 I open the meeting again into public session, and our next item of business is an evidence session as part of the committee's pre-budget scrutiny work. The purpose of the session to inform the committee's pre-budget scrutiny is the aim of influencing the budget before spending priorities for the next financial year or set. Members will be aware that we do have a budget statement the first week back after the October recess. The focus of today's session is on the cost crisis and impact on tourism and hospitality industries. I welcome Mark Russell, the chief executive of the Scottish Tourism Alliance, who is joined with Brian Simpson, industrial organizer at United Hospitality, and Leon Thomson, executive director of UK hospitality. I welcome you all to the committee this morning. I just reflect that the similar panel was before us last year in advance of last year's budget, and the main call that we had at that time was for investment in stage 2 of the tourism recovery fund. The Government was sympathetic to that, and the committee was supportive of our pre-budget scrutiny last year. That seems like a distant memory as we face a cost-of-living crisis and a rise in business costs and the pressure that sectors are under. If you feel the situation this year, what has been the difference in the past year? If we face a more bleak situation as we go into this winter than what we did coming out of the Covid pandemic, we will come to mark first. Good morning and thank you, convener. From a business point of view, I think that everybody would say that we are in a worse place than we were last year without question. The impact of the cost rises affecting business with the uncertainty of how to navigate through the challenges in front of us and some of those are still relatively unknown and confused, as we have seen over the last few days as well, are really causing concern. It is not least to protect the business and invest in the business to be competitive in the future and recover strongly and be sustainable, but to maintain the workforce. That is obviously in short supply anyway, so it is tough to say the least. We are going into the winter months again where, for many, they would traditionally close anyway, but how do they bridge the gap and repay not just the direct costs that will still come through energy but also some of the borrowings or the sizeable debt that many of them have taken on as well? Yes, worse than Covid at the moment in terms of survival. To the flip side of that, of course, is that you have a consumer base that is equally challenged with discretionary spend and how they might choose to prioritise that. The uncertainties of the leisure spend in particular over the coming weeks and months over the winter period will be very much at risk, and Leon can, I am sure, pick up on that and what is the feedback that is getting from the hotel sector in particular. The submission that we had from the STA from the survey does say that you are gravely concerned that some businesses might never reopen again. Do you feel that there is a higher risk of that this year than there was last year? We have already seen businesses take the decision to repurpose, change their viability from being a hotel to becoming a residential property. I think that it was reported in the BBC News last week about a number of properties in and around the Loch Lomond National Park area, where the smaller, mainly lifestyle hotel businesses have decided to try to counter the costs and everything else that is on the horizon. It is better to take an approach to come out of the sector. Obviously, the other key sector, which has seen some shift as well as the self-catering sector with the short-term debt licensing implementation process, again many of those operators have decided to basically come out of the marketplace. There are other operators that have been benefited from some of the international footfall that we have had, which has been hugely welcome. However, if you speak to that industry and particularly the inbound sector, their challenges have been about the number of breaks in the supply chain where there have been a disappearance of certain operators of skills who offer skillsets and provisions that are no longer there. Mark has outlined some of the key issues that the committee will want to explore, but if you want to reflect on where we are this year compared to last year, that would be helpful. Yes, good morning and thanks for the invitation to be here today. I think that as we came out of Covid, nobody could have imagined that we would be facing a challenge of this scale after we felt that the worst of it was behind us. However, as Mark has said, the challenges that face businesses now are much more significant even than the challenges that they faced as a result of the pandemic. Businesses have been trying to move towards recovery, have been trying to move back towards profitability, but we know from our own surveys that, even over the course of the summer, only about a third of businesses were saying that they were trading at a profitable level. I suspect that that figure has declined within the last month or two. We have businesses carrying debt from Covid. They have the challenge now of the rising costs around business. We have the cost of living crisis that the public is facing as well. We are bringing these two things together. It is a completely unsustainable situation for a great many businesses. A few months ago, we were talking about inflation being a massive problem, which remains particularly around food and drink inflation. Energy costs came along, and the increases there dwarfed the problems that businesses were experiencing. The support that has come through from the UK Government, which is incredibly welcome, still sees many businesses paying 200 or 300 per cent more on their bills than they were even just a few months ago. That fix is a temporary fix for six months. We obviously need to continue those conversations with the UK Government about what the targeted support will look like for hospitality beyond that. Right now, businesses are really struggling. They have their costs, they are trying to manage, they are seeing consumer confidence plumeting. Members are saying that bookings are incredibly low for autumn and winter. We are moving towards Christmas, which is obviously a massively important period for hospitality businesses. Some businesses could be looking to make about a third of their money over the festive period in normal times. Right now, there is not much demand for Christmas parties and Christmas breaks and those sorts of things. A lot of businesses are just scaling back their offer. Many businesses are considering whether they will stay open over autumn and winter because it is just going to be too expensive to stay open and they are not convinced that they are going to see the kinds of bookings coming through that they need as well. Businesses are having to make some very, very difficult decisions at the moment. These are businesses that ordinarily would trade all the year round. If businesses do close temporarily, hopefully only, over the autumn and winter months, that is detrimental to the quality of experience for visitors who are around. Obviously, those businesses will still have costs to bear, business rates and paying back loans and so on, but they will not have any revenue at all. It is very difficult and challenging times for hospitality right now. In comparison to last year, when we heard the pandemic, there was quite a bit of support, a different kind went into the sector. The sector was closed at that time, but there was furlough available, business rates relief and all the other packages. Do you feel that this crisis is more significant? Is the support compatible in any way? No, not at all. Beyond the energy rate support, there has not been anything announced for business. We welcomed the reversal of the national insurance increase, which will put for an average hospitality business. We gave them about another £10,000 or so back. That is something that they can invest that back into the business, but it does not really go anywhere when you look at the kinds of increases in the costs that businesses are contending with just now. At UK hospitality, we are continuing to make the ask of the UK Government to revisit that. We really feel that it needs to be lowered again, and we would like to see it down at 10 per cent. We feel that that is a measure that would help businesses in the short and medium term. Similarly, there is also business rate relief. From a Scotland perspective, if that can be secured, if that does come through in the UK Government's budget in November, then hopefully there will be some Barnett consequentials that would benefit my members here and the wider hospitality sector. Those are the kinds of areas of support that businesses really need, but they really need it now. They cannot wait for another six or eight weeks to hear if there is going to be more support. As things stand just now, it is very difficult, if not impossible, for