Scottish rural businesses are facing significant financial challenges, with nearly 5,000 farming, fishing, and forestry enterprises closing their doors since the beginning of 2020, according to figures from the Scottish government. The Conservative party has warned that these businesses are staring over a "cliff edge" due to surging operational costs.
The data indicates an average of over 200 business closures per quarter in these sectors since the pandemic began. The Conservatives attribute these closures to a combination of factors including high energy prices, increased business rates, National Insurance hikes, and a proposed family farm tax. North East Conservative MSP James Adams stated that protecting these industries is crucial for national security, describing them as the "lifeblood of Scotland."
Concerns have also been raised about policy changes impacting these sectors. In 2024, then Chancellor Rachel Reeves announced a 20 percent tax on inherited agricultural assets over £1 million, a move that was later modified to raise the threshold to £2.5 million following backlash and warnings about the potential impact on farmers. Adams further cited detrimental policy shifts such as the family farm tax, the EU's fishing rights agreement extending to 2038, and climate change restrictions as contributing factors to business failures.
The "business death" figures encompass businesses removed from VAT and Pay As You Earn registers due to zero turnover and employees. Prior to the COVID-19 pandemic, these sectors averaged 175 closures per quarter in Scotland. This number increased by 17 percent to 204 per quarter since the pandemic. The year 2022 saw the highest number of closures, with 930 firms shutting down. Provisional figures for the past 12 months suggest the closure rate has remained high, with an estimated 915 businesses ceasing operations.
An example of a business closure is Turriff Agri Parts Ltd, an agricultural equipment supplier in Aberdeenshire, which announced its closure after 47 years. Its retiring managing director, George Mearns, cited increased operational costs as a major factor.
Scottish National Party (SNP) MSP Calum Kerr argued that successive UK governments have treated rural Scotland as an afterthought. He stated that the SNP government provides Scotland's farmers and crofters with the most generous direct support package in the UK and remains committed to supporting rural businesses and communities. Scottish Labour's rural affairs spokesman, Donald MacKinnon, acknowledged the worrying trends and emphasized the importance of rural industries to Scotland's economy and communities, pledging that Scottish Labour will advocate for these businesses.
In related news, the Scottish Government announced £3 million in support for businesses affected by the Cairngorms wildfire, aiming to help them survive the impact of the blaze. Scottish Land & Estates welcomed the funding but also called for increased investment in resources like helicopters to combat future wildfires.