Economy, Energy and Fair Work Committee

Meeting date: Tuesday, December 1, 2020

Official Report 683KB pdf

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Covid-19 (Impact on Businesses, Workers and the Economy)

Under agenda item 3, we will continue our evidence taking for our inquiry into the impact of Covid-19 on Scotland’s businesses, workers and the economy. Today’s focus is on rural areas. We have about one hour for the session.

I welcome our witnesses, all of whom join us remotely. Stephen Montgomery is from the Scottish hospitality group; Graeme Galloway is the programme director of Developing the Young Workforce Dumfries and Galloway; and Jackie Brierton is the chief executive officer of GrowBiz Scotland.

Please allow our broadcasting colleagues a few seconds to turn on your microphones before you speak. If you want to speak, please raise your hand or type R in the chat box. If you need to raise any points about how the meeting is running, please type those in the chat box, too, and we will seek to deal with them.

I will start with a fairly general question. What is your assessment of how rural communities and businesses are coping with the pandemic and the rules to which they are subject? What issues do rural enterprises and young people in particular face? Who wants to comment first?

Good morning. It is difficult to give a generalised answer, because the crisis has affected rural economies in different sectors and in different parts of Scotland quite differently.

Undoubtedly, two thirds of the businesses that we have been supporting have been in severe difficulties and face great hardship. Some of them have already closed, but some of them have been able to—[Inaudible.]—reasonably well. Counterintuitively, we are also seeing a number of new businesses come forward, as people with viable ideas are taking advantage of some of the opportunities that have come up due to Covid. Therefore, the picture is quite mixed. One of the big difficulties for rural businesses in particular is that they have fallen through the slats with regard to the financial assistance that is available—I can go into that in more detail, if necessary.

For us, one of the issues is that more young people in rural areas want to stay there. In some cases, that is because they do not have a choice; in others, it is because they actively want to create a living there. On the face of it, the current schemes—the UK kickstart scheme and the Scottish Government’s young persons guarantee scheme—are good and generous, but neither allows young people to create their own businesses. There is no mechanism, and no finance in the systems, to allow them to develop their ideas—[Inaudible.]—and I think it was—[Inaudible.]—a lack of focus on entrepreneurship and encouraging people to create their own jobs. Some in rural areas want to do so, but there is no specific support for that.

Whether start-ups are created by young people or by others, there is a great lack of access to finance. At the moment, no schemes are available and, unfortunately, the banks are not opening new business bank accounts. If people do not have their own capital, it is difficult for them to find the finance to set up a new business.

Good morning, and thank you for inviting the Scottish hospitality group to give evidence.

The Scottish hospitality group is responsible for more than 200 sites that are spread across Scotland, in both rural areas and city centres. We employ 6,000 people and have a turnover of £275 million. Many—probably about 1,400 or 1,500—of our 6,000 employees are between the ages of 16 and 24. Therefore, young employment is a big interest of ours.

As you will know, our sector has been badly hit throughout the Covid pandemic. Since we opened up at the beginning of July, we have been allowed 15 people, then eight people from three households, and then six people from two households. There is also the farcical music ban and the 10 o’clock curfew. Those measures have affected both city centre and rural businesses throughout the pandemic.

Rural pubs depend a lot on the community, and a lot of people in the community depend on pubs. Restaurants are a safe place to go to socialise, but they have been hit by many restrictions—far more restrictions than have been in place in the rest of the UK. At the moment, it is hard for the sector, and there are no grants that are worth talking about available. We have been very badly hit, so it is a big subject for us.

We cannot hear Graeme Galloway. I think that his microphone is muted—perhaps someone can assist with that. I ask him to try again to check whether we can hear him. [Interruption.] I am sorry—we cannot hear him. We will try to sort that out. We will move on to other questions and, if we can get the sound sorted, we will bring him in later to comment.

Covid-19 has affected us all in our work and leisure, and all types of business have been affected. We all know that rural Scotland relies on employment in a small number of sectors, particularly tourism. Cities have much more sectoral diversity of employment. Has the reliance on tourism been reflected in public sector support? If not, what actions are needed?

I take it that those questions are for me. In rural tourism, a lot of our employees are from the area. We try to keep our local people local because, if we lose them, they go to city centres, Europe or other places. The kickstart scheme is good if it can be used. However, we face so many tier systems—one week we are open and the next we are not—that we do not know where we are.

A big problem is not knowing when we can trade, as is trying to stay viable. A lot of rural places are shut because trading is not viable. Most of our staff are on furlough payments, which are a big help for us. We need clarity, which must be provided soon. Many big rural businesses—such as Gleneagles and Auchrannie on Arran—have already closed because of viability issues and because no Government grants have been provided to help. A lot of the businesses involved have a rateable value of more than £51,000. When the pivotal and hardship schemes started in the first lockdown, only 8 per cent of hospitality businesses that applied for grants under those schemes received them.

We face such issues all the time. The banks are not helping either, because they are following the traffic light system—that is similar to 2008 and 2009, when road haulage was put on that system. In more rural areas, banks are not giving younger people mortgages, because hospitality is on the traffic light system—that applies even to small overdrafts. We are in a bit of a dilemma that we need immediate action on.

10:45  

There is confusion out there. Some people do not know what level they are in and whether they should be open. I get a lot of emails from people complaining, “This shop’s open but I can’t open.” What do the witnesses suggest we should do to resolve the confusion?