viable businesses to make any sensible business decisions about what they are going to do. That is the position that a great many businesses find themselves in today. I will bring Brian Simpson in. Members will have a number of questions that are directed to Brian Simpson, but if I can register to reflect on Liam's point that there will be businesses that will make decisions about closing over the winter, they will obviously employ people. What is going to be the impact of that uncertainty within the sector on people who work in the sector? Liam and Mark are absolutely right. We are seeing since March a huge reduction in footfall, which has obviously impacted businesses, employers and workers. We have been surveying our members, and a huge proportion of them are seeing a cut in hours, are seeing, in some cases, pubs or bars, particularly closing as a consequence. By hospitality, we have done a survey that found that seven out of 10 pubs were on the brink and would not survive Christmas. I think that pubs and bars in some restaurants are most impacted. Hotels are obviously impacted as well, but less so because of the international footfall that Mark was talking about earlier. The impact on workers is almost a double whammy, because consumers are being hit with, in my view, what is not a price cap on energy. £2,500 is impossible for most of our members, their average wage being between £18,000 and £21,000 a year. That puts them in energy poverty immediately, so they cannot afford to pay those bills. There is a double whammy whereby they are being hit by the energy, the cost of living crisis, as citizens, and then they are being hit because their businesses can no longer afford to retain them. Obviously, I will qualify that with a position where there are a lot of large businesses, multinationals, for example, who we believe are taking advantage of the cost of living crisis and our cutting staff, anyway, or cutting hours at least. There are a lot of small businesses that make up a large proportion of the employers out there who, I am sure, absolutely cannot do anything else but cut hours. We would still challenge that. We campaign against hours being cut anyway, especially if there is a contractual obligation. Bear in mind that 20 per cent of the sector in terms of its workforce are still on zero-work contracts, so it has no legal right to hours, no contractual right to hours. We are seeing them being cut back to as little as 0 or 4 hours a week, which is just completely unsustainable. Thank you very much. I will move on to members. If members have to direct the question to the member of the panel that they wish to hear from, that would be helpful. You do not have to invite all members to speak just in case they have been thinking about the timing for the meeting, if you do not wish to. Graham Simpson, to be followed by Jamie Halcro Johnston. Thanks, convener, and I will take your advice. I think that we will start with Leon, if you do not mind. What you have described is a situation in which costs are going up and there are fewer customers. Mark Wharton has not even asked the question. There has been demand and the international demand that has been there has been very welcome. Certainly not on the scale that we need. That is to be clear on that front. The domestic market has come, but it has been very lost minute and it has been difficult to plan around. The trouble is the balance of workforce in shorter supply, costs going up and limiting the capacity of property to then drive the necessary yield that it needs to pay the bill. The demand is now definitely without question falling off a cliff. As we go into the winter, that is the challenge. Leon, can you explain in terms of costs, because I want to explore that a bit, what are the main costs that businesses are having to deal with? We know about energy, but there are other things as well. Right across the board is food and drink. We have seen inflation there of up to 40 per cent on some items. It is wage inflation as well. Businesses have had to pay more in the tight labour market to secure workers and to retain workforce. O and S put out some stats that showed that the hospitality sector is paying 15 per cent more on wages than it was before. We are seeing interest rates going up for businesses that are carrying debts, either as a result of Covid or because they have been investing in their businesses, they are now having to pay more on that borrowing as well. The costs are huge and insurance is up as well, and some businesses have been struggling to secure insurance too. All of those and then energy on top of that as well. You said that the measure by the UK Government on energy was welcome, but probably not enough. Is there anything more that either of our Governments could be doing? I have highlighted that, from a UK Government perspective, we are keen to see the VAT rate coming down. We think that that would provide immediate support. Similarly, increased support around business rates relief as well. Businesses in England are currently enjoying 50 per cent rate relief at the moment, albeit with CAPS. We would certainly like to see that replicated here in Scotland as an absolute minimum. We understand the financial challenges that the Scottish Government has at the moment, but it is one of the levers that is there for ministers. If we can secure more money for business support from the UK Government, we would certainly hope to see that the Barnett consequential is being used to support our businesses. I guess that whoever can answer this, you are all painting a pretty grim picture. I just wonder whether we are able to put any figures on that for Scotland. Brian, you said that seven out of ten pubs are on the brink. On the brink can mean anything, but are there any stats that you can give us? There is a recent survey that has just been done by the Scottish Licence Trade Association across 600 pubs, which said that one out of 10 will shut for the winter. Four out of 10 will reduce their hours significantly over the winter period. That was off the press last week. We have got a snapshot survey out at the moment around the impact of energy following the announcements from the UK Government last week to get a feel and a sense of what that will mean for business closure in the short term. Let's be frank that not every business has had any benefit whatsoever from that. Anyone pre-April 1 who is signed up to a contract is not going to see that. Our Chairman Stephen Leckie across his entire estate is one of those that won't qualify for that. It's not a broad brush approach. The uncertainty of not knowing where you are is what is causing the challenge. For us, if we look longer-term now and we talk about pensett and everything else, how do we stay competitive? We have to have investment into the assets that we have to be really competitive on a global stage and not being able to invest in basic maintenance and repair of a property but also to be appealing and attractive to that international audience that has got the pound or the dollar to spend is really, really important. The business rates relief—we did get a £27,000 cap in the first quarter of the year, which was very welcomed. Again, if I use Cree Hydro as an example, the cost base is £25,000 a day or at that lowest level. It doesn't really touch the sides when it comes to having a real impact on a broader base. It's investment for the future in infrastructure, in the property, in the asset and in the people, and we have to be able to find a means to do that. I'll put this to Mark first and then maybe to Leon if you want to come in. It seems a little of a leading question, but the SDA has called for a pause on regulations that put increasing burdens on businesses at this time. Do you want to outline some of those regulations? Yes, thanks for the question. We were invited, in fact, collectively to enter into a conversation around putting proposals for pause or taking off the table of both existing pending and new regulation. One of those was the implementation of the short-term licensing fee structure, the collection of, which nobody had said Fiona Campbell herself had said. It's not about taking the policy off the table altogether, it's about pausing that investment. Another one was the deposit return scheme, which I think for many is still a bit of an unknown, but also upfront there's a sizeable investment required by operators' length and breadth of the country of different shapes and sizes. Upfront investment, could that be paused as well? There were other suggestions around the implementation of the 20p supplement on disposable cups from coffee shops, et cetera, which was largely to try and deflect a pause in consumer purchasing. It's another cost on top. The transient visitor levy, which has been committed to in the programme for government, we think the sentiment piece around that is really going to cause some unnecessary damage to the current environment when we're trying to recover. I guess with that, the concerns that we have around the TVL is, again, staying