Tag: business closures

Government regulations ‘causing spike in mental health problems in Edinburgh’s tourism sector’ 

New survey: government regulations causing spike in mental health problems in Edinburgh’s tourism sector

The Scottish self-catering industry highlights that Edinburgh-based operators report the highest levels of mental health issues in the country due the lingering threat of business closures.

A membership survey conducted by the Association of Scotland’s Self-Caterers (ASSC) shows that the Scottish Government’s short-term let regulations are causing a mental health crisis amongst small business owners.

In October 2024, around 450 operators were questioned by the trade body in an online survey as it continues to gather evidence around the impact of STL regulations.

Overall, around one-in-ten (11%) respondents said they had experienced no mental health issues as a consequence of regulatory changes. Incredibly, this figure drops to 0% in Edinburgh where the most stringent STL controls can be found.

The overwhelming sentiment is that the regulations have created financial strain, as well as increased anxiety and uncertainty, with sectoral discontent abundantly clear.

In terms of the key findings:

  • Across Scotland, over two-thirds (68%) had either experienced a ‘negative’ or ‘extremely negative’ impact on their mental health and wellbeing from recent regulatory changes;
  • This was particularly acute in Edinburgh where around 90% of operators had seen a negative or extremely negative impact; and
  • Edinburgh also had the highest number of extremely negative responses (46%).

The professional and personal strain is taking its toll. Several respondents highlighted the emotional toll, such as sleeplessness, anxiety, stress-related health issues, and feelings of helplessness, especially with the uncertainty of future income and business viability.

Many respondents also mentioned the high cost of compliance, administrative burdens, and delays in licensing applications, particularly for those relying on self-catering as their primary income.

These disturbing findings come as BiGGAR Economics published their independent analysis of the sector in Edinburgh. This showed it generated £154m in GVA and supported 5,580 jobs in 2023, while only having a negligible impact on housing with empty homes far outstripping the numbers of STLs.

Conscious to the issues facing small and micro businesses, the industry has attempted to work with national and local government to address the outstanding challenges to the regulatory framework but often to no avail. Edinburgh Council has now suffered a hat trick of legal setbacks, most recently with their u-turn over issuing three-month suspension notices.

Fiona Campbell, CEO of the Association of Scotland’s Self-Caterers, commented: “Running a small business can be a rewarding experience but the last few years have been gruelling with the pandemic and cost of living crisis bearing down on everyone.

“Our survey highlights widespread concern amongst Edinburgh’s self-catering sector, with a clear negative impact on mental health due to recent regulatory changes.

“What is causing particular anguish is the ominous threat that livelihoods will be snatched away due to heavy-handed government regulation, especially with the conflation of licensing and planning requirements.

“To compound matters, just as professional businesses have been shut down or are at threat of closure, we’ve seen a burgeoning black market of unlicensed accommodation, thereby undermining the entire purpose of the regulations.

“Well-managed short-term lets can easily coexist within communities while contributing meaningfully to local employment and the economy.

“As BiGGAR Economics have shown, STLs support over 5,500 jobs in Edinburgh alone yet are vastly outnumbered by the number of empty properties in the city. That is where the policy focus should be directed rather than scapegoating an industry for housing challenges.

“It has to be remembered that the very same individuals under the cosh have dedicated their working lives to ensuring the capital remains a welcoming and leading destination. Quite frankly, they deserve much better.”

Mental Health Infographic – EdinburghDownload

Over 54,000 Scottish SMEs fear closure from second UK lockdown

An estimated 35,070 Scottish SME*s (small and medium-sized enterprises) say it is likely their business will close permanently in the next 12 months as a result of the coronavirus crisis, with this figure rising to 54,776 in the event that a second national lockdown is introduced, according to a recent survey by Virgin Money*.

The research is reported in the latest Virgin Money Business Pulse, which provides a comprehensive insight into the performance of the UK’s SMEs and the environment in which they operate.

Across the UK as a whole, the survey, which was conducted in early September, revealed that almost one million SMEs fear they could close if there was a second lockdown. Two-thirds (66%) of SMEs said their profits were lower in April because of COVID-19 disruptions, including 21% whose profits took a hit of more than 50%. 