The UK and Scottish Governments need to sit down, open the door and talk to hospitality businesses more than they are doing. I am in a group that gets a call once a week to tell us what is happening—not what is planned. We have no input at all, although the SHG has made many proposals to the Scottish Government for alleviating the issues that we are being hit by.

Some restrictions appear in guidance, as with the levels system. We got the information at 8.20 on a Friday evening about what would come into effect at 6 o’clock on the Monday morning. Operators cannot plan in such a situation, because they make food and beer orders three or four days ahead—that is the lead time.

The SHG encourages the Scottish Government to sit down with us and give us a seat at the table to discuss the Government’s issues and to allow us to discuss our issues. That would create an easier working relationship, so that we can tell our operators and their staff where the Scottish Government is and what it plans to do. There is confusion among operators—and among customers, which is more important.

Does anyone else want to come in?

I want to comment on your original point, which was about tourism dominating the rural economy. You are right that a lot of areas in Scotland depend on tourism, but there is a huge number of diverse enterprises and businesses beside that. What we are seeing, certainly from the range of businesses that we support, is that there is quite a—[Inaudible.]—in the creative services sector, for example, who are finding different ways of selling their art and so on. We are also seeing a huge increase in different ways of providing care and wellbeing, which is providing jobs—[Inaudible.]

I totally sympathise and agree with Stephen Montgomery that hospitality businesses have been hugely badly hit, but we are kind of forgetting a whole range of other businesses in rural areas that are able to grow and survive. However, they need—[Inaudible.] If anything, the lobby for tourism and some other sectors has drowned out the fact that there are other businesses that could be providing employment and growing, but that are not getting any attention. That is not to say that hospitality is not critical, but there probably needs to be more balance and an opportunity for the voices of those other businesses to be heard.

Is Graeme Galloway able to come in? If not, I will finish there, convener.

Can you hear me okay now?

Yes, thank you. That is much better.

Excellent. Carry on.

We work with a number of business sector forums across Dumfries and Galloway and it is probably fair to say that Covid has hit different sectors in different ways. The engineering sector, for example, is fairly buoyant, particularly the companies that are manufacturing for agriculture, agricultural buildings and suchlike. At the other extreme, hospitality and tourism is far and away our worst-affected industry. It is clearly a very important industry for Dumfries and Galloway and it is almost decimated. The events that are held in the region throughout the year, such as the Wigtown book festival or the Eden festival, which are big draws into the region for tourists and others, have all been wiped out. It is a mixed bag; some industries are working well, but others, particularly hospitality and tourism, have been hit hard.

I understand the particular impact on tourism, which is not just in rural parts. Have there been any difficulties regarding the different restriction levels in the country? I support them, because it seems sensible to try to keep parts of the economy open as much as we can but, at the same time, I live in a level 3 area and I am sure that people in the Highlands would not want people from level 3 or level 4 areas heading up there. Specifically, are the travel restrictions that have been put in place generally supported? Is there a recognition that health comes first or do people feel that there are difficulties and that they would prefer the rural economy to be opened up?

What other areas of potential growth are there in the rural economy? One that jumps out is forestry, which would help us to tackle many other issues, including environmental ones. Where is there potential for growth in the rural economy?

That goes back to Mr Lyle’s question. If we had been given a seat at the table during the development of the levels system in Scotland, we would have been able to alleviate many of the problems with people travelling between different levels. In Dumfries and Galloway, we are stuck in the middle of an English lockdown to the south, which will probably go down to a tier 2 at the weekend—tier 2 is on the border of the Scottish level 2 and level 3—and level 4 to the north of us, from South Lanarkshire and Ayrshire and across the central belt. We are continually trying to ensure that we do not accept people from those areas—not even someone from a level 1 area coming into level 2. I am sure that Graeme Galloway will back me up on that.

If we had had some prior warning or some input to the levels system, we would have been able to adapt them to ensure the viability of businesses. In level 3 in Scotland, people are only allowed to open from 6 am to 6 pm, with no alcohol. Those hours are completely arbitrary. Peak times are from about 12 to 2.30 and then from 5 to 8.30 or 9 o’clock. At the moment, in level 3, we cannot get evening service, which means that, if people have an occasion, they will look to travel elsewhere. For example, people will travel from Midlothian to East Lothian—one is in level 2 and one is in level 3. People will do that.

In Dumfries and Galloway, the issue is that people will come across the border from England, because we are in a lower level. However, in England, last orders is at 10 o’clock with an 11 o’clock kick-out time, whereas here in level 2, we are allowed to serve alcohol with a meal inside—this is where it gets confusing—but not with a meal outside. If we were allowed to serve until 10 o’clock in the evening, hoteliers in all areas would be able to serve their residents. If a resident comes in at 9 o’clock for an evening meal, they cannot have an alcoholic drink. There is absolutely no scientific reason why someone cannot have a glass of wine with their meal.

If we had been able to sit down and talk about the levels and tiers before they were published, we would have had better input and helped to prevent people from crossing from one tier or level into another.

Does anyone want to pick up on my question about growth areas for the rural economy?