competitive in a tax environment that is already not in parallel or even better than anyone else, but also as we've seen some of the variables that have arrived as a result of the short-term let licensing scheme, we don't have perhaps a lot of confidence that the same could apply. Can I just comment on that? I live in Auckland, and I know a number of people who run B&B, some of them are actually getting out of the sector. There's been a lot of confusion about the processes. There's been a disparity on cost. It's meant to be revenue-neutral, but quite clearly certain councils are charging more than others. Firstly, do you think that the scheme will be able to be delivered given the procedures that have to take place, the checks that have to take place, by the deadlines? Do you think that the councils will be able to deliver that? Also, what are your concerns for the sector? Fewer B&Bs, I mean fewer people being able to find accommodation, we've already got problems around hotels, particularly in the Highlands and Islands as we've experienced over the summer. Is that going to be less available space for people to come and spend money locally at a time when tourism is going to be so key to many of those communities? In the first part of your question around the ability for a local authority to deliver on the administration of the scheme and the disparity in prices, I think that Orkney recollections is about £208, and then you come up to Edinburgh, which is about £5,100 for a 20, okay, admittedly it's a larger property. I think on Saturday there were only 19 local authorities that were ready in the collection process or actually had opened the door. The publication of the guidance was only issued at 11.57 on the 29th, on the 30th of September for a start on the 1st of October. There will be a surge. Obviously, those operators who are currently legitimate and want to trade and take bookings for surety will apply now, and I guess it's had the local authority administrations manage that process. There's a big question around that as well, but we've already seen, you know, there is already evidence which the Association of Self-Catres have reported on, of businesses choosing not to trade. I think probably some of it's a bit too much for them, but we have to have a proposition and we have to have a blend of offering. We've got some great hotel asset, we've got, you know, some new builds as well, so there's plenty there, but if we don't have the right balance, then we're going to be stretched to attract the right market as well. So, and the fringe, I think, the Festival of Certainly in Edinburgh, you know, highlighted concerns around a shortfall and accommodation at key times of the year. I think it's got a ruby union also, I've got a bit of a view on that as well, so difficult. And I guess, you know, about the neutrality of the cost pieces, again the question of one, and then it goes back to my comments around the TVL process should it arrive. Yes, all of those things. UK hospitality is very involved in the deposit return scheme, trying to get members ready for it going live on the 16th of August next year. It's a very ambitious scheme. It's going to completely change the way that we've recycled here in Scotland. I think there's a lot of concern about the length of time that remains to actually make the scheme operable. I think there's perhaps a sense of, you know, people hoping for the best on this and that we could actually go live next August and the scheme is not completely bolted down. One of the big risks is lack of awareness amongst businesses at the moment. And there are cost implications for businesses. Some of my larger members I've been speaking to their seniors going to take them six months end to end for their project team to get everything ready across all of the sites that they own and that they operate at the kind of smaller scale that our business is concerned about, where they're actually going to keep all this valuable empty stock until it's collected because, you know, obviously it's a significant loss to the business if items go missing. So there's some very real difficulties and challenges there. Because of everything else that businesses are facing at the moment, many owners just don't have the headspace to actually really think this through in terms of what they need from that. I was on a call with Lorna Slater last week against sort of outlining these issues but saying that we are committed to recycling and net zero agenda and that we will continue to promote the scheme to our members so that they are ready. But it's coming down the track really, really quickly and there's still too many businesses that don't know enough about it and just can't give the necessary headspace to the scheme. That's a problem. Mark has obviously highlighted the local visitor levy as well and to some dismay that we saw that in the programme for government. Officials and ministers are very clear that this won't appear until 2026 at the earliest but, as Mark has highlighted, we've got a sentiment issue there because once all this starts to go out into the public domain, people will be looking at their newspapers and deciding not to come to Edinburgh because there's a tourist tax or not to come to Scotland because there's a tourist tax in place. Whilst Edinburgh might want to be the first city in the UK to introduce a tourist tax, it's not always the best thing to go first. I think that we could have some significant challenges in terms of sentiment and perception at a time when we've got people looking for value for money more than ever so that's an issue. Mark has highlighted single use cups and so on. It's unclear as to when that might actually appear but, again, it's something else that businesses will have to grapple with, another cost for somebody. There's a health agenda as well. There's calorie labelling, which is still there, which has been introduced in England. It will likely be introduced here in Scotland at some point in the next year or two. There's also activity around nutrition and the promotion of foods with high-salt fat and sugar content, which will have an impact on hospitality businesses, too. It's the weight of all of that, which is causing the big burden, but there are some very real costs to businesses in that as well. I was speaking to Edinburgh hotels about the visitor levy and what that would mean. They will have set-up costs to manage that. They'll have IT costs to change systems. Some of those will be one-off costs, some of those will be recurring costs. There's also concerns about credit card charges on transactions and things as well. All of those things need to be discussed and bottomed out, but as things stand at the moment, there's no financial recompense being discussed for businesses who will have to shoulder those costs. Ultimately, it will be the visitor who pays the levy for the transaction, but there are some business costs in that. Before I bring in Colin Beattie, can I ask you to mention the national insurance cut that would be about £10,000 a year. The UK Government has sold that as it's committed to a low-tax, high-growth economy that would give businesses the right conditions to drive investment, growth and productivity. As a result of the tax cut, businesses will have more money to invest and become more productive, pay higher wages, create more jobs and support the overall growth of the UK economy. That's not what that £10,000 is going to be useful for this year. It doesn't appear. It will go into filling the gaps, which are there. I'll bring in Colin Beattie to be followed by Maggie Chapman. Thank you, convener. I'll maybe direct my first question to Brian Simpson. We're all aware of the incident by the UK Government in terms of support for energy costs. The comments have already been made by witnesses that we're seeing an effort that is far shorter than what the Covid exercise was in a similar crisis. How confident are you that the sector is going to be able to support its workers through the cost-of-living crisis? Confident at all. If we go by the way hospitality workers in particular were treated during the pandemic, they had enormous job losses, according to Forth, which is the most used HR platform in the industry. The workforce shrank by 26 per cent between 2020 and 2021, going into 2022. 