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Chamber and committees

Meeting of the Parliament [Draft]

Meeting date: Wednesday, March 1, 2023

Agenda: Portfolio Question Time, Local Government Finance (Scotland) Order 2023, Deposit Return Scheme, Dementia Strategy, Appointment of Members of the Standards Commission for Scotland, Business Motion, Parliamentary Bureau Motions, Decision Time, Scotland’s Hospitality and Brewing Sector


Scotland’s Hospitality and Brewing Sector

The Deputy Presiding Officer (Annabelle Ewing)

The final item of business today is a members’ business debate on motion S6M-07499, in the name of Craig Hoy, on Scotland’s hospitality and brewing sector.

Motion debated,

That the Parliament notes with concern the reported current pressures facing Scotland’s pubs, bars, breweries and wider hospitality sector, including in the South Scotland region; understands that the sector was amongst the hardest hit by the COVID-19 pandemic, and that ongoing current inflationary pressures and impacts on customer spending power makes trading exceptionally difficult; believes that Scottish hospitality businesses will not receive the 75% business rates relief that businesses in England and Wales will receive in 2023-24; notes the calls for the Scottish Government to reconsider the support on offer to the sector, and further notes with concern the number of policies being introduced or consulted on that it believes will put additional pressure on the sector, including the Deposit Return Scheme and restrictions to alcohol advertising and sponsorship.


Craig Hoy (South Scotland) (Con)

Pubs are at the heart of our communities: they bring people together, which helps to tackle loneliness and social isolation. Since Covid, however, they have faced unprecedented pressures.

The latest figures reveal that Scotland has 4,569 pubs, which support 61,900 jobs. The sector generates £1.8 billion for the Scottish economy every year, but pubs, the jobs and the economic and social contribution that they deliver are all at risk. In particular, they are at risk from record energy costs. Nearly half of all pubs are facing energy rises of more than 250 per cent, and one in three are facing rises of more than 500 per cent. They are at risk from sky-high rates, from the increased costs of drinks, food and broadcast subscriptions, and from increased supplier costs. They are at risk from a wilfully negligent Scottish National Party Government, the preposterously complex deposit return scheme and the absurd proposed restrictions on advertising, alcohol sponsorship and merchandising.

The Government now appears to have an anti-alcohol agenda. Rather than easing the pressure on pubs, the Government is piling the pressure on them like never before—the industry is at breaking point. The Scottish Licensed Trade Association says that 50 per cent of outlets were down in trade over the festive period compared with the last normal Christmas and new year season. In the first quarter of this year, six out of 10 outlets have been closing early or for full days.

Wherever I have lived or worked, I have always had a good local, as much for the social contact—if not more so—as for a good pint: the Tyneside Tavern, the Plough Tavern and the Mercat in Haddington, the Alleyn’s Head in Dulwich and the Marquis of Granby in Westminster. When I was living in south-east Asia, I would go to the Derby in Hong Kong, the Churchill Bar in Bangkok or the Penny Black in Singapore. Closer to home, just this weekend for the rugby, I went into the Goblin Ha’ and the Tweeddale Arms in Gifford. Those are all great pubs—places where I have made good friends and enjoyed beer and banter.

The “Friends on Tap” report that was produced for the Campaign for Real Ale—CAMRA—by the University of Oxford found that people who have a local have more friends and feel more connected to the local community than those who do not.

This week, I had the pleasure of visiting Dominic McNeill, who stepped in last year to save the Tower Inn in Tranent from permanent closure and change of use to housing. For years, Dominic had visited the pub with friends on a Wednesday night for a few pints and a few games of pool. Since taking over the pub, Dominic has not paid himself a wage and he is still swimming against the tide of rising costs and red tape. However, he is seeking to transform the pub into a family-friendly hospitality venue with a cafe.