Briefly, on Mr Rowley’s first point about support for the different levels, we hear from rural villages and towns that they are getting a lot of support in keeping their areas safe and meeting the restrictions. The biggest issue is the time available to prepare when decisions are made quickly, which is when there are problems adapting. At the moment, there is still uncertainty whether the level 3 and 4 areas will stay in those levels. That makes it almost impossible for an accommodation business in the Highlands, for example, to know whether to go ahead and promote an offer for Christmas and the new year, which would usually be one of its big income periods, given that it does not know whether it can legally attract people from other areas.

Consistency and the ability to plan ahead are the biggest issues. That is one reason why businesses such as Gleneagles have made the decision to close—it is easier and more cost effective. Some smaller businesses do not have that luxury and have to try to bring in income in some way. As I said, many of those businesses do not qualify for any support, for various reasons. There is still that huge wodge of self-employed people in rural areas in particular who have not qualified for support for a complex range of reasons: if someone has a mixture of employment and self-employment or if they have started a business only in the last 12 to 18 months, they do not qualify for the self-employment grant. There are a lot of barriers.

On your second point, which was about rural growth, I think that there is huge potential. I would go so far as to say that, ironically, in the face of the—[Inaudible.]—we have got, there could be a golden period ahead for rural areas if we can encourage and resource the businesses that want to set up in those areas. Members will be aware of this, but we are seeing a huge number of people making—[Inaudible.]—their lives to move into rural areas when they would not have considered it previously. That is partly because of the experience of the past nine months, and sometimes just because they want a different way of living.

Where I am based, in Perthshire, we hear anecdotal evidence that rural properties are disappearing before they even go on the market, because people are looking to move. Traditionally, that would be retired people, but we are seeing people of working age, with families, who are making a positive decision to move to rural areas. They are coming with skills, knowledge, capital and innovative ideas that could be developed in a range of ways. Digital connectivity is critical to that. Where there is good digital connectivity, people can run any business in any sector. We can see that now, because we have seen evidence of people being able to adapt to home working, for example.

We are seeing niche manufacturers setting up and selling across the UK and beyond. We are seeing technical—[Inaudible.] We are currently helping a business in the Blairgowrie area that is developing a potentially game-changing technology using infrared photography and doing a trial with Ninewells hospital. Someone can be based anywhere in Scotland and running a growth business, but we have to accept that those businesses will need support in a way that might be slightly different from urban businesses, and access to capital is still a major issue. The Blairgowrie business that I have just referred to should be qualified and fit the bill for research and development funding that would normally be available, but it cannot access a research and development grant, because those are suspended at the moment.

The summary answer to the question is: absolutely, there are many such areas. I have not mentioned the extractive industries, such as forestry or developing agriculture and so on, because it is almost a given that there are opportunities there. We should be looking at all the other niche—[Inaudible.]

I talked about care and wellbeing. There is a huge opportunity to develop a viable care and wellbeing infrastructure in rural Scotland. That will not only create viable employment and provide social care services for people in communities—[Inaudible.]—in other mechanisms, but it will almost be necessary, because the statutory services will continue to struggle to support communities with the right level of social care. I know that that is a whole other area and another discussion, but it is a potential growth area for employment.

Does Graeme Galloway want to make a brief point on that question?

Generally, people are quite supportive of the level that we are in, but we feel somewhat sandwiched between England and the central belt, as has been said. There is certainly a feeling within the chamber of commerce that hosts the DYW in Dumfries and Galloway that we would like us to move to level 1 for flexibility within business. Our Covid rates are falling.

To touch on what Jackie Brierton said, there are opportunities as a result of the Covid pandemic. In a similar way to Perthshire, our housing market is extremely buoyant with people moving into rural areas. Although there are still issues with digital connectivity across some of the more rural parts of our region, people can definitely see that there are opportunities there. They have been working from home for months and the world has not stopped turning as a result of their being in a remote area. They can access the internet and they can still play their role or do their jobs even if those are based in Glasgow, Edinburgh or elsewhere. People can undertake their role within a rural area such as Dumfries and Galloway.

Somewhat perversely, therefore, as I said, Covid-19 could be a bit of a boon for us in future when people realise the possibilities of remote working.

11:00  

We will move on to questions from Graham Simpson.

Stephen Montgomery, do you have any evidence of people travelling between tiers to access hospitality?

Yes. As Graeme Galloway said, Dumfries and Galloway is squashed between the English border and a level 4 area. The weekend before last, we were subjected to a torrent of abuse—I am being brutally honest—from people coming from the central belt who were possibly travelling to do some Christmas shopping in the Gretna Gateway, which was in level 3 at the time, I think. People wanted to book in for Sunday lunch or a bite to eat, and we have a protocol that involves us asking for a postcode or where someone is coming from when they call us. When we told them that we could not take their booking because of where they were from, that resulted in staff getting abuse that was, frankly, unacceptable.

Have you heard of other businesses suffering the same abuse?

Yes. I run a couple of Facebook groups and so on, and the situation is the same across the Borders. Over on the east coast, the situation involves people possibly going to the Newcastle area, where they should not have been going anyway, because of the prevalence there. Hopefully, the issue will be resolved soon.

My next question is also for Stephen Montgomery, but others might have a view. Have you had any experience of trying to access any of the funds that are available? Have you tried to access the latest fund for businesses that were forced to close, which was launched at the start of November?

