Scotland’s night-time economy and Coronavirus (COVID-19)

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Since the COVID-19 restrictions came into place, thousands of businesses that contribute to the night-time economy have been adversely affected. It is valid to question the future sustainability of the night-time economy, given much of it centres around socialising rather than social distancing.

This blog looks at how the night-time economy is defined, its use as a growth tool, and challenges pre and post lockdown. Plus, it explores the likely scale of impact for Scotland’s night-time economy and possible policy options.  

What is the night-time economy?

The night-time (or evening) economy describes economic activity taking place after many people finish daytime employment or education. It includes a wide range of activity in towns and city centres between the hours of 6pm and 6am, including pubs, clubs, cafes, restaurants, retail, cinemas, theatres, concerts and transport.

The night-time economy is an important driver of tourism, leisure and business growth within Scottish towns and cities but less relevant to rural areas gives the dispersed nature of these economies.

The majority of the firms that are engaged in the night-time economy derive large proportions of their total income between the hours of 6pm and 6am – with a heavy weighting towards the weekends. In particular, business activities related to alcohol feature significantly in the night-time economy although clearly restaurants and cultural/leisure venues are also important, as are hotels and transport. Challenges around alcohol and the night-time economy are highlighted below.

Using the night-time economy concept as a tool for economic growth and urban regeneration

The term night-time economy has been around for over four decades, where it was first presented as an opportunity to generate urban renewal, economic activity and employment in cities. The concept became dominant in urban planning circles, as an opportunity to grow or revitalise a city’s economy.

The growth of the night-time economy has been seen as a key element of regeneration for many city centres (e.g. Manchester, Newcastle, Belfast, Dublin) where the re-vitalisation of the city centre has been led by improvements in both the infrastructures and services. Glasgow noted the night-time economy in its recent City Centre Strategy aimed at ensuring Glasgow remains one of the top city centres and urban tourism destinations.

Using the night-time economy as a growth tool can develop a virtuous spiral, where a good reputation, a vibrant and diverse offer and good management can contribute to further investment and more visitors, which in turn will further strengthen the night-time economy. The same can happen in a negative way. Developing a poor reputation as a result of a limited offer and poor management will reduce investment and visitors, which further limits the level and quality of activity and the can further damage the city’s reputation.

Some have come to question the validity of using the night-time economy as a  strategy for growth, especially given the range of challenges trying to balance the competing demands of economic development, public safety and quality of life for residents.  Often linked to alcohol night-time economy areas tend to have high levels of public disorder, anti-social behaviour, and noise pollution. There are also valid questions about the quality of employment in the night-time economy with many employees working part-time or in precarious positions with no contract and/or no set hours.

Underlying these issues has been a trend of decline in some parts of the night-time economy. Since 2010 the number of nightclubs in Scotland declined by 26% to 550 and the number of public houses and bars has declined by 11% to 2,855 (source ONS Business Count).

Value of the night-time economy

According to the Night Time Industries Association the night-time economy accounted for 8% of the UK’s employment and annual revenues of £66bn (6% of UK total). SPICe was not able to source any publicly available studies on the value of Scotland’s night-time economy. However, a recent study of the Glasgow night-time economy found that it – defined as activity from 6pm until 6am – generates £2.16 billion per annum for the city.

To provide some perspective on the scale of the night-time economy in Scotland, SPICe has focused on the business count and employment contribution of the night-time economy in Scotland’s four largest cities.

In terms of definition, the following industries are included and detailed in the charts below:

  • food and beverage service activities
  • creative, arts and entertainment activities
  • taxi operation.

Given the way that sector classifications for official data are collected, some types of businesses that play a part in the night-time economy are not easily extrapolated from the data. Also, some of the sectors that have been included, are as much a part of the day-time economy, as they are the night-time economy, but have been included due to the volume of their sales between 6pm to 6am. And for this same reason there are types of sectors that have not been included here but do play a role in the night-time economy such as accommodation, sports venues, cinemas, retail, and other types of transport excluding taxis. Thus, we emphasise that the analysis here should be interpreted as indicative estimate of the scale of the night-time economy rather than an exact calculation.

For the business numbers we have used local units. Local units are roughly equivalent to workplaces and represent a unit associated with an enterprise. For example, one company may have several bars in a city, each one of these would be counted as a separate data unit.

Across the cities of Aberdeen, Dundee, Edinburgh, and Glasgow there are around 6,000 businesses in the night-time economy. The night-time economy represents 10% of the total business base in both Glasgow and Dundee (9% in Edinburgh and 7% in Aberdeen). The chart below provides more detail on the volume of businesses that contribute to the night-time economy within the respective cities.

  • In Edinburgh almost a quarter of the night-time economy is made up of licensed restaurants – this is less in the other cities (Glasgow 19%, Dundee 16%, Aberdeen 15%).
  • Almost a third of Dundee’s night-time economy is take-away food shops, a much higher proportion relative to the other cities (Glasgow 23%, Aberdeen 19%, Edinburgh 17%).

