Swinney warned of 'tumbleweed' high streets due to rates hikes

The First Minister was challenged over the issue while attending a major election hustings at the RBS headquarters in Edinburgh.

Stephen Montgomery of the Scottish Hospitality Group said rates increases in Scotland are "unlike anywhere across the UK".

He told Mr Swinney: "If we don't have surviving businesses, you are going to have no tax take whatsoever."

Mr Montgomery said the rates system was "broken", adding: "If we see the continuation of businesses closing, will the Scottish government take the blame when there's more unemployment, more high street shops and pubs shut, and we're at a tumbleweed area?"

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Responding, Mr Swinney defended his government’s record.

He said: "I accept that there are businesses that will face challenges as a consequence of business rates changes that have been made, but there is also a very significant amount of public expenditure used to support businesses in managing that transition."

From April 1, new rateable values have been put in place for all 260,000 rated non-domestic properties in Scotland. Wunderbar in Glasgow recently told the BBC it was facing a hike of more than £500,000, meaning it would have to lay off staff.

The Scottish government says it is providing more than £900 million in transitional relief for businesses.

Speaking at CBI Scotland’s joint business hustings, Mr Swinney said there are a range of different measures in place to support business development in Scotland, and pointed to the impact of the UK government’s hike in employer national insurance contributions.

He said this has had "much more impact on the economy than business rates ever will have", describing it as "quite simply a tax on jobs”.

Mr Swinney also said unemployment in Scotland is sitting at a historically low level, and is lower than the rest of the UK.

Scottish Labour leader Anas Sarwar said the rates relief provided by the government did not “touch the sides”. He told the event: “The right thing to do would have been to pause the reassessments, to re-evaluate them, and then do a rates relief system that was fair.”

He said the system should be “abolished”, with a chief assessor appointed.

Scottish Liberal Democrat leader Alex Cole-Hamilton said the rates rises were “criminal”, adding: “They are putting people out of business. We all know examples of the exorbitant hikes that some businesses are facing, without so much as a by your leave.”

Scottish Conservative leader Russell Findlay said the system was “completely broken”, with rises of up to 500 per cent. He said the SNP could have paused the rates revaluation, giving businesses respite and “breathing space”.

Speaking to journalists after the event, Mr Montgomery said he had recently made a choice to sell his restaurant in Annan “and get something out of it before it didn’t go the right way”, adding that he was lucky to be able to protect his staff.