How SNP and Labour are putting future of Scottish tourism industry at risk
Thousands of hospitality jobs have been lost since Chancellor Rachel Reeves’ Budget increased employers’ National Insurance contributions and the visitor levy or ‘tourist tax’ will only make things worse
Not that you would think it from the torrential rain showers we’ve been experiencing recently, but we are at the height of the Scottish tourist season. Driving up the A9 north at the weekend, I could not help but notice the number of visitors’ vehicles parked in laybys along the road, as people took photographs of mist-covered hills.
These scenes, welcome as they are, rather belie the real underlying story affecting Scottish tourism and hospitality sectors. Because what we hear from the industry is that while international visitor numbers have generally held up well, there are very real concerns about the domestic market, which won’t be helped by another wet and windy summer.
Scottish families are once again crowding to our airports in search of sunnier climes rather than holidaying at home, and the cost of living means that visitor spend for those staying home is being squeezed.
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Industry warnings and job losses
According to the Scottish Tourism Alliance, in 2024 the 16,000 businesses operating across the tourism and hospitality sectors in Scotland employed a total of 245,000 people, and generated revenues of £16.5 billion, 9 per cent of Scotland’s economy. But Marc Crothal, STA’s chief executive, warns that in recent months trading conditions have become far more difficult for many operators, and only look set to become more challenging still.
Government measures are undoubtedly having a detrimental impact on the sector. Latest figures from the Office for National Statistics reveal that the UK hospitality sector has lost 84,000 jobs since Rachel Reeves’ Budget and the increase in employers’ National Insurance, with the industry the hardest hit sector of the economy.
That was a decision taken by the UK Labour government, but the SNP administration in Holyrood cannot be exempted from the blame for the current difficult situation. The botched introduction of short-term let licensing has led to many smaller operators choosing to withdraw from the market altogether, given the additional costs and bureaucracy involved in complying with an overly complex scheme.
Those who remain face additional financial burdens. All this for a system which was far too broad in its reach and should never have been applied on a national basis, but introduced only where there was specific local need.
The same Scottish Government has failed to pass on the rates relief available to retail, hospitality and leisure businesses in England from the UK Government to Scottish businesses for two years now, putting our operators at a competitive disadvantage.
‘Unnecessary and avoidable’
And now we have the visitor levy currently being considered by council administrations across Scotland. First out of the traps has been Edinburgh, setting the levy at 5 per cent, plus VAT, on all accommodation bookings in the city, to apply from April next year.
It is a scheme which has been heavily criticised by the industry as “unworkable”, with no guidance having been issued to operators as to how to apply and pay the levy back to the council. According to tourism leaders, the current timeline for those required to apply the levy “places unnecessary and avoidable strain on the sector”, which is already struggling with rising costs.
Other councils are following suit, with consultations being launched across Scotland on whether the levy should be introduced. Fortunately, some, like Aberdeenshire, are extending their deadline for responses, after starting to realise the issue is more complex than it first appears.
But the question of a visitor levy goes beyond simply the matter of the administrative burden of collection. There is a much more serious matter to be considered: whether Scottish tourism can really afford, in a competitive international market, to make itself even more expensive with this new tax.
A recent survey showed that Edinburgh is now Europe’s most expensive short-break destination. We know Scottish families will choose package holidays overseas, not just because of the guarantee of sunshine, but because these often work out considerably cheaper than staying within our own shores. By imposing a visitor levy, are we not at risk of doing even further damage to an already struggling sector?
A sensible plan
It may be that Edinburgh during the festival period can well sustain a visitor levy without a detrimental impact. But that certainly does not apply to Scotland as a whole. Complaints about “over-tourism” ring hollow in many parts of Perthshire and Fife that I represent in the Scottish Parliament, where we would be delighted to see greater visitor numbers than we currently have, particularly outwith the hot-spot season of July and August.
One self-catering operator I spoke to recently told me he would bite off my hand to have a bit of the “over-tourism” that is deemed such a problem in places like Edinburgh and Skye.
Last month the Scottish Conservatives, for whom I speak on tourism matters, published a policy paper with four proposals to assist Scotland’s tourist sector. Firstly, to ensure there is significant rates’ relief for hospitality that’s at least as generous as that applied south of the Border.
Secondly, changes to the short-term let licensing regime to exclude letting rooms within your own home, remove B&Bs and guest houses from the scope of the rules, and introduce a lighter touch to the regulations as a whole. Thirdly, to change the visitor levy rules so that any sums applied would be a fixed rate rather than a percentage, which would help address the concerns about affordability. And fourthly, a new initiative to promote careers in the hospitality industry, particularly to younger people.
Taken together, this is a package of support which has been warmly welcomed by the sector, and would help address many of their concerns. Without this or something similar from the Scottish and UK governments, we are likely to see further job losses in an industry which should be our national flagship.
Murdo Fraser is a Scottish Conservative MSP for Mid-Scotland and Fife
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