Businesses facing huge rate rises as revaluation comes into effect

Firms in Shetland are facing huge rate rises – some by as much as two-thirds – under the Scottish government’s revaluation of business property which will come into force at the beginning of next month.

Hotels, guest houses, shops and other retailers are all in line for the swingeing increases and are only now beginning to digest the potential impact on their business plans as the country emerges tentatively from recession.

Although the government has reduced the business rate for 2010/11 to 40.7p in the £ for properties with a rateable value of £35,000 or less and 41.4p in the £ for those above, the revaluation conducted by the Scottish Assessors Association  – based on annual turnover – more than makes up for the cut in many instances.

On top of the government’s proposals to increase the durationl of ferry journeys to and from Shetland and the prospect of fewer winter sailings, the revelation has angered politicians and business people.

For seven hotels in Shetland the revaluation will mean an increase of a quarter or more. Two hotels facing sizeable increases are the Grand Hotel and the Queens Hotel, which face an increase in their rateable values of around 40 and 90 per cent.

The new rates set mean the Queens Hotel will now have to pay £19,006 and the Grand £19,109.50, increases from the previous year of £7,462 (64 per cent) and £3,463 (22 per cent) respectively. Owner George Hepburn, of JW Gray, said he had not yet been informed of this and as such could not comment.

Some of the other businesses to be affected are Lerwick’s shops: Westside Pine will see its rateable value increase by almost a quarter and the Cope-operated Shetland Soap Company by 21 per cent.

Other accommodation such as guest houses and hostels will also experience increases, with Islesburgh Youth Hostel’s rateable value increasing by 17 per cent and Eddlewood Guest House at Clairmont Place by 30 per cent.

Steve Henry, chairman of the Shetland Tourism Association, said: “Anything that puts the cost of people staying up will have an effect on Shetland.”

Mr Henry said the news this week that NorthLink is to add time to journeys and cut sailings will also be a worry for those in the tourist industry in Shetland.

Shetland Retailers Association chairwoman Janet Davidge said that for businesses that will be affected by the increase it is “bad timing”.

She said: “With the current economic climate it’s just one more thing for businesses to worry about.”

Isles MSP Tavish Scott said he will be writing to the businesses which will be affected by large increases.

Mr Scott said: “Liberal Democrats want to see a transitional period so that the hotels which are facing big increases don’t suffer the full force of these rate rises immediately. We know that the Scottish government doesn’t set the value of every hotel. But the government has chosen to hit hotels with the full increase in just one year.

“Previous administrations have brought major changes like this in slowly, over a period of time. The UK government is doing the same.

“At a time of deep recession, the SNP are hitting the tourism industry in Shetland and throughout Scotland hard.

“On April 1st, some Shetland hotels will be stunned by painful rises in their business rates. The Scottish government can’t take Scotland’s hotel industry for April Fools. They must introduce the scheme which helps these important Shetland businesses.”

The MSP raised the issue at First Minister’s questions last Thursday, criticising the decision to put “extra burdens on Scottish tourism” during a time that will be economically difficult for many businesses and questioned whether the government would change its mind about the increase.

First Minister Alex Salmond responded by stating that the decision to raise the rates had been made by independent assessors, “not by the First Minister or the government” and that the package of relief available to small businesses is “the most generous package in the United Kingdom” under which “60 per cent of Scottish businesses will be better off”.