26 per cent would equate to 58,000 job losses in the hospitality industry in Scotland. That could be, and as my colleagues have pointed out, why it could be eclipsed by the cost-of-living crisis, because you have a toxic combination of price rises for both the workers themselves and the businesses that employ them. It really is cataclysmic. We're already starting to see, as I said, over the past six months an impact on reduction in hours. We're seeing, because of the shortfall in customers, less tips. People aren't paying by cash. Due to a number of reasons, workers are not getting the tips that they used to rely on. All of that is having a knock-on effect on those workers who, as I say, the average wage being £19,000 to £20,000 a year, cannot afford the £2,500 price cap. It's a double whammy for that. I hope that answers your question. Brian, you mentioned during Covid that there was about a 26 per cent drop in the number employed in the hospitality industry. Did any of that get picked up post Covid? In other words, did it come back up the employment level? It did, if I can be frank. A lot of it was through fire and rehire, so a lot of multinational hotels. They terminated their employees during the pandemic, despite the job retention scheme. There was a large hotel chain that shall remain nameless for the purposes of this committee, who terminated 95 per cent of their workforce in Glasgow and Edinburgh at three flagship hotels. They re-engaged them three months later. By the way, they terminated them using public funding in terms of their redundancy packages, and then re-engaged them on lesser terms. That obviously doesn't apply to all employers. There are small employers out there who are genuinely unable to retain their staff, but during the pandemic, a lot of multinational employers who absolutely could have afforded to keep their staff on, terminated them and then re-engaged them. Yes, the numbers will have gone up. I don't have the facts on that in terms of how many would have been re-engaged from our campaign against fire and rehire. We estimate that around 14,000 of those, 58,000, were re-engaged or we campaign for them to be re-engaged either on furlough or on 100 per cent of their wages. Mark, can I ask you maybe to comment on the same thing about how you believe the sector will be able to support its workers through the cost-of-living crisis? How capable is the industry of that? I think it's a challenge. Again, it's about making sure that businesses are still there to be able to continue to provide employment for the longer term. Picking up on Brian's point of that 58,000, a number of those were European workers who also returned back to Europe as well. Even though they may have taken the furlough payment and actually not come back into the marketplace. There are really good efforts and good examples of employers who are doing their utmost to, and being very creative, trying to retain staff up on the west coast of Scotland. There's a hotel company who I know is actually contributing towards the employees' own home domestic fuel bills as part of the benefits package over and above the meals and the accommodation and everything else that they get, but not everybody can afford to do this. The risk is where we are having to look at a balance of closure. They will do the right thing through a process of having to let the employee go, but ultimately they would love to stay open and trade and keep that employee in situ because so many of them have invested significantly in the employee skills programme over the course of the last two years. We had some great funding from Scottish Government to run the Tourism and Hospitality talent programme, which three and a half thousand colleagues have gone through that programme. If they are not able to stay in employment, then that is a challenge. Again, I've heard from well-known businesses in the central belt who quite simply the employees couldn't afford to get to work and they had to give up their contract. It wasn't the hotel dismissing them in any way, shape or form. It was the employee making the decision that they physically cannot afford to pay the transport fuel costs to drive to and from work. That's obviously in certain parts of the country, not necessarily in Scotland, but we need to have a workforce and we need to invest in our future workforce and grow it so we can service the demand and deliver on the expectation of the future customer. Brian has mentioned a couple of times now about workers moving on to reduced hours. Do you recognise that as an issue at the moment? Can I suggest that we move on? If Liam Leone would like to answer that question, it means that all the panels have had an opportunity before bringing him back to Chapman. Okay. I was asking Mark, but okay, Liam. I'm not happy to answer that. What we've been seeing is businesses scaling back their operations for a number of months now, whether that's limiting the service that they provide, whether it's closing their doors for one or two days a week. That's something that businesses have been grappling with for quite some time. I know that businesses that have been trying to ensure that the workforce that they have is still getting the hours or close to the hours that they need, but, clearly, with businesses in a precarious situation, there's only so much that they can do. As Mark has highlighted, there are businesses who are looking at what else they can do to support their staff just now. There are good examples of businesses providing extra time off for staff so that they can benefit from wellness days and people looking at how they can be more imaginative with the shift patterns and so on to ensure that there's still work there for the people that they employ. One of the challenges that we are facing is that, because businesses are in a difficult situation just now, workers are beginning to move away from hospitality again to look for other types of employment. Also, some of the costs that workers are facing, particularly in rural areas, means that it is quite a challenge financial stretch for them to get to their place of employment. My own personal experience is that there are many hospitality businesses who seem to be crying out for staff who are desperate for staff with the skills to fill key jobs, and yet, on the other side of the coin, we hear that, in fact, there is reduction of hours in some areas of the hospitality sector. How is that work out? It's a very broad sector, and you need to break it down by geography as well, because the challenges that some businesses are facing are not necessarily faced by all in terms of staffing shortages and levels of demand, but the general picture is one of diminishing demand and, therefore, fewer hours available. Thank you for your comments so far this morning. I will follow on the same theme from Colin's questions about job security and job availability. We have heard about the tension between workers wanting the hours and hours and shifts not being available. Leon, you said that it's a diverse sector in their geographical and probably other separations. How are you as an organisation engaging with your members? What are the focuses that you are working on to deal with those differences in geography and in marginality? Job security as a whole doesn't tell us everything that we need to know. From a workforce point of view, we see that as being critical to the ambitions of the sector. When we came out of the pandemic, as Brian has highlighted, we'd lost a lot of the workforce. A few weeks ago, we were still looking at very high levels of vacancy rates across the sector. One of the things that we are trying to do is encourage businesses to pay more, to attract and recruit their staff and to offer more flexibility around working as well. There are also issues around productivity, where businesses who are struggling with staff or finding that they need fewer staff can change the way that they are working, but they still provide job security for the workforce. When we come through the current set of challenges, we will need to have access to that skilled workforce in order for businesses to develop and grow and play their full part in the economy of the country again. However, it is a real challenge for SMEs in particular to keep full complement of staff if they are not seeing the demand coming through from consumers. Mark, you have a similar line of questioning, but if we look at the geographical variations, if I can ask you to pick up on the variations in size and the relative differences of what larger organisations or larger companies are doing compared to the smaller businesses specifically around job security and what that means for targeted support to ensure job security not only through the coming season, which is going to be very difficult, but beyond that as well. There are a couple of other things, if I can just come back to what Leanne said. City centres, we still have a huge amount of people working at home. There is a culture now of not going out onto the high street. Obviously, there are a huge number of small hospitality operators, pubs, coffee shops, et cetera, who have seen a massive downturn in their trading, and that has resulted, obviously, in them having to cut their cloth according to workers' hours as well. So, that's another challenge we face, and it's important to have the vibrancy piece. There's lots of good activity being done around at local level through the local hotels associations together. Working in Venice is a great example where not a lot of people on the ground have come into the industry, they've gone into the schools, they've worked as a collective to bring absolutely raw, raw young talent with no experience whatsoever into the business, to train them and give them that on-job learning experience, and to create that