Both the UK and Welsh governments have recognised retailers pay a disproportionate amount in business rates and are introducing permanent rates reductions for shops from April 2026. The Chancellor of the Exchequer is expected to confirm in her UK Budget this week the size of reduction in the business rate that will apply to retailers in England in the coming financial year. The Welsh Government has also announced it will reduce rates for shops from April.

The Scottish Retail Consortium is calling on policymakers to ensure all retailers in Scotland also benefit from a permanent reduction in business rates. Scotland’s shopkeepers contribute about a fifth of all business rates. The SRC is warning that a less competitive business rates regime here would be bad for retailers but also for Scotland’s retail destinations.

Despite some welcome decisions in the last Scottish Budget, including a freeze in the Basic Property Rate and ditching of the mooted surtax on grocery stores, the business rate remains onerous and at a 26-year high. Meanwhile, Scotland continues to levy a higher business rate on medium-sized and larger premises than is the case in England. Recent data shows 2,400 Scottish stores stump up £9 million a year more in rates than counterparts down south, a whopping £93 million over the past decade for shops alone. In the last three years smaller Scottish stores have missed out on rates relief available to counterparts in Wales and England, despite Barnett Consequentials being forthcoming.

David Lonsdale, director of the Scottish Retail Consortium, said: “Governments in England and Wales acknowledge the rates burden on retail is disproportionately high and are bringing in permanent rates reductions for the industry from April.

“Unless we see action to reduce business rates for all retailers in Scotland then stores here risk being put at a further competitive disadvantage and potentially materially so. It’s not in the interest of Scotland’s economy, nor our high streets and retail destinations, for retail businesses to be incentivised to invest in Sheffield or Swansea over Stirling, Selkirk or St Andrews.

“The retail industry and devolved government have a shared goal of making Scotland ‘the best place in the UK to grow a retail business’. It’s imperative the Finance Secretary sets out in the Scottish Budget a concrete plan to permanently reduce the business rate applied to retailers of all sizes. Failure to do so could see consequences for commercial investment and for the condition of Scotland’s high streets, as destinations elsewhere in GB become considerably more attractive and cost-effective locations to trade and invest in.

“Retail trading is tough right now. Continued investment is essential to keep shops viable and attractive to customers. If it becomes materially more expensive to run shops north of the border than elsewhere that’s likely to shift investment to other areas. It’s up to Scottish Ministers and MSPs to ensure Scotland remains competitive.”