With the UK Government’s Autumn Budget just days away and details of the Scottish Government’s taxation and spending plans to follow in December, the Scottish Tourism Alliance is calling on both governments to back the recovery of our vitally important sector with financial measures to secure growth; these two budgets could be game-changers for the economy – for better or worse.
Put simply, our industry isn’t recovering at the pace needed to maintain tourism’s position as one of Scotland’s main economic drivers and contributors to the public purse. In fact, our businesses had been operating in an environment dominated by a perfect storm of rising costs and regulation which was curtailing growth, investment and long-term stability within the sector before anyone had even heard of Covid.
Our time pre-Covid was spent campaigning to remove barriers to growth; the amount of regulatory costs the industry has had to contend with, the rising costs of doing businesses over many years, Brexit, migration policy decisions and the additional levies that were making business harder to do. The fallout of Brexit has come home to roost in the current recruitment and supply chain crises; our businesses do not have access to the labour pool they need to trade viably and the impact of our departure from the EU has hit all parts of the food and drink supply chain. We are running to stand still almost 20 months from the beginning of the pandemic and struggling to invest in our tourism product to maintain any degree of competitiveness; recovery is very fragile and must be supported.
Our businesses welcomed the cut in VAT, however, the recent increase to 12.5 per cent has come far too soon. If the reduced rate had been maintained, businesses would have had longer to improve their financial position, deal with the overwhelming number of rising costs which have accrued in addition to the recruitment challenges and wage inflation, and been in a much better position to survive.
The Scottish Tourism Alliance is in full support of UK Hospitality’s ‘VAT’s Enough’ campaign, urging customers suppliers and hospitality venues and employees to lobby MPs on the need to lock in the 12.5% VAT rate for hospitality businesses. Maintaining the Scottish Government’s business rates relief extension is essential for recovery of the sector and avoiding a cliff-edge scenario whereby businesses currently struggling even with the current rate of relief will be paying potentially higher rates than they’ve ever done, when income is lower than it’s ever been.
Scotland’s tourism industry wholeheartedly supports the Scottish Government’s journey to net zero, however there are numerous costs to businesses in committing to that; this context must be considered carefully prior to any policy decisions which will result in an increase in business costs at a time when these simply cannot be maintained sustainably.
We need governments to create a policy environment which enables our businesses to do a lot better; to pay and reward staff properly, meet the cost of overheads, invest in creating a quality product, service and experience, support the supply chain and move towards ambitious recovery.
Increased financial burden translates to slower economic recovery, a long-term reputational crisis around Scotland’s tourism product in terms of quality and competitiveness and ultimately means less internal and inward investment to maintain our position as a globally important destination.
The eyes of the world are about to look to Scotland as the forward-thinking, innovative nation we tell the world we are. We will be measured on our deeds; Scotland’s economic growth and sustainability and reputation are dependent on our actions. We need these budgets to put jobs and growth first.
Marc Crothall is chief executive of the Scottish Tourism Alliance.
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