community amongst the workforce. There's a lot more being done by Springboard and the broader tourism skills group. We have Apprentices in Hospitality Scotland as well, which is a great initiative where, again, a number of large operators and small have come in supporting apprenticeships, apprentices into their business and using that generation of people, those workforce to be advocates as well. We've also now, with the cost of living crisis, also seen the older worker looking for a secondary income, and again, it's positioning the opportunities of employment to that older workforce too. So, as Leon touched on earlier, many of the operators are changing their modus operandi around shift patterns and actually seeing the old traditional ways of perhaps working going and how do we adapt to the modern-day way of working. We have the Hoteliers Charter, which was launched two years ago during Covid to try and present the industry in a much better light around highlighting the opportunities that exist, but also about the values of fair work within the business. I was just saying to Brian earlier, next 17 October, you will see a UK-wide campaign called Hospitality Rising being launched. That is a campaign that has raised nearly £850,000 worth of private sector money from operators, again, to change the perception of the industry, but also to make it a bit cooler in terms of campaign, marketing campaign, and be heavily targeted to people under the sort of 30-age bracket. But that's the industry taking ownership, and small operators, medium-sized operators, are very much part and parcel of that. Okay, thanks. Brian, if I can come to you and talk a little bit about the, I suppose, what else, as Unite, you're looking for from the employers around, we've heard about paying appropriately and flexibility and that kind of thing. What are the other kinds of things that employers could be looking at, and how are you finding those discussions going when you're having those with employers to attract and retain people in hospitality? Never mind the issues around job security. I suppose that the final bit of that is what are the kinds of things that, as we, this is part of our pre-budget scrutiny, what are the kinds of things that we should be requiring as part of our budget discussions? Thanks, Maggie. First of all, job security, particularly in this cost-of-living crisis, is a number one priority for Unite. It is our top priority to ensure well-paid, secure, contractually secure and unionised jobs throughout hospitality. That's our modus operandi. We are more than happy, as I've said to Mark Anlion, to work with the industry to drive up standards, because there is a vested interest there. One of the things that I think we are doing specifically is that we have our own fair hospitality charter, which I'm sure chimes in a lot of ways with the fair hotels charter, which is really simple reforms, things like the real living wage. To be honest, it's the Scottish business pledge. It's the real living wage ensuring a huge reduction, if not a complete removal of zero or contracts, providing proactive sexual harassment policies to protect women workers, transport home after eleven o'clock at night, so that they're not having to pay the £12 that they've earned in tips to pay for a taxi home. These are all things that particularly multinational employers can adopt with quite low costs, but the benefits of that—I'm not here to make the benefits for businesses or to make the benefit points for businesses, but my colleagues would agree, hopefully, that that's how you reduce turnover. To drive up standards, to keep those workers without being elitist about it, to keep the most highly skilled workers, we surveyed over 800 chefs about a year ago. 48 per cent of them said that they'd already left the industry, or that they were about to leave the industry. That is, again, without wishing to be the most highly skilled, most highly trained employees within the industry. If almost 50 per cent of them are leaving, and I would guess that that's gone up again, we're just about to get the results of this year's survey, I think that that's gone up. In terms of specifically what the Scottish Government can do with the budget, I think that we need a similar furlough scheme, we need a scheme that will protect workers from the cost of living crisis. Whether that be mitigation brought through the Barnett consequential, I'm not an economist. What I know is that any amount of money that's either given directly to businesses or directly to workers, it needs to be conditional. We cannot have a situation where huge multinational employers are receiving hundreds of thousands in tax breaks or whatever, but they're allowed to fire in rehire. Public money should be conditional. It should be conditional upon the Scottish business pledge. Any money that is being given directly to businesses, there must be a conditionality clause that says that you must pay the living wage, you must retain your workers if you're getting £120,000 in tax breaks or direct financial support. For me, that's an absolute necessity. One of the things—we've put this in our—I'm just going to wave this around because somebody asked me to. In the document here, one of the most successful interventions and support that we got from Scottish Government during Covid was the money to support the tourism and hospitality talent programme, which came at a time through Covid, where many people were out of work, mental health was obviously at the highest. We need to upskill and continue to invest and upskill a workforce that is shrunken, to say the least, and it will take time to recover. An on-going investment to investing in the skills piece, so if there is temporary displacement of an employee or otherwise, there is a place where they can go and can still continue to further and develop their skill sets. We would strongly recommend that. We've got a shortfall in skills in certain parts, but at the same time, there's a proven mechanism that's delivered really, really positive responses, and the three and a half thousand people have gone through it, I think, would be strong advocates for more of the same. Colin Smyth, followed by Gordon MacDonald. Thanks very much, convener, and good afternoon to the panel. Can I pick up the point earlier about labour and skills shortages? For some time now, everywhere I go and I speak to businesses, they tell me they can't recruit that there's a huge labour and skills shortage. Today, though, we're being told there's obviously businesses that are cutting staff and cutting hours and restricting hours, so there's almost a kind of a contradiction there, so it's clearly more complex than it's just a labour and skills shortage or it's just everybody's cutting back. Can you say a bit more about specifically the types of business that the sectors, I suppose, the geography of those businesses, are the ones that are laying off staff effectively and cutting hours most? What are the businesses that are in need of that support most? Obviously, some are still saying that we can't recruit at the moment and we want to expand, but clearly others are really struggling. What specifically are those businesses that are struggling and who needs the help most? As we came out of Covid, it was pretty clear that we had a massive shortfall. We were estimating some of the reasons for 30,000 vacancies across the sector that businesses were trying to fill. That has continued and what has happened is that people have gone very far in order to recruit and retain staff. We've touched on some of the good work that businesses are doing in that space. To some extent, businesses were able to fill some of the shortages that they had, but the difficulty is that, in some parts of the country, there just isn't the working age population to draw from. That's a major challenge, particularly for businesses in rural and coastal locations. Obviously, it wasn't helped by Brexit, either. For those businesses, they were already moving to models where they were only opening some of the time—closing one or two days or reducing the service that they were offering. Rural hotels would only be offering meals and bar service to residents. They wouldn't be able to be open for non-residents and so on. A lot of businesses are still grappling with those challenges and they've grappled with those challenges over the summer, while demand has actually been there. Cities are a slightly different picture because, as Mark was saying, there's not the same level of foodfall and activity in our cities that was there pre Covid. We haven't seen the business visitor market recover, which is so crucial for places such as Aberdeen and so on, so while they were still trying to find skilled staff, they didn't necessarily have the same levels of demand that they needed to service. It's a mixed picture in terms of where we were in the summer, but things have moved on massively since then. Now we're looking at a situation where demand is very light, particularly for hotels, particularly in rural and coastal