Scott Wright: Brexit deals further bitter blow to Scotland’s embattled hospitality sector

IT seems to be a strange and unfair predicament that the Scottish tourism and hospitality industry currently finds itself in.

After protracted spells of enforced closure owing to lockdown, followed by long periods during which trading has been limited because of other coronavirus restrictions, it might have been assumed that the sector could finally begin to look forward again. Particularly as the direction of travel when it comes to the easing of restrictions looks only to be going in one direction, despite surging case numbers of the Delta variant of coronavirus.

As it is, the pandemic has proved to have other twists and turns in store. Whereas one year ago there were rightly fears of a jobs bloodbath as major hotel groups – Macdonald Hotels, Apex Hotels and the Crieff Hydro Family of Hotels among them – were announcing major redundancy programmes, the industry is now mired in a staff shortage crisis.

It is a cruel development for an important sector of the economy that has suffered more than its fair share of difficulty during this horrendous crisis.

How can it be that restaurants, bars and hotels are having to limit their trading days and hours at a time when demand from consumers, finally free of most lockdown conditions, is on the rise?

Why has such a major operator as Gleneagles in Perthshire been resorted to dropping leaflets in its local area to advertise for staff when there are broader concerns about unemployment?

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Are hopes of a staycation boom realistic amid reports that some hotels have currently closed entire floors because they only have enough staff to operate at well below full capacity?

It is a complicated situation, and at least part of its origin lies in the Brexit vote of June 2016. For many Brexit supporters, a key part of the appeal was for the UK to “take back control” of immigration policy with regard to the freedom of movement between the UK and nations in the European Union.

Since day one, however, industries such as hospitality, tourism and farming warned this would lead to significant staff shortages, and thus it has proved. Major hotel operators in Scotland, which for years relied on an influx of seasonal workers from the EU, are now facing a summer staff drought.

In some cases, EU nationals who have been based in Scotland for some time have returned “home” because of the pandemic. But talk to operators and there is no doubt the fact the UK has clamped down on freedom of movement has had a massive effect on recruitment.

“Brexit has been a major factor in the loss of such a significant proportion of Scotland’s tourism industry’s workforce; many thousands of skilled staff returned to Europe and the restrictions on the type of job role a business can recruit from international shores is limited,” said Marc Crothall, chief executive of the Scottish Tourism Alliance (STA).

“For those that can recruit the cost of bringing just one worker back is between £4,000 to £6,000 in visa and administrative costs, so it’s just not feasible for hard-pressed businesses to go down this route.”

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Brexit supporters tend to respond to this argument by saying the situation is easy to fix. There’s no shortage of UK citizens looking for jobs, they say, so why not try and attract them? There is a youth unemployment crisis, after all.

If only it were that simple. Hoteliers will tell you that many “local” people just don’t fancy working in hospitality. They don’t like the prospect of working in the evenings and at weekends, and are much more interested in 9-5, Monday to Friday, office-based jobs.

Of course, the current staffing crisis is not down to Brexit alone. Significant numbers of workers in tourism and hospitality have simply moved to other sectors where they feel there are better long-term prospects in light of the pandemic. And who can blame them?

Before Covid struck, hospitality and tourism had increasingly become better at marketing the sector as a long-term career option. Now, with the industry so badly affected by the pandemic, and uncertainty still hanging heavy in the air because of surging case numbers of the virus, it is not surprising that some job candidates are looking elsewhere.

“This had a huge bearing on the loss of skilled talent, especially from chefs from within our industry,” added Mr Crothall.

In these circumstances, it was heartening to see a major recruitment drive launched yesterday by the Scottish Government, in partnership with industry groups such as the STA, to ease the crisis. The campaign, which runs from now until August 15, is also supported by UKHospitality Scotland, Skills Development Scotland, Springboard, HIT Scotland, VisitScotland, Scottish Enterprise, Highlands and Islands Enterprise, and South of Scotland Enterprise.

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“Right now many businesses are struggling to recruit a full workforce, resulting in closures and scaled-back service,” said Leon Thompson, executive director of UKHospitality Scotland. “The campaign, with its focus on young people, helps illustrate the variety of the jobs on offer and the terrific career opportunities that can be enjoyed by people entering hospitality.”

Given the extent of the staff shortage, it has also been no surprise that campaigners have been calling on the UK Government to introduce a specific hospitality visa to allow the industry to tap into the EU for staff once more. Bizarrely, we have even heard Tim Martin, boss of pub giant JD Wetherspoon, calling for a special visa to allow the industry to bring staff in from the EU – despite being one of the most vocal proponents of Brexit in the business world.

Mr Crothall said the STA is continuing to raise the visa issue in discussions with ministers at Scottish and UK level.

But time is of the essence. For nearly 16 months now hospitality and tourism operators have seen trading severely constrained by lockdown measures.

Now they are desperately trying to make the most of the summer season and shore up their battered balance sheets. The predicament is particularly acute for the many business owners who have had to take on additional debt in order to make it this far.

Unfortunately, the sad reality is that not every business is going to make it, and there are fears we could see a spike in insolvencies when the furlough scheme closes at the end of September.

For not only is there a staff shortage, parts of the sector, notably hotels and venue owners, are struggling with the continuing absence of foreign tourists, and ongoing constraints in the events sector.

According to Paul Waterson, hotelier and spokesman for the Scottish Licensed Trade Association, some business owners are considering exiting the hospitality industry completely, given the struggles they have endured in the last 16 months and the extent of the “reset” they now face.

“They have been in business for a while. They have really got to start again, and they are just not up for it,” he told The Herald.

The mood in the industry has certainly not been helped by Chancellor Rishi Sunak’s refusal to countenance any further extension to the furlough scheme – even though companies are having to contend with significant staff absences because of requirements to self-isolate.

South of the Border, UKHospitality is urging the Government to change the current policy on self-isolation, which it argues is leading to venue closures and reduced operating hours.

“A sensible and pragmatic approach would be to extend the ‘test to remain system’ for vaccinated staff to hospitality,” said chief executive Kate Nicholls.

“That would avoid businesses being forced to close, losing thousands of pounds of revenue at a time when cash reserves are low or non-existent following 16 months of closure and punitive trading restrictions.”

It is a similar situation in Scotland, where Mr Crothall argues businesses “don’t have the depth of workforce to allow for closure on the scale that Test and Protect requires”.

In his view, solutions have to be found, for both the short and long term, to ensure businesses “can trade at the required level to meet their overheads and also repay the loans taken just to stay afloat until this point.”

The route map out of lockdown may be nearing its end. But for tourism and hospitality, the journey is far from over.

The Herald Scotland

The Herald Scotland

The Herald is a Scottish broadsheet newspaper founded in 1783. The Herald is the longest running national newspaper in the world and is the eighth oldest daily paper in the world. The title was simplified from The Glasgow Herald in 1992