row.

Closed sign in shop

“Our pubs, restaurants, hotels and cafes, to name a few, are pillars of our communities. They’re where we go to meet friends and family, celebrate an occasion or for some much-needed relaxation.

“There is still time for the Scottish Government to put right their widely-criticised decision not to provide business rates support this year.

“As they finalise this year’s Budget, I would urge them to use the funds available to them and introduce a 75% business rates relief scheme.”

£15,000Pubs are £15,000 worse off compared to England

£30,000Hotels are £30,000 worse off compared to England

£110,000Larger businesses are losing out on up to £110,000

Vacancies fall by 35,000, but remain above pre-Covid levels

Reforms to the Apprenticeship Levy and addressing the cost burden for employers can ensure vacancies continue to fall, says UKHospitality.

New figures from the Office for National Statistics show that there were 112,000 vacancies in hospitality at the end of 2023, down from 147,000 at the same time in 2022. Current vacancies remain far higher than pre-pandemic levels, when there were 89,000.

We are continuing to call for measures that further enhance the sector’s ability to invest and develop its staff, primarily through reform of the Apprenticeship Levy.

The ever-rising cost burden for businesses also needs to be addressed, which is critical ahead of the National Living Wage increase in April.

147,000Vacancies at the end of 2022

112,000Vacancies at the end of 2023

35,000Total reduction in vacancies

Kate Nicholls, Chief Executive of UKHospitality, said: “It’s encouraging news that vacancies over the past year have fallen by such a considerable amount. 

“Hospitality businesses have invested heavily in their recruitment and how they develop their own talent – this progress is testament to their work.

“However, there is still much more to do. We still have 23,000 more vacancies than before the pandemic and recruitment is still challenging. It’s why our vacancy rate remains high at 8%.

“Hospitality can continue to drive down vacancies and create more jobs, if we are supported to do so. Reform of the Apprenticeship Levy would allow businesses to enhance their skills and development offering even further and is something the entire economy is supportive of.

“What’s incredibly pressing is reducing the cost burden for venues, which continues to be the driver of closures. 

“The National Living Wage increase in April is at the forefront of everyone’s mind right now and measures to reduce business costs are critical to help venues with the increase wage cost this brings.”