Submitted by Bill Fernie
23rd July 2026
The UK Government has announced a 20% cut in business rates for many hospitality businesses in England, offering welcome relief to pubs, restaurants, cafés, hotels and live music venues that have struggled with rising costs in recent years.
For thousands of businesses south of the Border, it could mean lower bills and a little more breathing space.
But in Scotland, the announcement immediately raises a difficult question.
Will Scottish hospitality businesses receive similar support or will they be left at a competitive disadvantage?
A Tale of Two Systems
Business rates are one of the many taxes that have been devolved to the Scottish Parliament.
That means decisions made in Westminster for England do not automatically apply in Scotland.
Instead, the Scottish Government must decide whether to introduce its own relief or continue with its existing business rates policies.
While devolution allows Scotland to make different choices, it also means businesses can find themselves operating under very different tax systems despite serving many of the same customers.
Hospitality Has Had a Tough Few Years
Few sectors have faced as many challenges as hospitality.
Businesses have had to cope with:
Rising food and drink costs.
Higher National Living Wage bills.
Increased National Insurance costs.
Higher insurance premiums.
Expensive energy bills.
Difficulty recruiting staff.
Customers with less disposable income.
For many small independent businesses, profit margins have become increasingly thin.
A reduction in business rates may not solve every problem, but it could provide valuable cash flow at a time when every pound counts.
Why This Matters for Rural Scotland
The issue may be even more important in rural areas such as Caithness and the Highlands.
Many businesses already face disadvantages that their counterparts in larger towns and cities do not.
These include:
Higher transport costs.
Greater delivery charges.
Smaller local populations.
Seasonal tourism.
Staff shortages.
Longer supply chains.
Running a hotel, café or village pub in Wick, Thurso or John O'Groats is very different from operating in a busy English city centre.
When costs are already higher, any tax difference becomes even more significant.
Competition Doesn't Stop at the Border
Tourists do not always think about business rates—but business owners certainly do.
Visitors travelling around Britain compare prices, accommodation and places to eat.
If English businesses receive tax reductions that Scottish competitors do not, they may have greater flexibility to:
Hold prices down.
Invest in improvements.
Hire additional staff.
Extend opening hours.
Survive quieter winter months.
Over time, even relatively small differences in taxation can influence investment decisions.
Pressure on the Scottish Government
The announcement is now likely to increase pressure on ministers in Edinburgh.
Hospitality organisations may argue that Scottish businesses deserve the same support as those in England.
However, there is an obvious problem.
The Scottish Government is already facing significant pressure on its finances.
Health spending continues to rise.
Local authorities remain under financial strain.
Large commitments already exist for education, transport and social care.
Every tax reduction has to be paid for somehow.
Providing identical business rate relief could cost many millions of pounds each year.
Difficult Choices
The Scottish Government now faces several possible options.
It could:
Match England's 20% reduction.
Introduce a smaller Scottish relief.
Target support only at smaller independent businesses.
Focus assistance on rural hospitality businesses.
Leave the current system unchanged.
Each option has advantages—and each comes with a cost.
Another Example of Devolution in Action
Announcements like this highlight one of the realities of devolution.
Scotland has the power to make different policy choices.
Sometimes those choices provide advantages.
At other times they create differences that businesses question.
Neither approach is automatically right or wrong.
But when neighbouring businesses on opposite sides of the Border face different tax bills, comparisons are inevitable.
Looking Ahead
Hospitality businesses across Scotland will now be watching closely.
Many owners will ask a simple question:
"If businesses in England are receiving additional help, why shouldn't we?"
The answer may ultimately depend not on whether the Scottish Government wants to match the policy—but whether it can afford to.
With Scotland's public finances already under pressure, ministers may have to decide between supporting one struggling sector or protecting spending elsewhere.
For many hotels, pubs and cafés across the Highlands, that decision could make a real difference over the coming year.
Comment
The announcement illustrates one of the strengths—and one of the challenges—of devolution. Scotland has the freedom to chart its own course, but every different policy invites comparison. Hospitality businesses are a vital part of many Highland communities, providing employment, attracting visitors and supporting local supply chains. If English firms enjoy lower business rates while Scottish businesses continue to face the same rising costs, pressure will grow on Holyrood to respond. The question is no longer simply whether Scotland can choose a different path, but whether it can afford not to.