Yes. We have quite a negative view of that. In the central belt, from 9 October to the beginning of November—that was the period of the short, sharp shock, which has now become a lot longer—grants of £2,000, for businesses with a rateable value up to £18,000, or £3,000, for those with a rateable value of up to £51,000, were available to businesses that were forced to close. Those grants are capped in relation to the number of sites—I think that the cap is five at the moment. After the grants are taken off, our businesses are losing £5,089 a week. Compare that with a grant of £2,000 a month.

On the back of that, the First Minister announced a £9 million fund for the 20 per cent furlough top-up, which became a £1,650 payment. However, here we are at the end of November, and that still has not gone out to hundreds of hospitality businesses.

In my view, the planning and execution of that were completely wrong. Rural businesses are dependent on that support, because they are being hit hard—they are not being hit as hard as those in the central belt, but they are being hit hard as far as footfall is concerned. However, they are suffering because of what has not been actioned before the introduction of restrictions.

Jackie Brierton, you mentioned that banks are not opening new accounts for people who want to set up businesses. Is that a big problem?

It is a major problem. I had the opportunity to raise the issue with Jamie Hepburn, the Minister for Business, Fair Work and Skills. He made some inquiries, and the banks’ response was that they were busy administering the coronavirus business interruption loan scheme and the coronavirus bounce back loan scheme and had to prioritise that work, so they were not able to open new bank accounts.

Some of our clients have been told that there will be a 12-week delay before they can open a new account. In many cases, they might simply not have been able to have a conversation with someone at their bank about a product, an overdraft or a new account. Obviously, one does not need a business account when starting a small business, but it is good practice to have one. People need one in order to qualify for some of the systems, so that situation causes quite a lot of issues for our businesses.

An additional banking issue exists in rural areas, in which most banks took part in a huge closure programme. Many small towns and villages have no banks. We were told that, with the new levels approach, the mobile banking system would be suspended for level 3 and presumably also for level 4. There are numerous problems with the banks and it will be really important, for a number of reasons, that they come back on stream, if we want to get that buoyancy back for businesses.

I go back to a comment that was made earlier in this discussion, which related to young people. What do the witnesses think the impact of the pandemic has been on young people in rural Scotland, particularly in relation to access to the labour market?

As I said earlier, we have a lot of involvement with young people at the moment. We are working—[Inaudible.]—to create a smart village for them. We see more young people who show interest in staying in rural areas—[Inaudible.]—been talking about, but they need opportunities. Too many barriers are in the way of us helping them to find employment or to start their own business or become self-employed, as they often want to do, because in rural areas the only way in which young people can stay where they are might be for them to create their own job.

I mentioned the young persons guarantee scheme, which is focused on creating training and employment opportunities. The—[Inaudible.]—that enables young people to start their own business, or a social enterprise with other young people.

The major effect of the pandemic on young people generally has been well documented. Some surveys that have been done—including one by the Rural Youth Project and other organisations—have highlighted the impact of the pandemic on young people’s mental health, particularly in rural areas, in which young people have the issues of social isolation on top of those about where their future lies.

Many young people in rural areas have said that having better connectivity would make a huge difference to their employment prospects and their social interaction. We constantly come back to that point in the rural context, because it is still an issue that digital connectivity is not good enough in too many areas.

You mentioned barriers on the technology side—broadband and so on. What other significant barriers do young people have in relation to either starting their own businesses or getting into the workforce?

I will highlight three barriers. We have touched on access to capital, which is a particular issue for young people and businesses. Many young people have no savings to fall back on. Although they might have gotten capital from family and friends in the past, that is less likely to happen now because of the pressures on people. Access to capital is critical.

Alongside that is the issue of the kind of support that is available for young people. Young people respond well to peer mentoring and support, and to having somebody who can act as a sounding board and can give continuous support, as opposed to a one-off meeting to tell them what—[Inaudible.]—is. On-going, relational support works really well with young people. A number of schemes are in place, but they are probably not good enough.

Thirdly, the standard barrier—apart from the digital one, which we have discussed—is transport in rural areas. To be successful in finding a job or creating a business, a young person needs to have access to the right transport. That is still a major issue in many areas of Scotland. Again, that is well documented, but it is even more important if we think about the emphasis on the green economy. That needs a lot of attention and it is a critical issue for young people.

A young person’s first job is normally in hospitality. In rural areas, that is in their local bar or hotel, as a waitress, waiter or pot washer. That gives them a really good insight into handling money, a bit of confidence, and everything that they need for their future careers.

I do a lot of work with the Springboard charity, which has continued into the schools and has been promoting hospitality in our academies. Getting to our youth younger—if you like—to try to progress them into hospitality and keep them in the local area is always a good thing.

A good thing to have come out of the situation is the adopt an apprentice scheme. If a hospitality business has an apprentice but is closing down, or facing a situation in which it cannot keep them on, we can draw up a CV with the qualities that they can take with them, maybe to another hotel in the area that is looking to take people on.

On the downside, there is a bit of a mental health issue. Our youth do not know where they are at the moment. That may be because, if they are in hospitality, they do not know whether they are getting a shift, because they do not know whether the business is open or closed. There is a big mental health issue there.

However, apprenticeships and the young persons guarantee scheme should certainly be good for the rural economy.

