NTIA Scotland has found that over a third of businesses in the night-time sector fear collapse following the results of a survey of over 100 operators within the Scottish Night Time Economy.
The culmination of pandemic debt, growing energy bills, workforce challenges, supply chain, increased insurance premiums and product cost increases have created a perfect storm. Operating cost pressures coupled with consumers with less disposable income have seen the early stages of a recession with slowing ticket sales and visitor frequency.
With 8 out of 10 businesses trading below 2019 levels with the average energy bill growing from £21,677 to £49,878 – an increase of 130%, almost 4 out of 10 (38%) are ‘unsure’ if their business will survive the next 12 months, with an additional 25% stating they are ‘not confident’
NTI Scotland say that “there is still some way to go to see the true impact of cost inflation on businesses, with over 53.8% of respondent businesses still to renew energy contracts. The uncertainty on costs and trading levels has seen over 38% respondents “unsure” whether they will survive the next 12 months and 25% stating they are not confident; we need the Scottish Government and Chancellor to be decisive through a financial intervention.
“The Chancellor must consider measures to support businesses, with business leaders calling for a reduction in VAT to 12.5%, further business rates relief and an Energy Cap for SME Businesses.”
Mike Grieve Chair NTIA Scotland said “It’s clear from the survey data that there is a real crisis looming for the sector as business tries to recover from the pandemic. Operators face a truly toxic mixture of reduced consumer confidence, lower disposable income due to the cost of living surge, in parallel with ever increasing supply chain and wholesale costs for businesses. Without urgent fiscal intervention from government, particularly on VAT and non-domestic rates, plus a viable energy price cap for operators, there is a real and imminent risk of an epidemic of business failures across the whole Night Time Economy in Scotland with significant job losses as a direct consequence.”
Gavin Stevenson Vice Chair NTIA Scotland commented, “As the cost of living crisis continues to hit both consumers and small businesses, the latest NTIA survey makes for stark reading, with fewer than 1 in 3 hospitality sector premises able to trade viably and turn a profit. Urgent government intervention is now required to save livelihoods across Scotland’s hospitality sector which is responsible for supporting 140,000 jobs and billions of pounds in tax revenue annually. As a direct result of Scottish Government’s much harsher pandemic restrictions for substantially longer than was the case in England, the average sectoral Scottish business debt of £160,000 is now the worst in the UK. In order to help both businesses and consumers, Scottish Government must immediately match the 50% discount on business rates offered South of the border for the whole of this financial year, and the UK government should also reduce VAT on hospitality to 12.5% so that our sector can better compete with European rivals.”
Donald C Macleod MBE, MD of CPL/ Holdfast Entertainment Group adds, “The projected cost of living and cost of Covid rises is extremely worrying for all business sectors, not least the (NTE) Night-Time Economy which bore the brunt of disproportionate and bruising Government Covid restrictions during the pandemic. I fear that unless the UK Chancellor of the Exchequer introduces an emergency package of measures in the autumn statement or before, one that will reinforce and stimulate the economy with measures such as a VAT reduction (back to 12.5%) and holds the energy giants to account by forcing them to reduce their ridiculously high energy costs, many previously robust and profitable businesses will go to the wall. I also call upon the Scottish Government to extend the 50 % business rate relief for another 12 months, which would help protect the hundreds of thousands of jobs and livelihoods that reliant on Scotland’s vital NTE , hospitality and tourism sectors.”