Scotland Urged To Deliver ‘Fundamental Reform’ Of Hospitality Business Rates

Scotland’s hospitality sector needs fundamental reform of the business rates system if businesses are to survive and invest for the future, industry leaders have warned First Minister John Swinney.

The call comes as the UK Government announces plans to review business rate valuations for hospitality businesses in England and Wales, amid growing concerns over the fairness of the current system.

The developments have prompted renewed calls for action in Scotland, where an independent review of Non-Domestic Rates (NDR) for licensed hospitality was commissioned by the Scottish Government but has yet to be completed.

Stephen Montgomery, chief executive of the Scottish Hospitality Group (SHG), said the industry welcomed the moves south of the border but stressed that Scotland had already begun work on its own review.

“What has been announced in England and Wales recognises that there are serious questions about whether the current system is fair for hospitality,” said Mr Montgomery.

“But Scotland had already started this journey. We pushed incredibly hard to secure this review and businesses have put a huge amount of effort, time and work into it.”

Review faces delay

The Scottish Government formally committed to an independent review of NDR valuations for licensed hospitality as part of its 2025/26 Programme for Government.

Brian “BJ” Gill KC was subsequently appointed independent chair, with the review originally expected to report before the end of 2026.

However, Mr Gill has since taken up the role of Solicitor General for Scotland and a replacement chair has yet to be announced, raising concerns within the hospitality industry about further delays.

The review has involved hospitality businesses and industry bodies being invited to submit evidence on the existing valuation system and potential alternatives.

Mr Montgomery said the sector had already done what had been asked of it and warned against allowing the process to lose momentum.

“Through the New Deal for Business, engagement with ministers and officials and the formal call for evidence, our industry has done what was asked of it,” he said.

“We cannot now allow all of that work to stall.”

SHG maintains that the review should not be rushed simply to meet an original reporting timetable. However, it also argues that businesses cannot be left waiting indefinitely while facing potentially significant increases in their rates liabilities.

Calls for more fundamental change

Mr Montgomery said any review must go beyond making limited adjustments to the existing system.
“This is far too important for that. We need a review that fundamentally challenges the current system, not one that just tinkers around the edges.”

The comments come against a difficult backdrop for Scotland’s hospitality sector, with operators continuing to face pressure from rising costs, labour challenges and taxation alongside weaker consumer spending.

Mr Montgomery warned that the consequences of further delays could be significant for businesses, employment and investment.

“We cannot keep waiting while more hospitality businesses cut jobs, stop investing, reduce opening hours or close altogether,” he said.

“We are already seeing major hospitality businesses enter administration. These are not theoretical warnings anymore. Businesses and jobs are on the line.”

Historic Perth hotel caught up in administration

Among the businesses affected by the wider challenges facing the sector is Strathmore Hotels Ltd, the East Kilbride-based hotel operator which entered administration earlier this month.

The company operated eight hotels, including Perth’s historic Salutation Hotel.

The Salutation dates back centuries and is widely regarded as one of Scotland’s oldest established hotels. The property began life as a coaching inn in 1699 and has long been associated with Scottish history, including the Jacobite era.

The case underlines the pressures facing hospitality operators across Scotland, with industry representatives urging ministers to ensure that the forthcoming NDR review results in meaningful reform rather than limited changes to the existing framework.

For Scotland’s pubs, hotels and other licensed hospitality businesses, the focus now turns to the appointment of a new independent review chair and whether the Scottish Government will maintain momentum towards a comprehensive reassessment of how the sector’s rates liabilities are calculated.