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Is Red Tape Strangling Scotland’s Licensed Trade?

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Is Red Tape Strangling Scotland’s Licensed Trade?

October 21
20:07 2013
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With one in five people in Scotland employed in the hospitality and leisure industry, and the sector contributing in excess of £4bn a year to the UK’s GDP, it’s a crucial cog in our economy. However, with the seemingly relentless stream of new legislation burdening the industry to breaking point – and around 12 British pubs closing each week and insolvencies in the sector increasing by some 30% in the last quarter of 2011 – what are the implications for the wider economy if this situation continues unabated?

Paul Waterson, Chief Executive of the Scottish Licensed Trade Association (SLTA), traces the root of industry’s difficulties to the smoking ban, back in 2006: ‘As a result of the ban, many pubs and bars lost customers and have never recovered from the dent made in the amount of people coming through the doors,’ he says. The smoking ban was followed by the 2005 Licensing Act, which came into force at the end of 2009 and was introduced to help address problems created by alcohol misuse in Scotland. Among other stipulations, the legislation introduced a ban on drink promotions and up-selling; both means by which the trade had until then utilised to encouraged custom. In addition to this, the new Act also increased the cost of obtaining and maintaining a premises licence. When it came into force, many licence holders incurred up to £4,000 in transitional costs, including architect plans and legal levies. Nowadays, annual fees can be as much as £900, compared with £86 every three years under the old system. More recently, changes to the public entertainment licence laws by the Criminal Justice and Licensing (Scotland) Act 2010 have further increased the burden on operators. An exhibition or public show, even if it is free of charge for the attendee, now requires a licence costing between £124 and £7,500. And, of course, there is increasing competition from supermarkets, whose operators are squeezing the on-trade still further by lowering their alcohol prices in a bid to attract more in-home drinkers. This – and other social ills – has lead to the controversial and much-debated Minimum Pricing Bill, which aims to set a minimum price of 50 pence per unit of alcohol. Regulation on this point is heavily supported by health campaigners but, somewhat inevitably, the trade has so far been less than impressed. The Scotch Whisky Association, along with other organisations, has even questioned the legality of the policy under EU law. The impact of minimum pricing has yet to be determined. If it results in the gap in between on and off sales being narrowed, could it encourage people back out of the home to drink in pubs and bars once more? Some argue that if drinking is conducted is a more controlled environment, the health benefits will become apparent. Maybe this is one area where the Government is to be applauded for its intervention; only time will tell. However, pubs and bars are not the only venues affected by the maelstrom of legislation. Some time ago, Edinburgh City Council suggested plans for a tourism levy – dubbed the ‘bed tax’ – where visitors to the capital would pay extra on their hotel bills to help fund the city’s festivals. Robin Worsnop (inset), chair of the Edinburgh Tourism Action Group (ETAG), is concerned that such a levy would have a snowball effect on the sector: hotel customers would be negatively affected, tourists would be less likely to visit Scotland, and these issues would combine to adversely affect income generation for everyone involved the hospitality and leisure industry. So, as we ride the wave of a double-dip recession, and stories of licensed premises closing their doors continue to haunt publicans around the country, is it fair to claim that the Scottish Government is giving the industry too hard a time? It would appear that with the way things currently stand, Scotland’s legislators are forcing the industry to jump through increasingly high, costly hoops just to comply with all the new laws and regulations – and that’s before any operator even considers making a profit. Can the alarming statistics of business failures in this sector be attributed, at least in part, to this tangled web of new regulation? Is it now time for the Government to take positive action such as replacing any additional compliance costs, taxes and training requirements with tax breaks and other innovative measures to support and sustain this invaluable sector? Should they, indeed, be going easier on the hospitality and pub trade, even just for a couple of years until it gets back on its feet? Or do we owe it to ourselves to address the problems we face head on, and take a proactive approach to solving at least some of the ills for which Scotland has regrettably become known the world over? That may be all up for debate, but one thing’s for sure; this country needs its licensed trade and its hospitality sector now more than ever before. Given the number of insolvencies and debt-ridden establishments in the current marketplace, you won’t find many surviving operators claiming that increased bureaucracy is good for business. Scottish Government take note.

For more information on the Licensing Act (Scotland) 2005 and all legal matters affecting you or your business, call 0131 656 2000 or visit www.todsmurray.com

This article has been edited from its original version. For the complete feature, please see Catering in Scotland magazine September/October 2012.

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Katie Corrigan examines the extent to which the myriad new laws and regulations are strangling one of Scotland’s hospitality and leisure sector…

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