There has been a massive impact on young people. Looking at Dumfries and Galloway, I suppose that there are a couple of indicators. Among 16 to 24-year-olds, universal credit claims have gone up by 72 per cent from January to October this year. Modern apprenticeships have fallen in quarter 2—opportunities for young people have fallen by 64 per cent. That is better than the Scottish average but is still horrendous. Those are indicators that young people are suffering.

We know that far more have stayed on at school this year, because other opportunities were just not there for them. As has already been touched on, the difficulties with transport links for young people are very real, and the dispersed nature of the population makes it much harder for them to access skills training and business support.

There is no doubt that those are all challenges. A lot of academic papers are now suggesting that there is a lost Covid generation. I do not think that it is quite as bad as that, but these are very tough times for young people, and I certainly welcome the young persons guarantee that was announced to address some of that.

What is the role of the developing the young workforce regional groups in rolling out the young persons guarantee? How effective has that been? How is the guarantee actually communicated to young people in rural areas?

11:15  

We try to target what we call the “key influencers”. Clearly, parents and the wider family are key influencers of what a young person decides to do with their career. Educational and business influences are really important as well.

Most of the money that has gone towards DYW is going into the creation of new school co-ordinators. The decision on how best to implement that has been left at a regional level. We went down a teacher-led route, for various reasons, after discussions with education and our key partners who already work in schools—Skills Development Scotland and our employability and skills services. It is about changing the mindset of school management teams so that they understand the importance of vocational training as well as academic learning. We are busy advertising for teachers in the schools to really push the DYW agenda.

Another key thing is to ensure that local employers are tied into their local secondary schools across the region and that young people have access to mentoring and insight into the industries that operate in Dumfries and Galloway. It is often said that, unfortunately, our region’s biggest export is young people. Jackie Brierton touched on the importance of trying to retain young people and to attract young people back into regions such as ours. That is critical.

We have an important role to play in reaching out to young people, but there is no doubt that Covid has made that difficult. We have taken a lot of our offer online, both at a national level and locally, to ensure that we are reaching out to young people so that they understand the opportunities that are available to them in rural areas.

I noted a statistic the other day. It is already old, as it is from July, but unemployment among young people in the Highlands increased from 3.8 per cent to 9.9 per cent between—[Inaudible.]—and July, and I am sure that it is worse now. That emphasises how much we need to help young people.

The guarantee scheme is good because it puts the emphasis on finding opportunities for young people, but funding is not available to employers or local organisations within that scheme. The UK kickstart scheme should be complementary to that and help with it but, unfortunately, some of the eligibility criteria make it really difficult, particularly for rural businesses. As you will know, a business has to be able to take on 30 young people before it qualifies. It can use an intermediary, but it still needs to have three employees in order to take on a young person. For microbusinesses in rural areas, that becomes really difficult.

The scheme provides £1,500 per young person for businesses to invest. It is a good opportunity, and they also get the wages—[Inaudible.]—but the barriers to smaller businesses taking advantage of it and providing opportunities for young people are considerable.

I have questions on a couple of areas, but before I ask them, I have a question for Stephen Montgomery.

Stephen, you highlighted some difficulties with grants that are available. I think that you mentioned the Covid-19 restrictions fund and the hardship fund that the Scottish Government introduced, which is based on rateable value. Those grants are being distributed by local authorities. What discussions have the Scottish hospitality group or your member companies had with local authorities to find out what the difficulties are in getting the funds released to you?

To be fair, a lot of the issues do not relate to local authorities. The main issues relate to conversations that I have had with the people who are dealing with it at the Scottish Government. On the 20 per cent top-up furlough, which turned into the £1,650 grant, they are still trying to navigate a way in which that will be paid. However, it could be paid very simply, in the same way that they paid the hardship grant and the forced closure grants. I do not see what the hold-up is.

Are they still trying to work out where the money is coming from? We are not sure. We cannot get a straight answer. All that we are hearing is our businesspeople saying that the money should have been ready for distribution at the start, when the restrictions were put in place. That seems to be an on-going issue not just for the SHG, but for hospitality as a whole. As far as hospitality in Scotland and all the trade bodies are concerned, there is no engagement on that.

Such things—the financial side and the execution—need to be planned before restrictions go live. That is an on-going problem that is causing major worries and financial concerns for our operators.

I will move on to general support for businesses. Hospitality is important in our rural areas, where a lot of self-employed people run small tourism businesses, but we have been given figures for the job retention scheme and the self-employment income support scheme that suggest that the claim rate in rural areas is lower than the Scottish average. The Scottish average take-up of the job retention scheme is 7.4 per cent, and the rate in 13 of the 15 rural council areas is below that. The average take-up of the self-employment scheme is 66 per cent, but the rate in 12 of the 15 rural areas is below that. Are there particular reasons why rural businesses and self-employed people in rural areas have not taken advantage of the grants that are available?

There are several issues. We have found that a lot of the businesses that approach us are confused by the multiplicity of schemes and things going on; some of them—[Inaudible.]—to claim grants when they should have done. Take-up of the job retention scheme relates more to the size of businesses and how they can apply furlough to people when they still need people to do things. In rural areas, it is more—[Inaudible.]

The take-up of the self-employment scheme is to do with the nature of businesses. I mentioned that a lot of people in rural areas are employed and self-employed—they might be employed in the winter and self-employed in the summer, for example. That is—[Inaudible.]—in terms of eligibility for the SEISS. People are also affected if they started a business within a certain time or—[Inaudible.]—business and they are not in the self-assessment system.

