Ministers receive legal action threat to save Scotland's night-time industry

It revealed that nightclubs, city centre bars and music venues have already had to cut 44% of the 43,000 staff it directly employs in normal times and there are further 24,000 jobs at risk.

The Night Time Industries Association (NTIA) has claimed that the majority of night time businesses could permanently close within weeks after running out of money to pay furlough contributions and fixed costs.

And it said it would have to consider a court challenge if urgent action is not taken.

Concern has come about rising debts and concerns over a lack of action to support bars, pubs, nightclubs, live music venues, festivals and businesses in their supply chain.

The NTIA said the Scottish Government's latest Strategic Framework update confirmed businesses will be subject to the “commercially unviable levels system of restrictions” despite financial support being withdrawn by the end of April.

The 10pm curfew being imposed as licensed premises start to open up from Monday was described by the NTIA as "devastating" for its members as most of the revenue is made after this time.

READ MORE: Night Time Industries Association: 'Scots ministers are bankrupting us'

Analysis by the CGA and AlixPartners Market Recovery Monitor, has revealed nearly 1000 licensed premises in Scotland had already shut in the year to January with the numbers dipping below the 10,000 mark.

According to new official figures the numbers employed in hospitality, arts and entertainment, including accommodation providers slumped by 20% in the year to December, 2020 - despite the furlough scheme.

Numbers employed in the sector fell by 42,000 to 226,000.

According to the data, drops in employment in hospitality and entertainment are the hardest hit of any sector in Scotland.

When pubs and restaurants open on Monday it will be alcohol outdoors only and a 10pm curfew. Indoors, the curfew is 8pm and no alcohol can be served.

The monitor analysis shows that less than a quarter (22.9%) of licensed premises in Scotland will have any space to use when it is open outdoors for drinking.

The analysts say: "Scotland has far fewer community and food pubs with gardens or patios, reflecting their heavy concentration in city centres - and, perhaps, the famed unpredictability of the Scottish weather."

The Scottish Hospitality Group which represents 200 businesses across Scotland further urged minister to improve the trading times allowed under more relaxed Covid-19 restrictions.

Stephen Montgomery, hotelier and SHG spokesman said: “Hospitality staff are working at a frantic pace to get themselves out of hibernation and ready for next week.

"Many premises will still be shut though and it’s an uncertain future even for those who can reopen. We urge the government to keep supporting viable but vulnerable businesses and to tweak the tiers in line with advice from those who really understand the industry.”

The Scottish Night Time Economy comprises over 1500 businesses and according to the NTIA generates £1.6bn per year into the national economy.

Businesses contribute more than £600m per year in tax revenue to government coffers.

An NTIA survey of businesses when asked to rate Government support on a scale of 1 to 10 gave ministers a score of just 2.8.

A "staggering" 98% of businesses in this sector say Scottish Government support has not been enough to ensure their survival It found that social distancing was "completely unviable", with the typical business only able to generate a small fraction of the turnover required to trade viably.

Some 85% said they will not survive if social distancing, activity, and opening hours restrictions continue for most of this year.

It found businesses have run out of money and exhausted their capacity to borrow.

The average business has taken on some £150,000 or more in Covid-related debt just to survive, keep staff employed, and pay the bills over the last year.

The NTIA warns that with government support funding now ended, and more money going out every month than is coming in, most are now facing an imminent risk of insolvency with the loss of all jobs.

NTIA spokesman Gavin Stevenson, the managing director of the Mor-Rioghain Group which owns venues in Inverness and Aberdeen, including The Gellions said that with the new restrictions, financial support is imperative to avoid bankrupcies.

The businesses issues are even more complicated as the commercial debt moratorium that has prevented landlords from progressing winding up petitions expires in June.

"If there's no additional support and a pathway back to full unrestricted and viable trading imminently, we'd have to consider all options, including a legal challenge," he said.

"Venues such as nightclubs, city centre bars, music venues were first to close and will be last to open. Some, such as nightclubs, have been forced to close by law and there is still no reopening date in the Government’s strategic framework.

"Others, such as busy high street bars, have technically been allowed to open, but at such reduced capacities that trading has not been economically viable.

"Measures to tackle the pandemic have left these businesses far more exposed to financial losses than is the case in most other sectors, as restrictions on capacity, activities and opening hours proved toxic to their ability to generate sufficient income to pay the bills.

"Business insolvencies and mass job losses are now inevitable within weeks unless the Scottish Government acts urgently. The NTIA has written to First Minister Nicola Sturgeon earlier this month highlighting the issues and requesting immediate crisis talks. It is beyond disappointing that as yet we have had no response whatsoever."

In February MPs on the All Party Parliamentary Group (APPG) for the Night Time Economy called on Prime Minister Boris Johnson and Chancellor Rishi Sunak to provide a sector-specific grant package and a roadmap to re-opening, warning that failure to act risks creating “ghost towns” around the country that would hinder the economic recovery from the pandemic.

The stark warning comes with the publication by APPG of the findings of its extensive inquiry into the impact of Covid-19 into the night-time economy, which has been largely shuttered since the first national lockdown was imposed in March last year.

Based on more than 20,000 responses from consumers, employers, employees and freelancers in the sector, it found 85 per cent of people working in the night-time economy are considering leaving the industry, with nearly four-fifths (78%) having been on furlough at some point.

Firms had on average made 37% of their total workforces redundant, while just 36% of self-employed nightlife workers have been able to claim the Self Employment Income Support Scheme, the survey reports.

It also found that, in the second half of 2020, businesses in the night-time economy had generated 28 per cent of their annualised pre-Covid levels, on average.

An SNP spokesman said:  "The SNP fully appreciate the difficulties the pandemic has brought on the hospitality sector. That is why we have spent millions of pounds in monthly support payments throughout lockdown, and have now committed to scrapping business rates for a whole year. 

"In addition to this, the Scottish Government will this week provide businesses with additional funds to help meet the costs of reopening - either £7,500 or £19,500, which is more than the UK government are currently offering.

"We have all longed for the day that some sort of normality returns to our lives, therefore it is a hugely positive step that the hospitality sector can reopen indoors and outdoors come Monday - the first country in the UK to permit indoor hospitality.

"However, it is well established that COVID transmits easier when people are in close proximity to each other which is why we must remain cautious."