Dominic and his team want to put the Tower Inn back into the heart of the community of Tranent. He talked fondly of his customers: the man who brings in his wife who suffers from dementia for some company and a cup of tea and to watch an episode of “Pointless”, and the elderly customer who suffers from chronic obstructive pulmonary disease who, one day, did not show up for his pint as he normally would. When the staff realised that he had not come in, they went down and found him at his home, suffering an attack. The pub’s staff called an ambulance and got him the treatment that he needed.

Across Scotland, our pubs are so much more than places where people go for a drink or a bar meal. They are more than the bricks and mortar, the taps and the table, or the dedicated people who work within them. They are part of and at the heart of the communities that they serve.

Sadly, the future looks bleak for many of our licensed premises. There are urgent interventions that the Scottish Government could take to save them. In England, pubs and hospitality venues currently benefit from 50 per cent rates relief, which will rise to 75 per cent in the forthcoming year. Despite receiving funding through the Barnett formula to deliver the equivalent in Scotland, the SNP is not matching that. The Scottish Beer and Pub Association has calculated that that will cost Scottish pubs £34 million this year alone. The average rates bill for pubs in Scotland has increased from £13,206 to £13,627. That is a double whammy for Scotland’s struggling pubs. For pubs in England, rateable values fell by 17 per cent on average, after significant Covid recovery discounts were built in for the whole revaluation period. We risk losing more and more pubs across Scotland. To help them to survive, the Scottish Government must urgently consider a package of post-Covid reliefs.

I recognise that the Scottish Government must act on the harm caused by alcohol, but we must also recognise that well-run pubs, which monitor people’s consumption, are part of the solution, not part of the problem. People drink less when they are in pubs than they do when drinking at home. The Covid lockdowns showed us that. All too often, however, the SNP Government funds experts and launches consultations that tell ministers what they want to hear, not what they need to hear. Ministers do that instead of listening to an industry that already complies with strict licensing and trading laws, that adopts global best practice and that invests heavily in effective self-regulation. Sadly, the Government appears to ignore the effective efforts by organisations such as the Portman Group.

The minister should understand that we tackle the problem of drinking by targeting problem drinkers, not by squeezing the last drop out of a sector that is already struggling. We reduce the harms caused by alcohol by addressing the root societal, emotional and physical causes of abuse, not by marginalising or penalising those who enjoy social alcohol consumption. We do that by directing funding towards local alcohol services and by providing front-line support for those most in need. We do not solve the problem by removing the Tennent’s logo from pint glasses, by outlawing grass-roots community sports sponsorship or by boarding up the windows of the Johnnie Walker experience in Edinburgh.

The Government should pause—or, at the very least, massively scale back—its consultation on alcohol advertising. There is also huge concern, quite rightly, about the impact of the deposit return scheme on Scotland’s pubs.

Douglas Ross (Highlands and Islands) (Con)

We have had a lot of discussion about the DRS today, and concerns have been raised time and time again. Just this week, the front page of The Northern Scot led with a stark warning from Nigel Tiddy of Windswept Brewing, who suggests that, if the scheme progresses as planned, the cost will be the closure of many small businesses in Moray and across Scotland. Does Craig Hoy agree with me that we cannot face that cost and that we have to pause the scheme? The Parliament should be doing that, and the minister should be listening to what Nigel Tiddy and many others are saying.

Craig Hoy

Absolutely. I agree with Douglas Ross, and I am sure that this will not be the only occasion when I say that.

The inexplicably complex closed-loop system involved in the DRS will impose costs, complexity and cash-flow pressures on pubs. The unintended consequences—crushed cans and broken bottles—and problems such as the search for secure storage and collection and return issues, are clear for everyone to see. Given that many of Scotland’s pubs and hospitality venues are already leaders in waste management and do not cause littering, we must ask why pubs are being included in the system at all.

Burdens such as the DRS and an advertising and merchandising ban will push many pubs in Scotland over the edge. Unless the SNP Government rethinks its approach, it will be wilfully and recklessly calling last orders on huge swathes of our pub and hospitality sector.

I say to the minister that it is not too late to save hundreds of pubs and thousands of Scottish jobs, but it is alarmingly near to being so.