The four cities aggregated account for approximately 40% of Scotland’s licensed restaurants and public houses/bars, and around 50% of creative, arts and entertainment businesses.

Approximately 75,400 people work in the nigh-time economy across Aberdeen, Dundee, Edinburgh, and Glasgow. The night-time economy represents around 9% of all employment in Dundee, 8% in Edinburgh and 7% in both Glasgow and Aberdeen. The chart below provides more detail on employment figures by specific night-time economy sector.

  • In Glasgow and Edinburgh about a third of night-time economy employment is in the licensed restaurant sector (Aberdeen 17%, Dundee 14%).
  • Dundee has a high proportion (46%) of night-time economy employment in event catering and food service activities (Aberdeen 35%, Edinburgh 15%, Glasgow 13%)

The four cities aggregated represent 50% of all Scottish employment in licensed restaurants, 45% of all Scottish bar/public house employment, and over 70% of all employment in the creative, arts, and entertainments sectors.

With over 6,000 businesses and over 75,000 people employed in the night-time economy in Scotland’s four largest cities, it is an important part of Scotland’s wider economy. These figures don’t include Scotland’s other cities and towns, so the actual total Scottish figures will be higher. What these figures show is that the scale of the night-time economy is not insignificant, and any decline of the night-time economy will negatively impact Scotland’s macro-economic indicators, such as employment and economic output.

Impact of COVID-19 on the night-time economy

On 20 March 2020 pubs, clubs, restaurants, and most other parts of the night-time economy were ordered to close across the UK. Similar to other parts of the economy, this mass shutdown has adversely impacted much of the night-time economy business base. Many of these businesses will have availed of the various business support schemes from the Scottish and UK Governments. However, these various support interventions won’t be enough to secure everyone’s future. Recently published HMRC data show that the ‘accommodation & food services’ sector after retail had the second largest take-up of the furlough retention scheme.  Some fear half of Scotland’s pubs may shut for good because of COVID-19. In April 2020, almost half (45%) of night-time economy sector businesses in the UK expected their company to close within three months under COVID-19 measures. Only 17% believed their business would survive for more than six months.

As much of the business base transition into the reopening phase of the COVID-19 response, many night-time economy businesses have grave concerns for their viability. According to the Night Time Industries Association, the sector is built on social engagement and social distancing does not align comfortably with this, resulting in the likelihood that businesses will become financially unviable in quick succession following the lifting of government measures.  They highlight that the reduction in business capacity, enforced spacing, queue management, and PPE brings into question not only the viability, but whether this is even something that can be managed in many night-time economy spaces. This is even before they account for the public perception of safety within businesses.

There are also concerns from some that the long-term enforcement of social distancing will see a trend of illegal social gatherings and raves start to develop across the UK, which in turn will bring rise to new challenges.

There are other challenges too as a result of COVID-19. In the coming months it is likely that job losses will increase across the economy, resulting in many people having less money to spend on nights out.

Reopening and policy levers to help the night-time economy through COVID-19

Following the Scottish Government route-map for easing lock-down, reopening outdoor areas for pubs and restaurants is included in phase two. The next review point is on 18 June – this review will inform a decision on when phase two can commence. If the relevant criteria are met, it is likely outdoor areas could open sometime from the 19 June onwards.

An announcement from the Rural Economy and Tourism Cabinet Secretary (10 June) Fergus Ewing indicated some businesses (including bars and restaurants) should start to prepare for a provisional return to trading – with appropriate safety guidelines – on 15 July 2020. This will be dependent on virus levels remaining low and the review on 9 July.

Once night-time economy businesses start to reopen, it’s likely we’ll see changes such as:

  • drinking being prohibited at the bar
  • tables spaced to adhere to social distancing guidance
  • ordering via apps
  • booking of time slots
  • stopping people from returning their empty glasses
  • reduced choice on menus.

It will be important that businesses work with their relevant unions, industry bodies, local authorities and public sector bodiesto help employees and customers to return safely.

Given the scale of the night-time economy, particularly in some of Scotland’s cities, and the range of ongoing issues prior to COVID-19, it will be important that policy makers give careful consideration, as to how those businesses and workers in the night-time economy can be best supported. Policy interventions to assist the re-start and sustainability of the night-time economy could include: financial support (to implement social distancing, promote innovation, etc.), fiscal policy levers (e.g. adjustments to VAT, non-domestic rates, etc.), targeted training and upskilling initiatives, and staggered closing times.

It is worth highlighting that the Scottish Government has commissioned work to understand how the easing of COVID-19 pandemic restrictions on licensed premises can be effectively managed to protect emergency services. The study will consider the way in which consumers and venues might respond to any easing of restrictions – in terms of alcohol consumption, intoxication, violence, sales and promotions.

Alison O’Connor, Senior Analyst, Financial Scrutiny Unit