Kate Forbes, Scotland’s Deputy First Minister and Economy Secretary, has signalled further disparity in the rates system with England after cautioning against Holyrood “copying and pasting” any reform introduced by Westminster.

She said that the structure of the economies north and south of the border “are fundamentally different” and a tailored response is required from each government.

Speaking to Daily Business during a visit to a start-up accelerator hub in Edinburgh, Ms Forbes pointed out that the Scottish government accepted the changes recommended in the Barclay review in 2017.

However, businesses north and south of the border have called for further reform of business rates and there has been some concern, particularly among retailers, over growing disparity between England and Scotland that may affect competitiveness.

In the recent Scottish budget the government agreed to partially match the 40% relief announced by the Chancellor in October, and a proposed additional levy on larger premises was shelved.

Ms Forbes said that while the two governments engage on these matters, “I would strongly caution against any copying and pasting of UK government changes to non-domestic rates for the very simple reason that the structure of business in Scotland is fundamentally different.

“The backbone of our economy is small and medium sized businesses, whereas in England it is a lot more top heavy. There are a lot more big businesses, particularly in London and the south east, which distort the shape of the business community in England and Wales.

“So we have to be really careful about adopting a UK government model which essentially would rely on big business to fund any reliefs for small businesses. We just do not have the same scale of large businesses.

“I guess the nature of devolution is that you can tailor policies in a way that is far more advantageous.”

She said the government had responded in the budget to a number of demands from business on the poundage and relief for the hospitality sector which in particular had long asked for reform to the methodology for calculating rates.

“I am very supportive of that position,” she said. “I would like to see reform to the methodology around hospitality businesses.

“The sticking point has never been government’s appetite for that. The sticking point has always been to find a methodology that would enjoy the support of all businesses in hospitality to replace what currently exists.

“The big sticking point in terms of the assessors is sufficiency of data to value businesses. There is a lot more available data for retail, for example, to determine their rateable values than there is for hospitality, which is why we end up using more of the turnover figures than we would in retail.

“So there is no argument from government on the appetite to reform the methodology for hospitality. The question has always been what replaces it, and the minute you start talking to the hotels who may disagree with the cafes you encounter a challenge.”

Ms Forbes has previously asserted that raising income tax may impact adversely on economic growth. Asked if this was now government policy, she said: “John Swinney said it, and I’ll say it. You cannot continually raise income tax, and we have confirmed our position in the budget where we haven’t increased the number of bands, for example, or the rate of tax.”

On the possibility of removing some of these bands, she said: “My view is that the principles on which income tax was devolved – efficiency, certainty, proportionality – are still the principles on which we should base all tax decisions.”

Concerning the departure of former Skyscanner executive Mark Logan as the government’s chief entrepreneurial adviser, she said she owed him a “debt of gratitude” for the work he did.

Asked if he would be replaced, she said: “At the moment I am not involved in such conversations. At the moment there is no [such] plan.”

Ms Forbes visited start-up firms operating from an accelerator in the historic RBS HQ in St Andrew Square to promote a package of measures to help entrepreneurs.

As part of £15 million of investment, at least £4m will be invested to expand the number of women entrepreneurs by providing tailored support at the earliest stages of business creation.

The initiative contributes to overall spending of £34.7m across entrepreneurship, innovation and social enterprise – a 50% increase on 2024/25.

This includes continued investment in Techscaler, the Scottish Government’s flagship programme for tech start-ups. There will also be a new round of the Ecosystem Fund and a new fund to further develop clusters in sectors such as life sciences, digital and advanced manufacturing. 

Among those operating from the hub is Gut Wealth, an Edinburgh-based start-up, founded by Gemma Stuart, a recent recipient of funds at the Scottish Government-supported Scottish EDGE awards.

Ms Stuart said: “I’m proud to be scaling my business in Scotland as part of the thriving ecosystem here.

“In the last two years, I’ve accessed vital guidance and support from Business Gateway, Scottish Enterprise, AccelerateHER, RBS Accelerator and most recently Scottish EDGE to help me scale.

“I’ve built a strong network of founders and I’m especially grateful for the other female founders who have helped educate me on raising funds and shared opportunities.”