areas. There's probably going to be a bit of a drop-off there. Cities are still struggling to come back. We are in a situation where there will be winter festivals and so on, which will hopefully attract people to come in and visit Scotland. A lot of that will be taking place in Edinburgh and maybe other cities too. Just now businesses are not seeing the demand that they really need in order to maintain some of the staffing levels that they've been operating at over the past few months. We're talking specifically about skills. We've lost all our language skillset with the departure of our European colleagues, and it's a big market for us. We need to have that cultural blend of a cultural workforce for an international industry. We should have a fully multinational workforce to be able to match the needs of the customer as well. Not only that, that's a really good—they're very important to our own homegrown talent as well, so how they can learn too. There's skills lacking there. The supply chain, I mustn't forget that. If there's breaks in the supply chain, we can't do anything at the front end. The need to have the logistics workers there, the fruit pickers and all of the others that we know have in the food production space have been challenged with. I think that the other point is around—one of the benefits going back to this development programme is that we lost a lot of our middle management, our supervisory staff, so when you're onboarding a new recruit into the industry, some of those raw recruits, it's very difficult. Again, if you're challenged with trying to service a guest of not having that supervisory level of well-placed individual to onboard that new recruit into the workplace as you would want them to, so they stick around and stay and they can learn. The investment right the way through supervisory management and then leadership is really key. We know that we've got accommodation challenges still in certain parts of the country, which limit the amount of opportunity for a business to retain staff in a downtime as well. There's a cost associated with that. From outside looking in, the uncertainty of the sector's long-term recovery is obviously not going to perhaps fare too well if you're looking at a career in the industry and an industry that is maybe susceptible to potentially having to slow down or close. A combination of things, but for us language is a massive shortfall and that's why we need to get the immigration position shifted so we can get those international workers back into the ecosystem as much for servicing the customer but also for our own talent to learn and engage with them too. Can I just come in one minute to give an example from our perspective of the antidote to this labour shortage? It would come as no surprise to members that we believe that the antidote to that is driving up standards, but just to give you one example, especially in rural communities, we teamed up with a small hotel, a 40-bedroom hotel in Dumkeld, which had really been struggling post-Brexit and then through Covid to retain, to attract anyone. Not because they'd done anything wrong, they hadn't terminated any staff, they actually paid 100 per cent furlough or they topped up the furlough to 100 per cent of wages during the pandemic and still they were struggling to retain staff. So we teamed up with them, we eventually, piece by piece, incrementally got them to implement the fair hospitality charter, the final one being paying the real living wage and they started paying £10.50 anewaer. Within six weeks, they had filled their labour shortage. We helped to advertise, it was top story news on STV because we want to advertise decent employers. Those employers that are doing the right thing and paying the real living wage and not terminating people unnecessarily, putting in place a proactive sexual harassment policy, happened to be those with the lowest turnovers, those who were able to fill those gaps in employment. I think that example, which is replicated in so many other examples, particularly in rural Scotland, speaks for itself in terms of the antidote to that shortage. I did just follow up on that point, but that's very interesting in Leona Mackay, that was really helpful in terms of trying to break down that challenge in labour and supply chains. It does seem to me that it clearly is very complex, as you mentioned earlier, there are a lot of businesses that are absolutely on the brink, especially hospitality and licence trade. They are really, really struggling and that's having a big impact on your members who are seeing their hours cut. You also mentioned that some businesses, especially particularly large businesses, were very much profiteering from Covid and the cost of living crisis. I know that you might have done quite a lot of work on that being highlighted. There does seem to be a very big business, where the businesses are effectively driving up prices above supply costs and that, in turn, is spiralling inflation. Can you say a little bit about that work that you might have done and just what the impact that has on the cost of living? Yes, absolutely. Again, not to just be focusing on multinational hotel chains, but it is them that we are seeing the biggest examples of that. Take COP26, for example. Obviously, most accommodation services were increasing their prices, but you had multinational employers who were charging £5, £600 per room, per night. None of that extra profit was going back to the workforce. We used that price increase as an example to campaign for higher wages. None of it was trickling down to the workforce. In fact, the hotel in question was a five-star—you don't need to do much research to know who I'm talking about here—the five-star hotel in Glasgow, which was charging as much as £700 per night but still had housekeepers cleaning those rooms on £7.8 per hour. Some of them were still being paid youth rates, so they were being paid below the minimum wage. Unfortunately, that is perfectly legal. They weren't breaching the minimum wage act, but that is an example of where literally the workers who were cleaning those £600, £700 per night rooms had no increase in wages whatsoever. They actually had their hours cut. Some of them had their hours cut to zero. They were put on zero or contracts. That was going on during the pandemic. It's still going on during the cost of living crisis. Unfortunately, it happens to be the employers who could afford to pay a bit more. We're not talking about small businesses. Yes, there are small businesses that have had to let people go. There are small businesses that have cut hours. I can't speak for every example, but the employers who are doing this to the most workers happen to be those with the deepest pockets. I think that you'll probably be aware that there's a fair work inquiry into the hospitality sector, which we're all very involved with. We're delighted to be part of that. The point that Brian makes around real living wage employers is that there's a really vastly increasing number of real living wage employers in the industry now, and probably many more that pay above that but don't necessarily declare themselves the new virgin hotel here in Edinburgh. 225 rooms is a real living wage employer. You look at mercat tours. You look at rabies tours. Great examples where those staff are very much in situ, retained, and the attraction is there. I'll take another, probably one of Scotland's most well-known hotels. I'll leave you two in the central belt who have also paid way above the base wage. For the sake of 50p, an hour more from another type of business in a different sector, you've got individuals who are leaving and going to take and chase that money because they need the extra 50p to combat the rising costs that they're having to face in their own home. It's a small pool that we're all fishing in and every sector of the economy is chasing the same person. As little as 50p is a point of difference. I want to ask you about cost 11 and what the impact and outlook is going forward. Leon, you touched upon the fact that hospitality is a very broad area and it covers pubs, restaurants, cafies, travel and tourism businesses, entertainment venues. The cost of living crisis is reducing the amount of leisure spend that people have. Is it having the same impact across all of these different areas within the hospitality sector or is it benefiting from? It's very variable. Talking to pubs and restaurants, they're seeing a decline in fruit fall generally and they're also seeing a decline in spend, people spending less money whilst they're out and in the venues. People appear to be going out less often than they were before, which is understandable given that people are obviously looking at their personal finances and working out how they're going to make things stretch. Hospitality is very much on the front line when it comes to people scaling back on their discretionary spend. What we're starting to see now with the bookings for hotels is that people are scaling back on those mini breaks and weekends away, which