That’s why The Herald is today launching Reset The Rates, a major campaign for fundamental reform of Scotland’s business rates system.

Backed by leading business figures and industry organisations, the campaign argues the current regime is too complex, too unpredictable and increasingly risks holding back sectors that are vital to local economies and communities.

Business leaders say the problem is particularly acute in hospitality and tourism, where the method used to calculate rateable values has left some firms facing severe increases in their bills.

Many say the resulting uncertainty makes it harder to invest, create jobs and plan for the future.

The Scottish Government has commissioned a review into the methodology used to calculate bills for the hospitality industry. However, following a change of chair from BJ Gill KC to Jonathan Murphy, it is not expected to report until the summer of 2027. Even if ministers act quickly once it reports, significant reforms may not take effect until 2029.

The Herald’s campaign launches today (Image: Damian Shields/ Newsquest)

Reset The Rates calls for six reforms which are designed to protect businesses from sudden hikes in bills, help ensure policy is applied consistently across the country, encourage businesses to invest and, crucially, help restore vitality to Scotland’s high streets.

Our campaign has attracted the support of a range of business leaders in Scotland, including high-profile chef Nick Nairn, Highland Coast Hotels’ Kenny McMillan, Wickman Hotels’ Edward Wickman, Jonathan MacDonald of Scoop Restaurants, and Siobhan Edwards of Lisini Pub Company, as well as the Federation of Small Businesses, Scottish Tourism Alliance, Association of Scotland’s Self-Caterers, Scottish Chambers of Commerce, Glasgow Chamber of Commerce, UKHospitality Scotland, Scottish Hospitality Group, and the Scottish Licensed Trade Association.

They have joined the campaign because of widespread concern over the uncertainty inherent in the current system, which can leave businesses facing sharp and unexpected increases in rates bills.

One business that illustrates the shortcomings of the current system is Cairngorm Lodges and Cairngorm Bothies in Deeside. Owner Gordon Drummond told The Herald that he “woke up to the horror” of seeing his business’s rateable value increase to £62,250 from £22,000. That would have meant his monthly business rates bill was set to increase from £360 to £2,583.

“We were devastated, absolutely devastated,” Mr Drummond said. “At that point in time I thought, ‘that’s us, we’re done’. We are a community-oriented business, we have got 10 people employed here and I thought, ‘we’re done’.”

Gordon Drummond of Cairngorm Lodges in Royal Deeside (Image: Newsquest/ Gordon Terris)

Thankfully for Mr Drummond, relief later provided to self-catering accommodation businesses during the process to approve the Scottish Budget for 2026/27 meant his business could carry on. But had it not been for that relief, he said Cairngorm Lodges would have been “finished”.

Mr Drummond’s experience reflects the sharp increases in rates bills that have affected businesses across Scotland since the latest revaluation. The rises have placed further pressure on a business community that was already feeling the effects of rising energy, labour, food and drink costs, undermining the ability of firms to hire staff and invest for growth.

Critics say this makes it extremely difficult for businesses to plan for the future and to have the confidence to invest and take on staff.

Business groups also point to confusion over the “patchwork” of more than 20 relief schemes put in place to shield owners from the steepest rises, with different approaches often taken to their implementation across the country.

And there are questions over why 14 different assessors operate across Scotland, compared with the single valuation body that covers England and Wales, a situation critics say leads to inconsistency and inefficiency.

The six reforms being proposed by The Herald’s Reset the Rates campaign are:

• Adjust thresholds for the small business bonus scheme to ensure small firms remain within its scope

• Create a national business rates assessor to avoid regional disparities

• Deliver a fairer deal for hospitality and tourism accommodation

• Introduce safeguards to prevent individual businesses facing sudden unaffordable increases following revaluation cycles

• Ensure major online operators pay their fair share to benefit the business community as a whole

• Press the UK Government to restore the business premises renovation allowance relief to help bring vacant sites back into use

The Herald has written to First Minister John Swinney and Prime Minister Andy Burnham to set out the six reforms, which together would help create a rates system that is fairer, simpler and more predictable, giving businesses greater confidence to invest, create jobs and support the regeneration of Scotland’s town and city centres.

The Scottish Government responded to the controversy created by the latest revaluation by expanding the relief it provides to shield businesses from rates increases they faced. However, while a further package of relief was provided to the hospitality, retail and leisure sectors, industry groups representing pubs, restaurants and hotels say many businesses are being denied support because, they argue, the rateable values of their premises do not reflect the underlying profitability of their operations.

Changing the system to one that more accurately reflects the underlying strength of businesses and their ability to pay is seen as crucial to the future prospects of the hospitality and tourism sectors.

Marc Crothall, chief executive of Scottish Tourism Alliance, said: “The current non-domestic rates system is outdated and too often penalises businesses that perform well and want to invest. For many tourism and hospitality businesses, particularly those with a rateable value above £100,000 and receiving no relief, increases in rates have come on top of significant rises in energy, food and employment costs. The combined effect is squeezing already tight margins and making it increasingly difficult for businesses to reinvest.

“The rate reliefs extended by the Scottish Government are, of course, very welcome for those businesses that receive them, particularly those on our islands. But reliefs are ultimately sticking plasters. We need a system that works and provides much greater transparency and assurance for existing business owners and those looking to invest.

“We would also support the return of business premises renovation allowance relief. Scotland has a significant number of distressed and vacant assets, including properties that have fallen into administration, and measures which encourage investors to bring those properties back into productive use would be very welcome.”

Guy Hinks, Scotland chair of the Federation of Small Businesses, said that “far too many [businesses] have seen a significant increase in their rates at exactly the wrong time”.

He noted: “Our big concern isn’t simply the headline increase in rateable values which have been as much as 400% in some cases. It is the cash impact on individual businesses, particularly those that have gone from paying relatively little to facing a bill that is substantially higher. We have heard from business owners facing increases of tens of thousands of pounds per year, and others that previously paid little or nothing and have found themselves with a substantial liability, which is only partially addressed by transitional rates reliefs.

“That is particularly difficult for a business with tight margins because a rates bill has to be paid regardless of whether you are profitable or not. For a typical small bakery or a hairdresser, which is already dealing with higher energy, employment, insurance and borrowing costs, another hike in their bills can make the difference between taking on a member of staff or just surviving.”

Fiona Campbell: Increases in rates bills have a ‘human cost’ (Image: PR handout)

Fiona Campbell, chief executive of the Association of Scotland’s Self-Caterers, said the impact of the revaluation “has been severe and completely out of all proportion to anything happening in the businesses themselves”.

Ms Campbell said: “Our survey work discovered average draft RV (rateable value) increases of 120%. Shockingly, many operators reported rises above 200% and some exceeded 300%. These rises don’t reflect higher turnover, better facilities or greater profitability. In many cases nothing has changed at all.”

She added: “The human cost of this cannot be understated. 23% of our members reported severe stress affecting their wellbeing and 43% reported serious worry, while 8% called it the ‘final straw’. 35% said the impact could make their business unsustainable and a further 34% said their long-term viability was at risk.”

Mr Hinks said: “The Scottish Government recognised the extent of the problems we were highlighting by introducing transitional arrangements and additional retail, hospitality and leisure relief. That’s very welcome but it doesn’t remove the underlying problem – many businesses are still facing substantially higher bills over the coming years.”

Over the coming days, The Herald’s Reset the Rates campaign will examine the impact the current system is having on businesses across Scotland, hear from firms affected by soaring bills and explore how reform could help create a fairer, more predictable environment for investment and growth.