Christine Grahame (Midlothian South, Tweeddale and Lauderdale) (SNP)

I thank the member for bringing the debate to the chamber. I add my voice to those who recognise and applaud the stoicism and determination of many in the hospitality sector, including pubs, small hotels, restaurants and similar venues in the Borders and Midlothian, which with Covid funding—although not all received it—adapted as the epidemic progressed and somehow managed to stay afloat.

I am thinking of one place in particular, in Peebles: the Central Bar in the Northgate—a small freehold pub, almost like someone’s living room. It had a hard time during Covid because it did not have the space to provide food and therefore missed out on support. It had its regulars, for whom it was more than a place for a wee bevy—it was their social life. Undaunted by virtual closure, the proprietor took the time to redecorate and added hanging flower baskets outside. If members visit its website, they will see what a cheery place it is after his efforts during Covid.

Now, thankfully, we all look forward to more normal times across spring and into summer. Indeed, a by-product of Covid was the popularity of the staycation and the enjoyment of simple pleasures such as taking a walk to a local cafe or pub. I think that it made us all appreciate what was on our doorstep, which also means that we are supporting our local communities.

Particularly in rural areas, such venues are part and parcel of the community, and they often play a large part in raising funds for charities. With regard to rates, there is, of course, the small business bonus scheme, with some—depending on rateable value—paying no rates and others paying a proportion. For decades, that policy has helped small businesses. There is also rural rates relief for businesses in designated rural areas, start-up benefits and so on. All of that distinguishes the Scottish non-domestic rates from the English system, so I do not support the call for 75 per cent business rates relief, as many small businesses already receive a 100 per cent discount. It is like comparing apples and pears.

The Scottish Government continues to pursue the Tied Pubs (Scotland) Act 2021, which is currently blocked by an interim interdict while an appeal against the judicial review that had been won by the Scottish Government goes through the court process. Success in resisting that appeal would redress the current imbalance that acts against tenant landlords.

However, one issue that I agree will cause difficulties is the deposit return scheme, whereby small, pubs, hotels and so on will not charge customers the 20p levy but will instead be required to store the empties to be collected, when the money will be recouped. Where will those empties be stored? I can think of several small businesses in my area that simply cannot store them.

There is also the high cost of energy, which is devastating for hospitality in Scotland. Any hotelier, publican or restaurateur today will tell you that that is the biggest issue that they face. It is not included in the Tory motion, which is therefore like a curate’s egg—only good in parts—although I note that the member made passing reference to the cost of energy and rising costs in his opening speech. We have 10 per cent inflation and, indeed, 17 per cent food costs inflation, which are by far the biggest hits on hospitality.

I conclude by recognising and thanking all those small hospitality businesses in my constituency for soldiering on through Covid, often with the support of their communities.


Maurice Golden (North East Scotland) (Con)

I thank my colleague Craig Hoy for bringing this debate on hospitality and brewing to the chamber. It is a much-needed opportunity to focus on the problems that the sector is facing—what the Federation of Small Businesses described as

“an unprecedented sequence of challenges”.

During the pandemic, hospitality did its best to adapt, and, of course, the UK Government stepped in to protect a million Scottish jobs. Even so, Covid smashed through the economy like a wrecking ball. Businesses are still recovering, so being hit by a global cost of living crisis as well as an energy crisis was the last thing that they needed.

In recent months, I have frequently met hospitality owners and drinks producers and have heard at first hand about how hard those problems are hitting home.

It is worth reminding ourselves how important hospitality is for Scotland. The sector employs 200,000 people, delivers £9 billion of value to our economy and helps to attract millions of visitors each year. The Scottish Government should therefore be bending over backwards to help the sector to protect those jobs and see that economic activity grow, but it is doing the opposite by burdening it with higher taxes, smothering it in red tape and even refusing to meet with its representatives.

In England, the UK Government will provide up to 75 per cent rates relief from next year. The Scottish Beer and Pub Association, the Federation of Small Businesses and the Scottish Tourism Alliance have all called for the Scottish Government to match that support, but the Scottish National Party and Green Party have chosen not to.

