The Night Time Industries Association (NTIA) is warning of an impending unemployment tsunami with 24,000 jobs at risk in a matter of weeks because struggling night-time economy businesses in Scotland have now run out of cash to pay furlough contributions and fixed costs.
The Scottish Government released the latest Strategic Framework update on Friday confirming that businesses will be subject to the commercially unviable levels system of restrictions for many months longer despite all financial support being withdrawn by the end of April.
Worse still there is no commitment or target date for the return to commercially viable trading for businesses in the sector, which is only possible when social distancing and all other legal restrictions end.
A survey this month of NTIA members confirmed the desperate state the sector is now in, with average Covid related debt reaching a wholly unsustainable £150,000 or more per premises, and businesses facing an imminent cash flow crunch. The survey also confirmed that less than a quarter of premises have licensed outdoor areas, the vast majority are many months behind on rent or mortgage payments, fewer than a third have been able to trade viably at any point in the last year, and almost all cannot reopen or trade viably while social distancing remains.
These businesses have now exhausted financial resources. Cash reserves have been depleted, more borrowing is now impossible with no guaranteed opening dates and businesses are rapidly running out of cash to pay their fixed costs and furlough contributions. Business insolvencies and mass job losses are now inevitable within weeks unless the Scottish Government acts urgently. The NTIA has written to First Minister Nicola Sturgeon earlier this month highlighting the issues and requesting immediate crisis talks but has had no response whatsoever.
NTIA Spokesman Gavin Stevenson said,“Our members have done the right thing, closed their previously successful businesses for the sake of public health, and gone deep into debt paying the enormous fixed costs and furlough contributions to keep staff employed for over a year now. We were the first to close and will be last to open. No sector has suffered more. But Government have consistently taken our sector for granted and refused to engage meaningfully with our representatives.”
“Many of our members have been closed for over a year now, and virtually all have suffered crippling financial losses. In short, the money going out every month has been far greater than the money coming in, and government support has typically covered less than a quarter of this deficit.”
“To add insult to injury government support has now ended while there is no end date to forced closure and other restrictions. Scottish Government now only has two options, provide substantial and immediate additional support for as long as it is mandated that our businesses stay closed and/or operate under the restrictions that make them unviable, or provide a clear route map with target dates for the end of all legal restrictions on capacity, activity, and opening hours.
If neither of those options are forthcoming then our First Minister is, in effect, asking thousands of small Scottish business owners to bankrupt themselves.”
The Scottish government ignored the ‘workable’ strategic framework presented to it by four trade bodies on Friday by announcing its own five-tier system yesterday that will sound the death knell for many businesses already on their knees.
UKHospitality Scotland, the Scottish Licensed Trade Association, Scottish Beer and Pub Association and the Scottish Hospitality Group collectively asked for the government to take on board their points and ensure that any legislation designed to keep communities safe and businesses intact “does not have the unintended consequence of delivering the final blow.”
But Marc Crothall, Chief Executive of the Scottish Tourism Alliance says that the restrictions will see hundreds of business close permanently.
He said, “Clarity on restrictions for hospitality businesses, as announced in parliament by the First Minister will without a shadow of a doubt create a wave of trauma and mental anguish across the sector with many hundreds of businesses who will fall into tier 3 or 4 now likely to stay closed beyond Christmas, or indeed permanently. Employees full and part time who had hoped to return to work are now put at even greater risk unemployment.
“Average fixed costs for business far outweigh the levels of grant support advised and for many in the sector it remains unclear if they will qualify for any support at all. The gap between the funding that is available and the costs of overheads and maintaining staff levels has become too great and I would expect imminent announcements of redundancies on a worrying scale, particularly for any businesses placed in Tier 3 or 4.
“The financial and mental strain experienced by business owners in our sector, many of whom I have conversations on a daily basis with is exacerbated by what is an extremely short timescale for implementing these measures; it is absolutely critical at this stage that more detailed information comes from the Scottish Government. Businesses have just days to make decisions on staffing levels, the procurement of stock and indeed in relation to whether or not it is viable to continue to trade at all.
We are also sitting on a mental health time bomb in the absence of more robust financial support.
Said Marc, “Without a robust package of support, our hospitality and tourism sectors are facing the bleakest of winters with very little hope of recovery beyond the beginning of 2021. The current and predicted impact on the mental health of those within our sector is now becoming one of the biggest issues and challenges we are all facing as we look to the weeks ahead, as is the economic impact on our communities.
“Scottish and U.K. Governments must as a priority, step up to the plate together as they have rightly done so to protect the NHS and the lives of those affected by Covid; however it must be an equal priority to also seek to protect the lives and livelihoods of thousands more who work right across the tourism and hospitality sectors and our supply chains.”
Nicola Sturgeon will confirm which areas will start in which tiers tomorrow.
The Scottish Government has been presented with a ‘workable’ Strategic Framework by Scotland’s hospitality trade bodies – UKHospitality Scotland, the Scottish Licensed Trade Association, Scottish Beer and Pub Association and the Scottish Hospitality Group ahead of today’s scheduled debate on the framework put forward by the Scottish government in a bid to ensure that the Strategic Framework adopted is ‘right’ for the industry.
In a letter to the First Minister and MSPs, the trade bodies presented a ‘workable’ Strategic Framework for the country’s hospitality sector.
In a joint statement, the trade bodies said, “Clearly the objective for everyone must be to contain the spread of the virus. It must, however, be done in a way which gives the incredibly valuable businesses in our sector the best possible chance of survival and a more equal shouldering of the burden at this time. If we are not careful, businesses will be closed for good and jobs permanently lost.
“We are now calling on the Scottish Government, and all MSPs, to acknowledge that our sector stands to lose the most if the framework is not absolutely right. They must take on board our points and ensure that any legislation, that is designed to keep communities safe and businesses intact, does not have the unintended consequence of delivering the final blow.”
As well as putting forward their framework the trade bodies, while emphasising that hospitality in Scotland is not to blame for the spread of the virus, have sought clarification on a number of issues and made proposals designed to support a sector that has been devastated by the COVID crisis.
Higher levels of restrictions will require higher levels of support for businesses. These must be at least in line with levels in England
The economic support made available in the form of grants will not be sufficient. There must be information from the Scottish Government as soon as possible how it intends to use its share of the £700 million funding allocated recently by the Chancellor to the devolved governments
Urgent confirmation of how the Job Support Scheme will work for Scottish businesses to save up to 70,000 jobs
Support must be provided for sub-sectors including music and entertainment venues, nightclubs and conference centres, that are unable to open
Anomalies regarding the serving of meals in cafes but not pubs or restaurants, or hotels unable to serve alcohol to residents, must be reviewed immediately.
The letter also urges the Scottish Government to ensure it does not impose any restrictions longer than is necessary, with any measures regularly reviewed. There also needs to be a clear roadmap for how areas facing tighter restrictions can work towards exiting those restrictions, with comprehensive guidance for businesses, based on consultation, issued in advance of any new measures.
The sector has confirmed it is prepared to make additional concessions to assuage concerns of the MSPs and the Scottish Government.
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