There are many reasons for the take-up figure, and a key reason is one that was mentioned in relation to business support. This has been a time when, more than ever before, businesses have needed one-to-one support—somebody on the end of a phone. In many cases, Business Gateway and the agencies have provided that, but accessing such support is not as easy for a lot of smaller businesses. There has been quite a gap. Part of the reason for that has been the volume of demand—many businesses have needed support and resources.

The feedback that we have got from businesses is that they welcome one-to-one support and being able to contact people readily. People are having really—[Inaudible.]—times, when their mental health, their financial situation and everything are weighing on them. The business support system has needed to be—[Inaudible.] It has been that in lots of cases, but there have been failures, too.

In rural areas, a lot of hospitality businesses are run by families—by the operators. That means that not a lot of furlough might be needed. If a business is run by a husband and wife team, for example, they will not take up furlough.

A lot of people are looking for a grant system; business help is certainly needed. As I said, the average business in a rural area or the central belt is losing £5,089 a week by the time it takes up furlough, because of the payments that we must make towards furlough, pensions, national insurance, standing costs and so on. The average grant pays about £700 a week.

If Scotland wants hospitality businesses to still be here next year or in two years’ time, we need to look at the grant system properly.

More and more businesses are moving online to try to keep going. Broadband is a UK Government responsibility, and there was an announcement by the chancellor that he is cutting the amount of money that is available for broadband projects from £5 billion to £1.2 billion over the next four years. The UK Government has watered down its pledge to reach every home in the country and it now has the lower target of 85 per cent of homes. If the roll-out of broadband across rural areas is not funded, what impact will that have on the rural economy?

It will have a huge impact. The 15 per cent gap will, no doubt, disproportionately affect rural areas as opposed to urban ones. We can only hope that the fact that the reaching 100 per cent scheme is still being rolled out in Scotland—there are also complementary schemes—will mean that what is needed in rural Scotland will be fulfilled. It is critical that every area has access to high-speed broadband.

The need for high speeds keeps increasing; it does not stay the same. The more complex and—[Inaudible.]—heavy the software and applications are, the more speed we need. There are some great examples of innovation in Scotland, where communities have taken it on themselves to provide high-speed broadband to speed things up. Perhaps we should look at it from that perspective and help more communities to do that more quickly—not that I am advocating that everybody digs their own trenches.

High-speed broadband is the key to Scotland’s future economic success, so if we do not have digital connectivity, we are shooting ourselves in the foot from day 1. If we consider our aspirations as a country and an economy, which are to have a greener economy, a wellbeing economy and a more inclusive economy at the same time as having the right kind of growth, how will we do that if we cannot compete with countries that have already nailed their digital connectivity?

As was said earlier, the rural economy already makes a huge contribution to Scotland’s economy. I sincerely believe that it can make an even bigger contribution in the future, but it will do that only if it does not have the proverbial hand tied behind its back.

I agree with Jackie Brierton. Broadband connectivity is a must for businesses in rural areas. If we want to promote rural entrepreneurship, we must have connectivity to the rest of the world, but my fear is that the 15 per cent gap will be in rural areas, due to the expense and whatnot.

I work with young people in schools throughout Dumfries and Galloway, particularly through the Young Enterprise Scotland programme and DYW. In setting up their businesses, young people do not consider physical shops; they sell their products on the internet and through social media channels that I have never even heard of, and they are making a success of it. Not having access to broadband capability will really hamper them in life.

I agree with everything that Jackie Brierton and Graeme Galloway have said. We talked earlier about people coming from cities to settle down in rural economies for a different way of life. If the connectivity is not there and people in rural areas cannot work from home, that will disadvantage them. I am quite upset and annoyed about that. It is imperative that, as much as we can, we get rural connectivity up to the same speeds that exist in city areas.

11:30  

I was slightly surprised by Gordon MacDonald’s assertion that digital broadband is being delivered in Scotland by the UK Government. I am sure that he will be writing to the SNP, because it says on its website that the SNP is improving Scotland’s digital infrastructure and that it has met its target.

That was just a point of clarification. Perhaps Gordon MacDonald does not understand what the rest of the SNP is doing in delivering digital infrastructure. I hope that that clarifies that specific point. Thanks to the UK Government, almost 900,000 properties are being connected, if we believe Gordon MacDonald.

I move on to other matters. How can Scotland’s rural areas contribute to the green recovery? I know that Jackie Brierton mentioned that. Would she like to start?

There are myriad ways that the rural economy contributes to the green economy. There are obvious examples that involve using our natural resources better, such as using forestry better to create different experiences, products and opportunities, and the way that agriculture—[Inaudible.]—to go, which will support a greener economy. I have my fingers crossed that that will go in the right direction.

Our microbusinesses are seeing huge interest from a wide range of businesses. They want to be greener and to learn how to run their businesses differently in order to contribute to carbon reduction. That can involve things such as sustainable tourism, which is of huge interest to a lot of tourism businesses because they know that that will be the way to attract people in future. [Inaudible.]—industries can contribute to the greener economy as well.

As we have discussed, if we have the right digital infrastructure, it will enable more businesses to operate and create products that can be sold online, and those products can be created in more effective and efficient ways. That will all contribute to the greener economy.