The Fraser of Allander Institute said that the Scottish Government’s budget was taking a “hardline approach” to business. It is not just the budget that is taking a hard line on business; it is the Government’s whole attitude. Let us look at the proposal to ban alcohol advertising, on which it is consulting. Just this week, the Scottish Tourism Alliance warned that the policy is

“ill-conceived, high risk and delivers self-inflicted damage to swathes of Scotland’s communities”.

We all want to see sensible measures to tackle alcohol abuse, but it is concerning to see a proposal on the table that has such potential to risk jobs and businesses.

Jobs and businesses are also at risk from the Scottish Government’s deposit return scheme. Every business that I have spoken to wants it to succeed, but the Scottish Government has cooked up a chaotic scheme that is overly complicated, costly and downright confusing.

Hospitality venues have been left struggling with the lack of storage space. They still have not been told how glass will be collected or whether there is a solution for crushed cans. That is a major problem, because the number of collections will increase for hospitality venues, as will the number of bins that they need to put out. Incredibly, when hospitality businesses tried to raise their concerns, the minister would not see them.

The damage that the Scottish Government is inflicting is of massive importance and it adds to its anti-business agenda. The Government should be proud to be pro-business, to support job creation and to encourage growth. That is a recipe for success, not just for businesses but for Scotland as a whole.


Pauline McNeill (Glasgow) (Lab)

First, I thank Craig Hoy for choosing such a crucial debate and for raising awareness of the pressures facing the hospitality and drinks sector. The debate has come at a really important time.

We know that the hospitality sector is probably under more pressure than any other sector that I can think of, and it is largely a wonderful and diverse industry. I say “largely” because I always want to raise the issues of the minimum wage and skills, but, largely, it has a lot to offer young people and our economy and I want to stick up for it.

I discovered some of that during virtual meetings that were held during the pandemic while doing my bit to engage with the sector. With Brexit, the pandemic and now the acute cost of living crisis, it is a truism to say that many businesses have gone to the wall and many more will do so if they do not get the help that they deserve.

If we do not act to support the industry in its time of need, the consequences will be dire. We have heard that from many businesses and on many other issues, including the energy issue. I am sure that the minister has heard thousands of examples of energy bills going up in the region of £500 to £1,500 pounds, and that is not even the end of the story.

The Glasgow region, which I represent, is dependent on the hospitality sector, which is one of the reasons why I have taken a strong interest in the issue, but some Government decisions are making matters worse and it does not need to be this way. Take, for instance, the introduction of the low-emission zone in Glasgow, which the council refuses to delay despite the huge impact that it will have on an already beleaguered taxi trade. I have called for a year’s delay because, without a strong taxi trade and strong public transport, there will be a huge impact on Glasgow’s hospitality sector. I see that all the time. When I go out at different times of the day in Glasgow, I can see visibly that the patterns of socialising are changing. That is possibly because people cannot get home by either public transport or taxi. It makes sense to make decisions that are coherent in some way. That is what concerns me, and I want to continue on that theme.

The relationship with tourism is also critically important to hospitality. If visitors do not come to our cities, people are going to lose business as a result. I have had this conversation with the minister before, and he knows my concerns about support for Glasgow airport, which, at this time, is critically important to getting people to come into the city.

Like other members—Maurice Golden, in particular—I think that the Government still does not fully appreciate the impact that the deposit return scheme will have on every business. One small distiller in Linlithgow said that it will cost it around £21,000 to comply with the legislation, and other suppliers are saying that they will have no choice but to put their prices up, so there will be an impact on the consumer. It seems extraordinary that the Government is not listening to that, regardless of where we want to be in five or 10 years’ time. Given the cost of living crisis and the other impacts on businesses, it seems extraordinary to me, in terms of an economic strategy, not to listen to businesses that are concerned about the scheme.

