THE owners of an award-winning local hotel have given a cautious welcome to news that business rate increases for Scotland’s hospitality sector are to be capped.

Following loud protests from pubs, hotels and restaurants across the country, finance minister Derek Mackay announced on Tuesday that no hospitality business in Scotland would face an increase in rates greater than 12.5 per cent in 2017-18.

Beth and Murdo McLeod, owners of the Knockderry Country House Hotel in Cove, were expecting their rates bill to more than triple before Mr Mackay’s announcement.

And while the McLeods welcomed news of the cap, they warned “a lot of work” would be required to ensure a fair system of business rates beyond the next financial year.

As reported in last week’s Advertiser, the Knockderry was originally in line for a rates increase from £9,500 to £30,000 from this April after a re-calculation of commercial property values across Scotland.

Each commercial property’s net annual value is set against the “rate poundage” – set by the Scottish government – to calculate how much each business will pay in rates.

Mrs McLeod said: “This [rates increase cap] has to be the right answer. This review was done too hastily and without the right form of consultation.

“The cap of 12.5 per cent is a significant reduction for a business like ours, which was facing a 210 per cent increase.

“The industry itself now has an opportunity to work with councils, assessors and the Scottish Government to try and find a fair way forward.

“However, I suspect the issue has been shelved to make way for some bigger political issues.”

Mr McLeod said that the increase, no matter how limited, was still an increase.

He said: “It’s better than a hole in the head for the moment, but it’s still a 12 per cent increase. It’s like saying ‘don’t cut my leg off, but you can have my foot’.

“However, it gives us time to have a good look at what we do, and I’m glad we have time to sort ourselves out.”

After last week’s issue went to press, the McLeods were informed by district assessor David Thomson that the hotel’s net annual value had been the subject of a further local review – and had been reduced from £60,000 to £48,500.

Mr McLeod said: “I’m grateful to the valuation board for having taken the trouble to look at our situation again, although a 19 per cent cut from something ludicrous would still have been something ludicrous.

“I have every sympathy with the valuation board locally and I think it’s important to say I have no problem with the businesses who are going to pay no rates at all. It’s important to accept that it will help them.”

Net annual values are set against the ‘rate poundage’, set by the Scottish Government, to calculate how much each business has to pay in rates.

A review of the Scottish system for business and non-domestic rates, led by former RBS chairman Ken Barclay, is due to report back to ministers in July.

Local councillor Aileen Morton, Argyll and Bute Council’s policy lead for sustainable economic development, said: “Considering the importance of tourism both locally and across Argyll and Bute, it’s good to see the Scottish government finally recognise the need to manage the impact on hospitality providers.

“Hopefully the announcement provides some comfort to our local businesses – safeguarding jobs and allowing people to continue to invest in new facilities.

“Obviously this is just a one year relief scheme at the moment, so the review of business rates due to conclude this summer does need to take on board the serious concerns raised, and find a longer-term solution.”

Announcing the rates cap, Mr Mackay said: “It has become clear that there are some sectors and regions where the increase in rateable values is out of kilter with the wider picture of the revaluation. I have listened and decided that we will act nationally to tackle the impact.

“With the further measures we are now taking, combined with the powers and investment we have provided to local councils, that is a good deal for businesses, a good deal for public services, and a good deal for the Scottish economy.”

Willie Macleod, executive director of the British Hospitality Association in Scotland, said: “This is good news for the hospitality and tourism industry in Scotland.  “The Scottish Government has listened to our industry and we welcome their recognition of the importance of hospitality and tourism to the Scottish economy.

“This is a pragmatic solution for a major issue and we look forward to further constructive dialogue with the Scottish Government and the Barclay Review Group.”