has provided a lot of business to hospitality over the years, particularly hotels and other forms of accommodation, but we're starting to see that being scaled back as well. It may be that people continue to ring fence that two-week holiday, which means that it's going to be absolutely vital that we encourage people to holiday in Scotland, people who are residents, people in the rest of the UK, and obviously going after those lucrative markets, which Mark highlighted before. We're seeing that gradual downturn in spend. People still want to have a good experience, they still want to go out, but it's becoming increasingly difficult for businesses to provide that experience at the price point that people are looking for. Businesses are absorbing a lot of those additional costs themselves at the moment, which is completely unsustainable, but they need to do that. It seems in order to keep the customers coming that they do have. I'll come to you on then, Mark, but in terms of staycationers, there was a suggestion that the summer we've just passed, there was a large increase in staycationers, so people might have been spending less, but there was more of them. It was partially due to the week-pound making foreign holidays more expensive, travel disruption, etc. What impact did staycationers have on businesses and did Scotland get the share of 26 million staycations? We're very fortunate in Scotland that we're able to attract a variety of visitors from across the rest of the UK and internationally as well. The staycation market has been crucial, particularly over the past few years. The issue is that people come and spend less. That's a major challenge. Whilst we have a strong domestic market, we see a lot of people going out as well. They were prepared to brave the queues at the airports and head out for their two weeks in the sun, and so on, particularly after two years of having severe travel restrictions. The domestic market has been key. A lot of businesses can't necessarily pivot very easily towards the international market. They were lying on the domestic market. That's their real bread and butter stuff, but it is the international market that is particularly lucrative. As we go further into the cost of living crisis, it is becoming more and more apparent that we are being affected here in the UK, perhaps to a greater extent, than other countries. We will probably see the domestic market tailing off, particularly on shorter breaks in particular, but we will see more interest from the international markets, particularly with the pound being weak. It's absolutely vital that we chase those key markets. I mean, from a domestic market, I think the secondary spend piece is huge. Looking at the broader tourism industry, if you take visitor attractions or where you go, or even if you're going to a resort hotel and you're paying for extras, if you go as a family, one of the reasons is to go there is because your kids want to do X, Y and Z, and all of a sudden, if you can't do that, then you've got probably a bigger challenge on you with your kids biting your head off rather than going there. People choose not to go. Again, a lot of evidence now of taking the picnic and driving, going to the great outdoors, which is fantastic. You'll see that self-curation of your holidays. The bottle of wine has become the glass of wine and all of that stuff. All of that little extra, of course, you're competing against other types of activities. We look at the return of the football season, the tickets. We've had an amazing season of outdoor live music. A lot of that has been thanks to Covid, in some respects, because of the backlog of touring artists. I think that Geoff Ellis sold over a million tickets to concerts over the summer season. Now they're not cheap. Again, you're making a commitment to a bucket list type experience, so that then puts something else on the back burner. The cost of physically putting petrol in the car and travelling from A to B is also a consideration now, so the compound effect of that is, again, getting people to think twice. The outbound tourism spike we knew would happen. Those that we probably captured were the ones who saw the chaos in the airports down south and hadn't made that commitment and thankfully supported. The golf tourism season was phenomenal with the amount of golf that we had played in Scotland, but a lot of that was overhanging as well. I don't think that we've had a true picture of what the real numbers are this year, but, again, from a survey that the Association of Self-Caterers has just published today, they have themselves shown a significant slowdown in bookings and its last minute decisions more couples than families as well. The one market that has actually come back quite well was the coach market as well, so there was a lot of tours of the older community who were able to have that confidence restored about travelling in that way too, but don't spend a lot. How are the industry planning going forward? Do they imagine that this constraint in consumer spending is going to be on going for a long period of time or are they hoping that it changes in a shorter period of time and what impact is that on the industry? As a sector pre-Covid, we were around 65 per cent domestic dependent anyway and 35 per cent international. I think that we'll all say that it's absolutely critical that we have a much up-weighted international football and capture the opportunity while it's here to make sure that we increase the routes and the connectivity. We've seen a peg back in the Middle Eastern carriers. We need to restore that connection and we need to make sure that we capitalise on the US market. The UK Inbound Conference last week in Aberdeen, and again the operators there would tell you that there is demand and Scotland obviously is a very attractive destination to come, but we have to assure up the quality, make sure that the assets are here and actually make sure that the infrastructure and the transport routes are absolutely rock solid. Tourism Ireland invested 80 million euros into their international marketing campaigns and to make sure that they maintain that. There is our competition not so far away from here, so the investment and it was going back to the convener's first point around the recovery piece around how we must invest in growing our international football. Average spends about 650 pounds of an international tourist as opposed to 150 odd from a domestic market. That will allow the football and the re-investment into the product. I'm going to bring Fiona Hyslop in. We are moving now to questions that are more focused on pre-budget scrutiny, so I think that Fiona's questions will be looking for suggestions about the budget statement that is next, once we come back over October, and the committee is working with us. The convener has just asked my question. Sorry. We're getting down to brass tax, looking forward to the budget of 2324. Thank you for your written evidence. I think that you've set out clearly what your asks and expectations would be. We understand from the chances that there's likely to be departmental cuts at the UK level. We don't know what, depending on which departments they are, what that will mean in terms of Barnett consequentials. We could be facing a budget, and we'd be very likely to face a budget that is tighter this year than it is our has been. What would you prioritise for keeping? That's not about additional spend. What's important to you and your sector in the budget that is already there that you would want to prioritise to keep? I might come to Leon first and then to Mark. In terms of what's already there, we've talked a lot about the need to keep promoting Scotland as a leading destination. We really need to keep the budget there and high for Visit Scotland, both promoting the country and promoting destinations around the country. That's absolutely key and critical. We need to keep investing in infrastructure. We've got significant challenges with some of our transportation, and I know that members on the islands have had a pretty torrid time of it. We need to be able to turn that around for them and communities there, so investment in ferries is key. We need to continue to be able to look at spreading the benefits of tourism and hospitality around the country. Rail, bus services and so on are absolutely key and critical and vital as part of that. We should really be looking at whether there is some possibility of turning on the tap for a bit more investment in those areas. We've talked a lot about people. Ultimately, when we come through this crisis, it will be about having the right people to come into the sector and deliver that great experience that visitors and guests are looking for. I would certainly be looking for the Scottish Government to continue to invest in activities that support tourism and hospitality pushing for a greater awareness and understanding of the great jobs and careers in the sector and encouraging people to actively come into the sector and to help us to up-weight some of the skills