Of course, the issues that I have already mentioned are not the only ones that impact on the hospitality sector. As Craig Hoy said, the consultation on restricting alcohol advertising promotion will have an impact if we do not do it properly. I want it to be understood that Scottish Labour believes that action is needed to address the growing alcohol-related crisis, but we need to do that in a sensible way. However, the evidence seems to be that the way that the Government is choosing to do that at the moment will hurt the same businesses that we have already said will be hurt by those other policies.

For what it is worth, I am doing my bit. I put on record again my thanks to Ivan McKee for engaging with the business sector in the small group that I put together. Among the things that we want to discuss is the issue of how the UK Government and the Scottish Government can work together, where possible, to do things to help this industry. Christine Grahame has talked about the rates issue. I want to talk about whether a reduction in VAT in the short term would help. I know that that is a UK Government responsibility, but we need to have joined-up thinking here. If something does not give and we keep piling on duties, responsibilities, schemes and legislative changes without implementing positive schemes to support the industry, I am afraid that the situation will be a disaster. I am not going to keep quiet about that.


Fergus Ewing (Inverness and Nairn) (SNP)

The Cairngorm Brewery operates its brewery and the Winking Owl pub in Aviemore, and it has done so for decades. It is run by Sam Faircliff and it employs 30 people. In a recent conference call, which was kindly arranged by Mark Tate of the Cairngorm Business Partnership, I discussed with Sam and several small brewers and gin distillers the impacts of the regulations that are being imposed on them.

Sam told me what it costs her to run the brewery. The price of malt has gone up by 50 per cent, from £540 to £840 per tonne; CO2 has gone up 100 per cent—at one point, it had gone up by 400 per cent; electricity has gone up from 17p to 50p per kilowatt hour; and all other ingredients have gone up by 25p. That is in the aftermath of, as members have said, the need to cope with Covid, Brexit and the uncertainties that have been caused by the war in Ukraine. Sam confirmed to me that businesses now face the most stressful time in their history.

I know that the minister does do not have portfolio responsibility for the deposit return scheme, but I think that the Government is perhaps beginning, somewhat belatedly, to get the message. The deposit return scheme is the worst policy that I have ever seen in 43 years as a lawyer, as a small businessman, as a minister and now as a humble back bencher serving a somewhat late-in-the-day apprenticeship, starting at 65.

Seriously, I do not know why the Scottish Government is persisting with the scheme. As the minister knows, I can say that I warned the Minister for Green Skills, Circular Economy and Biodiversity and I warned the Government—I warned them all—privately, repeatedly and not just over the past few weeks but over the past two years. This is a disaster and it will become a catastrophe.

In the time that I have available—which is not very much, but I do not want to trespass on your goodwill, Presiding Officer; perish the thought—I want to make one more point, which results from the seven or eight meetings that I have had with the British Glass Manufacturers Confederation, in which Phil Fenton explained that the DRS is not a recycling scheme but a collection scheme. There is an existing recycling scheme with producer responsibility, which involves a re-melt target. The point of that is to ensure that glass recyclate is used to form cullet that can go to the Ardagh Group and to O-I—Owens-Illinois—in Scotland and elsewhere in the UK, where it is turned back into bottles. Without that re-melt target, it would just be used as roadfill because those companies can pay more at auction for the recyclate. There is no re-melt target in the DRS.

Further, guess what? Phil Fenton told me that the British Glass Manufacturers Confederation—which I, as a humble backbencher, albeit with a lot more time on my hands than previously, met—has not been able to meet the Minister for Green Skills, Circular Economy and Biodiversity. Despite my asking written questions and writing to the minister on the issue, she has not met the confederation, which knows all aboot it and is desperate to help.

Guess what else? If, because there is no re-melt target, the glass goes to roadfill, there is an issue with the carbon savings. At the moment, according to Phil Fenton, the carbon saving is 580kg per tonne, but, if the glass is used for roadfill, that saving goes down to 2kg per tonne. Do the maths: 580kg minus 2kg—that is how much worse things could become.

