I’ll be far from alone in enjoying the best that Edinburgh’s hospitality sector has to offer this festive season, and it’s good for lots of reasons to get out and enjoy each other’s company in comfortable surroundings with tasty things to eat and drink.
Apart from unwinding and recharging the social batteries, the importance of the hospitality sector to the local economy can’t be underestimated.
According to the most recent Scottish Government figures, the tourism, food and hospitality sector was worth £934 million to the capital’s economy and Edinburgh City Council’s latest Edinburgh by Numbers report estimates some 34,000 people are employed in accommodation and food services, the fifth biggest sector. That’s a lot of people relying on thriving businesses for their livelihoods, so it should concern us all if it has problems.
Thanks to the actions of both the Labour Government in Westminster and SNP in Holyrood there are problems aplenty for a sector in which the margins are never high and the risk ever present. It only takes a miserable run of weather to wipe out expected revenues.
Pubs and restaurants are not alone, but the double whammy of high business rates – the SNP has kept back the money it received through the Barnett Formula to fund similar rebates currently available to hospitality businesses in England and Wales – and the looming threat of higher National Insurance (NI) contributions, is pushing more employers to the brink.
Other factors may be at play, but the sudden closure of the Gardener’s Cottage on London Road, and its sister restaurant The Lookout on Calton Hill, cannot be unrelated to the high cost of doing business. If these internationally lauded places cannot survive despite lavish praise by renowned critics, then alarm bells must be ringing across the sector.
With great aplomb, SNP finance secretary Shona Robison announced limited help in her Budget earlier this month. “We have listened to concerns in business, particularly hospitality,” she said, blaming their problems on staff shortages, high energy prices and the NI hike, and then putting great store in offering 40 per cent non-domestic rates relief for hospitality premises liable for the basic property rate of tax.
Unfortunately, that cut out a significant number of businesses, particularly in Edinburgh, and the result, according to Scottish Hospitality Group director Stephen Montgomery is investment programmes planned for 2025 are now being reconsidered.
Writing to MSPs this week, he said: “Coupled with the UK Government’s employer National Insurance increases, Scotland’s licensed hospitality sector is now facing a taxation crisis, which could lead to a significant number of closures, job losses and further decisions to postpone major investment.”
Wider rates relief is badly needed, as is reform of the punitive business rates system in which licensed hospitality business charges are based on turnover rather than square footage, unlike retail. Ms Robison promised reform last year, but it must have slipped her mind a fortnight ago.
There’s still time for Ms Robison to arrange for a late present in the new year, and as the Christmas weekend gets going, let’s hope our shops, bars and restaurants do a roaring trade because they’ll need all the support they can get to thrive in 2025. We can all raise a glass to a more prosperous new year. Merry Christmas everyone.