The overall support for a more local approach to our economy and people’s recognition that they should and, in many cases, can access everything that they need within 20 minutes of where they live are important for the future of our green economy. A lot of our rural communities have grabbed that and created good ideas about how they can go forward with it. For example, there are climate change cafes to raise people’s awareness, and there are little towns such as Dunkeld, where there is a really dynamic local economy and a focus on helping people to shop locally and support their local—[Inaudible.] All of that is supporting a greener way forward.

There are myriad opportunities, and the more awareness and education we have that help businesses to do the really practical, day-to-day things, rather than big things, the more that will start to create positive outcomes.

Green energy is central to what Dumfries and Galloway produces as a region. We have a long history of that with the Galloway hydro scheme, and more recently we have had the Robin Rigg offshore wind farm and a number of onshore wind farms in the region. That industry is still there to be exploited, and we have a number of big companies, such as Natural Power, which is based in Dumfries and Galloway.

When we set up what we had called the renewable energy forum, people said that it be called the energy forum, because that is the way forward and the future. The industry is there to be exploited in Dumfries and Galloway, which is often described as a natural place to live, work and learn.

We can certainly build on that green economy in relation to the smaller microbusinesses that can be set up. We need digital connectivity but, as I said, people are realising that they can set up in small, rural areas and deliver a business across the world.

Tourism is definitely an area that we could still exploit in south-west Scotland. I am always saddened by the number of people who drive up the M74 from England and do not turn left but head straight to the Highlands, when we have some of the most fabulous coastlines, hills and forestry areas in the UK.

There is a movement for the creation of a Galloway national park. I would certainly back that as it would bring jobs and infrastructure into the more rural west of our region. I am a keen hillwalker and I go down to the lake district. To be frank, it is overrun, yet I walk in the Galloway hills and I do not see another soul all day. There are areas that we can exploit to the advantage of the region.

You are quite right, Graeme. It is a beautiful region, and some of the best political representatives in the whole of Scotland are in Dumfries and Galloway.

Stephen, do you have any comments?

On hospitality, we have the north-west 500 and we have the south-west 300, and a lot of the people that we try to attract—[Interruption.]

I am sorry, I was distracted because I saw Maurice Golden laughing.

We are trying to adapt to greener energy, and we have welcomed a lot of the grants that have come out—I think that they have been provided by the UK Government to the Scottish Government—as far as electric vehicle charging points are concerned. I have put one in on one of my sites. I know that colleagues have put them in along the north-west 500, and we are now trying to exploit that with the south-west 300. I would encourage the Scottish Government to try to make some more funding available for that.

There are other, internal options. Instead of having radiators in bedrooms, people are looking at installing infrared heaters, which involve dry heat rather than wet heat—they heat people’s bodies rather than the room. Hospitality can certainly benefit from such things. They can come from the wind farm people, who are putting money into local communities. That is great for local initiatives and it is a welcome scenario for communities in rural areas.

We move on to questions from someone from another beautiful part of Scotland—the deputy convener, Willie Coffey.

I have a few points to make and a few questions to ask our guests. First, I will make a point in response to some of Maurice Golden’s crazy comments.

If the Scottish Government had not intervened in the broadband story for Dumfries and Galloway and the Borders, we would have been waiting for another 50 years or more for the UK Government to do anything about it. That is a fact. We have put our money where our mouth is in order to put the broadband services down there. I had a wee quick look while that chat was going on, and 80 per cent of the premises down there are getting 30 Mbps plus at the moment. There is a bit of a way to go, but there is no way that the UK Government was delivering anything close to that down there. That point needs to be put on the record—

Deputy convener, I hesitate to interrupt further chat on that point, but do you have questions for the witnesses on further points?

I do, but that point from Mr Golden had to be responded to, given what he said earlier.

That is fair enough. Carry on.

An important event that is coming down the track in less than a month is called Brexit, and we will be leaving the digital single market, which is worth €400 billion per year. Scotland will be taken out of that. What are the panel’s views on the impact of that on rural communities, given that we are talking about digital services and connectivity? What are the possible implications? Did you know that we will be leaving the digital single market at the end of December?

Obviously, I am not here to play party-political football between various political parties; I am here to talk about our sector.

As far as Brexit is concerned, given that Covid is the main issue just now, we have not really seen where Brexit is going to massively hit us. There is an employment issue. Before Covid hit, we thought that we would probably have a shortage of skills and labour, but we are now seeing many hospitality businesses shutting down, and there may well not be as big a demand.

Given the apprenticeship and the developing the young workforce schemes, we do not see Brexit as a massive problem just now, but it may well be a different story next year and 18 months down the line.

We are going to leave a digital market that is worth €400 billion, but that is not a problem. What is Jackie Brierton’s view on that?

I am sorry, but I think that Graeme Galloway had his hand up first. We will then go to Jackie Brierton.

Sorry, Jackie.

In the sector forums that I have discussed, there is certainly real concern about Brexit and about there being no trade agreement. There is certainly evidence that some sectors are stockpiling machinery or materials because they are incredibly nervous about what will happen in the new year. Like Stephen Montgomery, I do not want to be dragged into politics, but that is the feeling that I am getting from the various sector forums.

Those who have direct competitors in the EU and currently export to the EU are probably the most worried about how their business will be affected. There is worry about the likely disruption to logistics, particularly if the business exports food products to the continent, and the implications of import VAT. There is certainly concern in the sector forums about how things will look. The fact that we still seem to be negotiating a trade deal with only four weeks left is a real concern to businesses.

