Pinsent Masons: Brexit, tourism and troubled times?

Frances Ennis is a Senior Associate at Pinsent Masons in Glasgow with fifteen year's experience acting for clients in all liquor licensing issues. Fran is a commercial litigation lawyer and acted in the case of Brightcrew -v- City of Glasgow Licensing Board, the leading case on the extent of Licensing Board powers. Frances.Ennis@pinsentmasons.com

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The last three years have seen an unprecedented level of political uncertainty. A “Yes” or “No” vote on 23rd June 2016 was not simply an answer to a seemingly binary issue about power. It was in many ways a more nuanced question of how others see us and how we see ourselves.

No more obviously are these concepts embodied than in the Scottish tourism industry which thrives on notions of identity, connection and the provision of a quality, authentic experience, to new and old faces alike. The industry is understandably nervous about the political, social and economic impact of Brexit.

What are the main challenges Brexit poses for the hospitality and tourism industry?

Jo: A key issue is staff retention and recruitment. As well as its outstanding beauty, Scotland is renowned for the warm welcome tourists receive. People are the backbone of this industry. With an ageing population and geographical barriers, Scottish employers are reliant on the EU workforce, particularly in this industry.

The current Brexit uncertainty strains the ability to retain and attract staff. Some comfort is provided by the EU settlement scheme, which allows those here under free movement to remain if they register. However, who can benefit from that scheme depends on whether we leave the EU with a deal or not. Employers would be wise to encourage affected staff to apply under the scheme now.

Fran: Increased legislation such as the immigration checks in relation to alcohol and late hours catering licences will place administrative burdens on already overstretched Licensing Boards and thereby impact on application processing times. This could disincentivise expansion by some businesses, particularly in Board areas known to have long delays in dealing with applications.

Is there light at the end of the tunnel beyond Brexit?

Jo: There's certainly a lot of change ahead. The Home Office wants to roll out a new single immigration system in 2021, underpinned by the principles that all nationalities are to be treated the same and with a focus on talent and skills (as assessed by the Government). The latter is of particular concern in the industry.

The UK's current Points Based System is complex, expensive, time consuming and only permits skilled individuals to work in the UK. The Home Office has promised a simpler, less bureaucratic system which will accommodate some lower skilled work. However, these concessions are offset by the determination to retain a minimum salary threshold, the level of which is up for debate (currently £30,000). Set too high and this would pose a barrier for a large number of roles in Scotland, and the majority of those in the tourism industry. It is a blunt instrument. If it must be retained, a more nuanced approach would be welcome - recognising the specific industry and regional challenges faced.

Acknowledging the reliance on EU nationals in lower-skilled roles, a 12-month visa has been proposed for "low-risk" nationalities in any role, regardless of skill or salary. So far so good. However, after 12 months in the UK a 12-month cooling-off ban will be imposed. It has been offered as a short-term safety valve for the economy (to be reviewed by 2025), to allow employers to adapt and invest in home-grown talent. And adapt they must unless the position changes.

The industry faces real challenges to future recruitment and, in turn, growth. Many have called for regional, seasonal and/or sectoral variations to be implemented – points being considered by the Home Office. They are in a period of consultation on the new system. Now is the time for the industry to engage with them and voice their concerns. These are not easy fixes - there is a perception that the industry is less attractive than others to build a career in. Reviewing how the industry, and all the opportunities it presents, is portrayed at grass roots level will be a key piece in the puzzle.

Apart from Brexit, are there any other issues affecting the tourism industry in Scotland?

The big industry story of recent times has been business rates, long considered by the trade as unfit for purpose. The Scottish Government’s recent u-turn on airport duty was also seen by many as a massive blow to not just the industry but the Scottish economy as a whole. There is good news for tourism though, with more frequently occurring and implemented valuations looking likely, giving those affected more room to breathe longer term.

From an alcohol point of view, operators will be familiar with the growing focus on the "protecting and improving public health" objective within the legislation. Whilst the motivations are no doubt admirable, there is a feeling amongst some that all operators are being tarred with the same brush. Regardless, a business needs to be on top of their legal obligations.

Beyond any legal duties, what should the tourism industry be doing?

Fran: Innovation. The Scottish tourism sector is no stranger to instability. Brexit is the latest disruptor on the block.  These are troubled times; increased legislation, local authority cuts and an increasingly vocal health lobby. The message that "Scotland is open for business" is more critical than ever. Businesses need to think outside the box in terms of experiences they can provide their audience. Licensing Boards need to be flexible and pragmatic in their support of local businesses. As the trade has shown in the past, the existence of a disruptor does not mean you throw in the towel. It means you up your game. The Scottish tourism industry is as robust an industry as you can get and I have no doubt that it will rise to the challenge.

Tourism is everyone’s business.  Raise your business profile within Scotland’s tourism sector by connecting with the Scottish Tourism Alliance today. See www.scottishtourismalliance.co.uk