The economic viability of Scotland’s crisis-hit hospitality industry could be dramatically enhanced and the prospects for tens of thousands of workers improved by relatively minor changes to restrictions policy, according to a new economic impact study.
The independent study by BiGGAR Economics found that adjusting opening hours by around two and a half hours and allowing alcohol to be served under strictly controlled conditions would increase hospitality business turnover from £419m to £1.1bn; increasing the number of jobs supported from the current 28,300 to 60,800; and securing the viability of 1,816 businesses.
Scotland’s main hospitality groups, the Scottish Beer & Pub Association (SBPA), Scottish Licensed Trade Association (SLTA) and UKHospitality-Scotland (UKH-Scotland) are now calling for the Scottish Government to urgently implement the changes to save businesses and jobs.
The changes to restrictions would also transform the impact on public finances, turning a £261m fiscal cost of subsidy into a £63m positive tax contribution.
The report states that a return to the stricter restrictions as seen up to 10th December, would cost thousands of jobs and come at a fiscal cost of £347 million.
The economic impact study examined several policy scenarios – all of which maintain key restrictions to ensure public safety and to prevent the spread of COVID-19 – but allow longer opening hours and alcohol to be served across Levels 1 to 3 of the Scottish Government’s regional restrictions.
Director of UKHospitality-Scotland, Wille MacLeod said: “The restrictions, as currently in place, have a disproportionate impact on the hospitality sector and is costing the Scottish economy millions of pounds. A relaxation, as has been suggested by the industry would give our sector a transformative boost and help support business in the crucial recover period.”
The study, which was commissioned by Diageo on behalf of the hospitality sector, revealed the enormous economic cost the current restrictions policy is having on the hospitality sector, reducing annualized turnover from £2bn pre-Covid to just £276m under the restrictions that were in place in November, with the number of jobs supported collapsing from 83,400 to 19,100.
The report examines the economic impact of five scenarios, including restrictions in place before 11th December, restrictions currently in place, and three potential alternative scenarios:
- The first alternative policy scenario looked at extending closing times from 8pm to 10.30pm and allowing alcohol to be served with food in Levels 1 to 3. This scenario supports £927 million in turnover and 53,100 jobs; however, it represents a fiscal cost of £14 million.
- The second alternative policy scenario looked at also allowing wet-led pubs and bars that don’t serve food to be open until 8pm in Levels 1 to 3. This supports £1.1 billion in turnover, 60,800 jobs, and a fiscal benefit of £63 million.
- The third alternative policy scenario looked at allowing all hospitality businesses to be open until 10.30pm and to serve alcohol. This supports £1.2 billion in turnover, 65,400 jobs, and a fiscal benefit of £105 million.