On the digital single market issue—[Inaudible.]—small businesses that export small amounts of products. We have one such business not far from where I am that has a good market for its textile products. Trying to work out how it will export its products and what will be involved is causing it extra hassle, stress and money.

There is uncertainty for most businesses. We are sitting here without a clear idea of what the impact will be. There is no deal on the table that has been agreed. I think that most businesses are waiting to see what will happen, rather than doing a huge amount of planning.

For many rural businesses, particularly in agricultural and manufacturing areas, the biggest issue with Brexit will be access to labour. We have local fruit farms in one of the best fruit-growing areas of the UK, never mind Scotland, but some fruit farms have already made decisions to stop producing soft fruits because of the issues that they will have in accessing labour. That will be the biggest issue for many businesses. There is no sign of—[Inaudible.]—how they will be able to access that much-needed labour next year.

Let us try our best to look ahead positively beyond the health emergency. The young people who took part in the panel discussion with Colin Beattie and me this week talked about their desire to continue to live locally. At the outset, Jackie Brierton talked about the problems with transport and so on.

Should we look at a new arrangement, whereby both Governments encourage employers to set up more employment opportunities within rural communities, rather than asking and expecting all the youngsters from places such as Dumfries and Galloway to make the journey to Glasgow or Edinburgh—the bigger cities in Scotland—to find work and employment opportunities? Given the Covid experience, should we not do more about that? Should we not have been doing it for some considerable time anyway, to make sure that local and rural communities could thrive?

11:45  

I think that you are right. Covid has shone a light on the fact that, in the past, we have accepted that young people wanted to leave rural areas and go to the city. Although many have left and many will do so, for education and so on, surveys that have been done in the past few months have shown that young people have a desire to stay in their local areas. They want to enjoy the environment that they have been brought up in and that they live in, but they also want to develop themselves and to have the opportunities that they might have if they moved.

In the past nine months, it has been shown that it is absolutely possible to work remotely and, if people have the right digital resources, to set up an enterprise that can sell anywhere in the world. The—[Inaudible.]—and the aspirations of young people are undoubtedly there, so why do we not make that a much more positive strategy for the future?

I have mentioned a couple of times this morning that there are infrastructure issues that could quite easily be—[Inaudible.]—considerably. For a young person to positively stay in a rural area, they still need access. If they cannot find a job, they will need access to capital in order to create their own job. When we have schemes in place specifically to help young people, why are we not allowing them to help people to do that?

The kickstart scheme is an obvious example; instead of having a six-month placement with a business, we should make it a six-month enterprise apprenticeship and pay them the same—[Inaudible.]—to develop their idea into a business plan and test trade. At the end of the six months, they might have a business, rather than facing the end of a placement, when they might not even have an employment opportunity.

Stephen Montgomery and Graeme Galloway, can you offer comments on that agenda of thinking about new ways to provide employment opportunities, because of the digital revolution that we are in, and the hope that we will soon get the fastest speeds possible in rural communities? Should both Governments be exploiting that to assist rural communities more?

Absolutely. The issue of young people wanting to leave rural areas is a strange one. In Dumfries and Galloway, a couple of years ago, we did a survey called 10,000 voices in action, which suggested that 55 per cent of young people under the age of 18 would leave Dumfries and Galloway tomorrow if they could. Thankfully, I have seen much more positive reviews more recently. South of Scotland Enterprise ran a survey across the south of Scotland that suggested that young people are keener to stay in their own localities in rural areas.

That touches on what I would call “youth-place compatibility”, which is the pattern of adjustments that lets young people experience the advantages of rural living without excessively compromising their education and employment goals. It is a case of creating the opportunities for them to carry on their studies in a rural area and, thereafter, to seek employment. In Dumfries and Galloway, DYW is absolutely about promoting the opportunities that are available for young people.

However, we are always fighting against the bright lights of the cities. I am reminded a wee bit of a comment that Bruce Springsteen made when he was introducing the song “My Hometown” at a concert. He said that

“Everybody has a love-hate relationship with their home town”,

and that that is built into their DNA. That is very true, but it comes back to the issue of youth-place compatibility. What makes a young person want to come to Dumfries and Galloway? How do we retain the young people we already have? How do we attract new people into the area?

Financial incentives to employers to create those opportunities, and perhaps financial incentives to young people to set up, would have a massive return for a rural area. We are good at waving our young people off to colleges and universities at 18, and they do not come back until they are 65 and want to retire. How do we attract them while they are of working age? That is the big issue for us.

Stephen, can you offer any comments on how we can better exploit digital technologies and look ahead at different ways of providing employment, particularly in your sector?

I cannot add much to what Jackie Brierton and Graeme Galloway have said. Throughout the Covid pandemic, we have learned that businesses need to start working together instead of being in competition. If we compare self-catering accommodation with hotels and restaurants, for example, there is an ideal opportunity, because we saw a real boost for self-catering accommodation as we came out of the first lockdown, and now people can do what they want to do, to a degree, in self-catering accommodation, where they are in their own wee bubble. Restaurants and cafes could work with self-catering places to create a better environment and more job opportunities for our youth. That is an issue that we could look at.

I appreciate all those responses.

I thank our witnesses for coming in today.