What more difficult business area can there be in Scotland right now than hospitality in the Highlands?

Letter in The Oban Times, 5th April 2023

There is barely a café, pub or hotel that is not desperately seeking staff across the Highlands this Summer. And we all have horror stories of new employees not turning up for their first day at work, or being seduced by a higher pay offer elsewhere a month after starting.

Hospitality has three major costs, the largest of these is staff. The living wage is rising by 9.7%, and the introduction of NEST, the national pension plan, increases wage bills. I’d say hospitality payroll cost have risen by 30% since 2019. And that’s only if staff are available - it seems every potential employee is being fought over by every business in town, and potential staff from outwith the area cannot find accommodation.

Where are all the workers? The Fraser of Allander Institute reports labour market inactivity due to ill health and disability in Scotland at 32%. And there has definitely been a move away from the antisocial hours worked in hospitality to that offered at desk jobs. Many Government employees are still working from home, are comparatively well paid, with excellent holidays and pensions - "What’s not to like?"

In part due to the war in Ukraine, food prices have risen steeply, up 19% over the last year. It’s very difficult to pass on this sort of increase in a hospitality setting. Butter, olive oil, grain based products, chicken and eggs have all soared in price.

Hospitality requires a lot of energy: heating and kitchens consume the kilowatts as fast as you can watch the meter spin around. Yes, the war in Ukraine is again a key factor, but judging from the obscene profits of the oil companies and utilities, there is a lot of profiteering going on. The wholesale price of electricity has fallen dramatically since the high at Christmas 2022, but is still not being reflected in our bills. Since the end of Government support, everyone is shouldering big energy bills.

What can the Government do to help? Well, Westminster has given a 75% rates relief to businesses in the hospitality sector, but this has not happened in Scotland. Stephen Boyle, the Auditor General claims that over a £1 billion of covid business support passed over by Westminster to the Scottish Government had not been accounted for. We need to nurture our small hospitality businesses. Hospitality is a major business industry for the Highlands, and most companies are on a knife edge.

I am a director of two businesses that include restaurants, and face these issues every day.

Angus MacDonald
Highlands Liberal Democrat Councillor and Westminster Candidate