Despite lockdown restrictions easing over the summer months, 64% of profits SMEs’ profits over the past 30 days decreased due to coronavirus-related disruption, compared to expected profits for this period prior to the outbreak of the pandemic. 55% of these businesses believe it will take more than six months for profits to recover to pre-lockdown levels.

Underlining the continuing precarious situation for SMEs, 17% of businesses say it is very likely or somewhat likely they will be forced to close permanently in the next 12 months.  This number rises to almost a quarter (24%) when considered in the context of a potential second national lockdown, similar to that seen in March and April.

A key turning point for SMEs will be the closure of the Coronavirus Job Retention Scheme at the end of October.  42% of SMEs (excluding sole traders) expect their workforce to be smaller in December than it is in September. The new Job Support Scheme coming into force on 1 November is less generous than the furlough scheme, and so represents a significant withdrawal of fiscal stimulus.

However, the survey also uncovers some positives, with 15% of SMEs stating their profits were unaffected during lockdown and 10% noting their profits were higher, as demand for specific products, such as food and PPE, increased. 

In addition, the lockdown has prompted almost a quarter (23%) of SMEs to update their strategy, 21% to reshape their vision, and 12% have improved existing products and services.

The Virgin Money Business Pulse covers the first half of 2020, which captures the start of the COVID-19 crisis. 

The scale of the challenges experienced by SMEs is reflected in the Virgin Money Business Pulse, which fell to its lowest ever level of 32.9 in the second quarter of 2020. 

This was driven by record-low scores in the revenue, GDP and capacity indicators, although gains were made in the business costs and lending indicators.

Rock bottom commodity prices and falling wages have provided some relief to SMEs in the form of declining business costs.  Similarly, government-backed loans as part of the fiscal response to the pandemic, led to a record jump in SMEs’ borrowing, which has improved the lending indicator.

Elsewhere in the Virgin Money Business Pulse, the new Regional Rebalancing Tracker, which records regional economic inequalities in the UK, reveals the economic divide between London and the South East and the rest of the UK has continued to widen in the past six years. 

Scores are calculated based on a region’s convergence to the level of economic prosperity and opportunity in London and the South East.  The tracker reached a record low of 38.6 points in Q2 2020, with the lowest levels of convergence in the North East of England and the East Midlands.

Scotland’s individual Regional Rebalancing score was 37.6 in Q2 2020, with a weak rate of business creation weighing on the overall score. Productivity in Scotland is, however, the highest in the UK outside of London and the South East.

It is estimated that in 2020, workers in London and the South East generated on average £37.69 per hour worked. In Scotland, the corresponding figure is £30.13. This means that for every pound of output generated by workers in London and the South East, workers in Scotland generate an estimated 80 pence in the same amount of time.

Gavin Opperman, group business director at Virgin Money, said: “The results make for sober reading, but they are unsurprising given the extraordinary disruption of the last six months. 

“The COVID-19 pandemic has caused the deepest recession on record and recovery is slow, despite the national GDP figures regaining ground.  The UK’s SMEs have experienced unprecedented strain, with sales and profits affected by workplace closures, supply chain disruption, diminished productivity and declining household incomes.

“Despite the pickup in economic activity in the summer months, businesses are by no means out of the woods.  As we head into the autumn and winter months with newly introduced restrictions, the next six months will be critical for many businesses. 

“SMEs have shown tremendous resilience and innovation this year, with some excellent examples of creativity to pivot business models and maintain operations.  But there is no doubt there are tough times ahead.

“On a brighter note, the pandemic may offer SMEs the chance to continue longer-term with the new and more flexible work patterns the pandemic necessitated, helping to rebalance the spread of wealth and opportunity across the country.

“We will continue to focus on how we can best support the businesses we work with. The future is always hard to predict, perhaps more so now than ever, but we will aim to be the best partner we can be as the UK navigates through the economic recovery from the pandemic”.

*Calculated by The Centre for Economics and Business Research (CEBR), with research conducted by Censuswide from 04/09/20 to 07/09/20, with 501 SME decision makers