I have never encountered anything like this in politics. Governments make mistakes—that is okay—but this is not carelessness. I am afraid to say it, because I have been a loyalist for nearly 50 years—my party, my cause—but the DRS is wilful recklessness, and that is why I am speaking out. It is as though the captain of the Titanic, when leaving the port of Southampton, deliberately set sail for the iceberg. It has got to stop and it has got to stop now. If not, the economic carnage that Kate Forbes described when she visited Sam Faircliff this week is almost inevitable.


Brian Whittle (South Scotland) (Con)

I thank my colleague Craig Hoy for bringing this debate to the chamber and allowing us to highlight the importance of this sector to communities throughout the country and the significant pressures that have been heaped on it, as he ably described in his speech.

We know that the local pub is an essential social meeting point for many of our communities and that breweries both large and niche have a positive impact on our economy. However, with the shockwave of Covid still resonating, the sector now faces further dual pressures from the much-maligned and seriously flawed Scottish version of DRS and the uncertainty around the potential blanket introduction of restrictions to alcohol advertising and sponsorship.

In case there is any doubt about the concerns that industry has about the DRS scheme as it has been chaotically introduced, I will highlight an extract from a letter that I got today from a major brewer, which it sent to Circularity Scotland along with its application. It says:

“We write to confirm that, although we have signed the agreement, this has been done simply to comply with our obligations under the regulations and to avoid being unable to sell our products in Scotland after the go-live date.

We have grave reservations about some of the terms of the agreement. We have particular concerns around the advance payments in light of some comments from the three prospective First Minister candidates that the scheme may well be delayed beyond the scheduled go-live date. The methodology for calculating the advance payments is not clear and has not been shared with us, so we don’t know how our potential exposure can be calculated.”

It goes on to say:

“We reserve the right to withhold payment of any advance payments in the event of a delay to the scheduled go-live date, given any such delay is now reasonably foreseeable, and you should be acting now to use reasonable endeavours to keep the amount of advance payments as low as possible.”

Fergus Ewing

Does the member agree with Christine Grahame’s point earlier today, which the Minister for Green Skills, Circular Economy and Biodiversity did not address? The requirement to pay an advance payment for a scheme, the delay in which is completely outwith the control of the company, means that company directors cannot sign up to the contract, because they have a fiduciary duty not to displenish the company of its money gratuitously—in other words, it has a duty not to give money away. They might as well be handing away £1.5 million a month for free. Directors cannot do that. Why is it that the Scottish Government has not got the basic point of company law that its producer agreements are ultra vires and prima facie unlawful?

Brian Whittle

Of course, I agree with my colleague. That is what happens, I fear, when a minister who does not understand the basic premise of business is put in charge of a policy.

We have pubs that are only now beginning to realise that stores of bottles and cans will become valuable commodities, and that they must now consider how they will ensure that they have security that is adequate to protect those stores. Furthermore, they must ensure that the cans are not crushed and that the bottles are not broken.

Following on from the Minister for Green Skills, Circular Economy and Biodiversity’s ridiculous performance during questions on her ministerial statement, when she refused, point blank, to acknowledge that only 664 drinks producers out of the estimated 4,500 producers that Circularity Scotland said would register for the DRS had signed up to the scheme by the close of the application process, the Scottish Chambers of Commerce issued the following statement:

“It’s been clear to the business community for some time that operating this poorly designed scheme in its current form is impossible and is adding unnecessary cost pressures on businesses.”

I quote those interventions because they are not my words but those of the industry, so there can be no suggestion of any political bias. One has to wonder what it is that the Green-SNP coalition has against business, especially business that is so crucial to the Scottish economy.

Members’ business debates are often a time when we can come together to celebrate Scottish successes. Today, we witnessed a ministerial statement that has such potentially wide-ranging negative impacts on our pubs and brewing industry that members from all parties were almost pleading with the minister and the Scottish Government to listen to the serious concerns of the industry. Instead, the minister doubled down on the chaotic scheme, remained deaf to MSP colleagues, the industry and even the prospective candidates for the position of First Minister, and blamed everyone else for the problems.

I again thank my colleague Craig Hoy for giving us the opportunity to highlight the plight of pubs and brewers. The industry is central to our communities’ wellbeing, and we must protect this integral part of our economy. Members can rest assured that Conservative members will do everything that we can to highlight its concerns.


The Minister for Business, Trade, Tourism and Enterprise (Ivan McKee)

I thank Craig Hoy for securing the debate, and I thank the many members who have highlighted the importance of the hospitality and brewing sector to Scotland and have taken the opportunity to put their points on the record.

The sector, as many members have highlighted, is hugely important to Scotland’s economy and is a core part of our communities and, indeed, our culture. It provides employment for upwards of 200,000 people, offers employment Opportunities across all of society and has an ever-growing diverse workforce. There are some 130 breweries in Scotland, around 10 of which are in the south of Scotland. They produce high-quality products for the domestic market and, of course, our increasingly international export markets. That demonstrates Scotland’s business strengths and entrepreneurial spirit, some fine examples of which I was delighted to see on my recent trade and investment trip to south-east Asia.

Hospitality is an incredibly resilient sector despite the many challenges that have presented themselves to it in recent years. It is good to see that, despite the challenges, some 590 more businesses in the accommodation and food sector opened than closed over the period of 2020-21. However, that does not take away from the challenges that we absolutely recognise the sector faces, and the Scottish Government is committed to supporting the sector where we can.

The heritage that is associated with the hospitality and brewing sectors helps to put our nation and regions on the map and to promote Scotland’s image to a global audience, which, in my role as the minister responsible for trade and investment, I know is hugely important. Those sectors are national assets to celebrate and develop for a sustainable and successful future.

As I indicated, and as we all know, the sector has been through some real challenges over recent years, and members are right to highlight that conditions have been especially tough for hospitality and brewing over those times. With Covid, when the Scottish Government did everything that we could to support the sector through those most testing of times, all financial support that was made available to us was passed on in the most equitable and speedy manner possible. However, we know that the support that was given was never going to—never could—fully compensate for the loss of business suffered.

That was the case right across the UK and internationally, where the sector faced many challenges. The challenges now are different although no less profound, and from my many interactions with businesses in the sector, I absolutely understand the challenges of the cost crisis, high energy costs and wider inflationary pressures caused by global supply chain issues. The sector is also grappling with labour shortages, which are often highlighted as the most significant constraint on its ability to grow and prosper. Those have been partly caused by Covid but largely created by the impact of Brexit, which has halted vital labour market access with the ending of free movement, and the post-Brexit immigration apparatus does not compensate for that.

We have a structure that does not serve the sector’s needs, and we, alongside industry representation, continue to press the UK Government on that. We are also pressing the UK Government on support with energy costs. On 22 February, my ministerial colleagues John Swinney and Michael Matheson wrote jointly to Grant Shapps, the Secretary of State for Energy Security and Net Zero, to raise concerns over the lack of engagement in respect of the forthcoming energy bills discount scheme and to seek a meeting to discuss our concerns ahead of its coming into force at the start of April.

We want to ensure that vulnerable businesses, particularly small businesses and those on fixed-price contracts, are given proper protection and consideration in the new scheme. We are pressing the UK Government on those issues on behalf of Scotland’s business community.

Brian Whittle rose—

Craig Hoy rose—

I am spoilt for choice. I will take Craig Hoy’s intervention.

Craig Hoy

I thank the minister for eloquently listing the challenges that the sector faces. Will he perhaps approach the issue of the challenge of the DRS with more candour than his colleague Lorna Slater? If the figure of 84 per cent of companies not having signed up is accurate, does he credibly and honestly believe that the scheme can go ahead?

Ivan McKee

I will come on to talk about my interaction with the business community around the DRS and other issues facing the sector during the course of my remarks.

We must continue to support the sectors where we can.

On the issue of non-domestic rates, which has been raised by many members today, we are taking a different approach from that of the UK Government, with the aim of ensuring fairness and optimal use of what are limited resources. In the budget statement in December, the Deputy First Minister delivered the number 1 ask of 18 different business organisations in many businesses with regard to freezing the poundage rate for next year at the same rate, which remains the lowest poundage rate in the United Kingdom for the fifth year in a row. It is forecast to save business rate taxpayers £308 million compared with an inflationary increase.

We are also supporting a package of reliefs worth £744 million, including the small business bonus scheme—highlighted by Christine Grahame and others—which has been reformed and extended and remains the most generous small business relief across the UK.

Christine Grahame

Just a little bit of history: it was, in fact, the Conservatives, through Derek Brownlee, in negotiating a budget many years ago, who introduced the small business bonus scheme, which the Scottish Government was happy to accept. Gone are those days.

Ivan McKee

I thank Christine Grahame for her intervention.

I will talk about the work that I am doing with businesses through my extensive engagement. Members will be aware that I talk to business organisations, particularly in the hospitality sector, on an almost daily basis through the business regulatory joint task force, which was set up at the end of last year. The group has had two meetings already and its third meeting is coming up. Businesses from many sectors are represented on the task force, including, of course, the hospitality, leisure and tourism sector, which has had extensive representation at those meetings.

The task force is focused on looking urgently at the regulations that are coming down the track, not to unpick them individually—there is plenty of scope to do that in other forums through engagement with relevant ministers—but to look at their cumulative impact, as well as their timing and the process around them, to make sure that the business regulation impact assessment process has teeth and is taken into account when the Government looks at regulations. It is very important that the overall perspective is heard and that businesses have the opportunity to raise their concerns with me as the minister who is responsible for business. I am delighted that that group is making good progress on those issues.

Douglas Ross (Highlands and Islands) (Con)

The minister speaks about the significant engagement that he has with the business community. Can he tell us how many producers in Scotland could have signed up for the DRS by today? We know that 664 have, but out of a total of how many? Given the minister’s experience and his interactions with those businesses, can he tell us what that number is?

Ivan McKee

Obviously, I have not spoken to every business that is involved in that, and I do not have that number to hand. I know that the member is very keen to get that number—some numbers were quoted earlier in the debate. If he continues to ask the relevant minister, I am sure that he will get the appropriate answer.

I want to talk about our commitment to the implementation of the Tied Pubs (Scotland) Act 2021 as soon as possible, which was mentioned by Christine Grahame. Unfortunately, the act is subject to judicial review, but our commitment to take that work forward to give rights to tenants remains in place. Of course, other work is happening to support the sector through the reform of permitted development rights, which would allow premises to make better use of space, improve their business models and increase revenue, which I think we are all keen to see. We are very keen to take forward all that work.

We are focused on having a strong, successful and vibrant hospitality and brewing sector in Scotland. A key part of our national strategy for economic transformation is about providing support for entrepreneurial businesses, to make businesses more productive across all regions in Scotland and to deliver the skills that are necessary to support business growth. We want to see hospitality spaces being well used, responsibly, with viable businesses contributing to local economies and communities. We also want to see fair work at the heart of the sector, which I press very strongly with businesses in the sector. I raised that during my meeting just this week with the trade unions representing their members in the sector. Pauline McNeill has rightly raised the issue of fair work in the debate.

It is also important to recognise the work that we have taken forward with the tourism and hospitality industry leadership group, which I co-chair with Marc Crothall of the Scottish Tourism Alliance and which also has trade union representation. The group has the opportunity to provide strategic oversight on the medium and long-term challenges that the sector faces.

Pauline McNeill has rightly identified the importance of tourism and international links. She can rest assured that we are working hard to restore and increase the number of air links into Scotland in order to ensure that tourists come to our shores in ever-increasing numbers.

I am committed to continuing to engage with the sector, to listening to what it has to say on regulation and other challenges that it faces and to taking the steps that we need to take as a pro-business Government. I will again meet trade bodies in the sector on 15 March in the Parliament, and we plan to attend a meeting of the Scottish Parliament hospitality group, which is chaired by Pauline McNeill, later in March. I look forward to both of those meetings and thank Craig Hoy for bringing the debate to the chamber.

Meeting closed at 18:49.