activity for people who are currently in the sector as well. I would see those as priorities. It's great that we have a council that comes together to develop the same budget or pre-budget positioning. Without question, we have to maintain our position in terms of being a competitive destination and one that's an attractive one to visit. That also you then need to create the enablers for people to get here. That infrastructure piece is critical. Scotland Outlook 2030, the new tourism and hospitality industry leadership group, which I've been invited to co-chair with Ivan McKee, is about to reform itself and with a new membership and will kick off towards the end of this year. I guess the priority actions for that group will come out, but I don't see them being any different. To the point around making sure that Visit Scotland's budget isn't compromised in any way that it can continue to do what they do very well, but also on top of that, there is the destination net zero agenda and how the businesses transition through to their green agenda. We need to have the right support networks in place to support the industry to do that. There's a lot of investment being made by the larger corporates, but some of the smaller operators are struggling to do that and how we're having to go next. The investment in skilled workforces continues on and that end-set agenda, I guess that community wealth building Scotland Outlook is all about spreading that tourism wealth and how do we make that happen. It's difficult. The budget is very tight and we know that, but we would ask that the Government see the sector as a force for good and that it drives a multitude of benefits through local economies when the one thing that Covid did do favourably for the sector is when it stopped. I think that there was a much greater recognition of just how important tourism is to the local community and how many livelihoods it impacted by it not actually happening. I've said this before to Ivan McKee and others. There's a lot of talk about future industries. We've been around for a long, long time as an industry and people will always drink and want to have a holiday and actually the impact as a force for good that tourism delivers is something that shouldn't be underestimated. If it reassures you that the economy committee of the Parliament for the second time has focused on tourism, perhaps it reflects our understanding that this is a national industry, one of the few that reaches all parts of Scotland? I think that we've always said that we're very fortunate and grateful for the fact that the Scottish Government viewed the sector with a degree of importance that it is to the economy and we're probably the envy of our colleagues south of the border and elsewhere. The investment in the asset and going back into cities around the vibrancy, how do we bring that buzz and culture and the lifeblood back into these communities? As much for the wellbeing of society as well, there is a real need that we can stimulate a lot of jobs too. We can recover quickly given the right ammunition, but you need to have that investment, that pump prime into those larger operators, the businesses that can really are ambitious. There's a lot of entrepreneurship in the industry, there's been some great examples of small and medium and large scale entrepreneurship that is delivered who they have ambition and they want to grow and I think as a collaborative approach that's what we really want and to encourage and continue the way that we've worked previously over the years. I can really come to Brian Simpson now and ask you what you would expect to see in the budget now. The same point is if you want anything new, you might have to say what you prefer not to have. I would ask directly, do you think it's more important to keep some of the good and progressive policies that are already there to help in the skills sector or different other areas that we've just heard about in the previous evidence sessions? Or is there something new that needs to be done? What's missing from the response so far? I'm not just from the Scottish Government, but from the UK Government as well. I need to separate those two Governments because my criticism is more barbed, shall we say, for the Westminster Government. In Scotland, I think that the one thing that we need to put more financial and physical and logistical resources into is increasing the focus on fair work and encouraging employers to sign up to the fair work principles, the business pledge. If I can be critical for a moment, I don't feel that fair work is as interwoven in our discussion about business growth or economic success. I feel sometimes that fair work is tagged on at the end. I would say that more money and more resources and more time for ministerial buy-in for fair work is put in there across the piece. I totally agree with Leon about investment and infrastructure. We need better trains and buses to be able for the workers to access those rural employers or workplaces, but also for the customers to get up there. In terms of the British Government, I have lost complete faith in their willingness to support not only small businesses but the lowest-paid workers in the British economy. Everything from the tax breaks to the richest people in society—I think that it was Leon earlier that said that the average small business would gain about £10,000 from the NICOT—the average hospitality worker is gaining about £200. The actual benefit to them from the so-called changes or improvements that are being made at a British-wide level is not touching the sides. In Scotland, I would say that focusing more on fair work and making sure that it is completely interwoven and genuinely resourced across the Scottish economy, not just in hospitality and retail is crying out for it, and I agree with Mark on community wealth building. That is an important way to get more bang for your buck and put an amount of money into the hands of citizens who will spend it a lot better than some politicians. Whatever it is, it needs to be meaningful. The challenge is that the level of support in some cases has been great to have, but to have real impact does not allow businesses to make transformational change or invest. Clearly, the business rates lever is the biggest one that is within the gift of the Scottish Government to consider, but when you talk about the size and scale of investments that are needing to be done and go back to staying competitive in a modern-day world, it has to have scale and meaningful investments to be allowed for businesses to make that change. That can be balanced through different fiscal measures or otherwise, but the intent is there by many. The aspiration is certainly there from the industry as a collective, but it has got to be done within the scale of being able to stay viable and open in the short term. There is an important message there about how we can have a sustainable sector for individuals as the workforce, and that also helps to knock-on in terms of retention, which has a cost and value itself, but investment and growth are not just the short-term immediate issues around energy costs. If there were Barnett consequentials, it is not obvious that there would be that in the business sector area, would business rates be your priority? With no state aid cap as well, because a lot of the larger businesses, because of the business rates, may well get over to the tipping point. There would have to be a caveat there that would not exclude some of those large businesses from being able to take advantage of the relief of that time. We have had one statement from the Scottish Government around this year's budget. Within the budget that the committee is responsible for, there has been a saving made to the employability budget of the region of £50 million. That has been to fund the Scottish child payment, so that is the decision that the Government has made. In correspondence with us, they have explained that the high employment rate at the moment feels that you could take some money savings out of that budget. I do not know if, Brian, if you have a view on that, because the Government has proposed it as a—I mean, they are not denying that it will have an impact, but there is the same impact that should be minimal because there will still be money in employability budget, but £50 million is coming out. Do you have any concerns about the impact of that? Over that £50 million is a huge amount of money, which, if I can be frank, is well spent by organisations such as Skills Development Scotland. We work hand in hand with Skills Development Scotland to make sure that people are, as Mark pointed out earlier, that we get some of those 58,000 job losses or people who lost their jobs back into much more sustainable employment. I would imagine that that is going to have an impact massively on skills development and the employability resources that are there. I think that that money can be taken from other areas of the Scottish economy that would have less of an impact on the workers that need it the most. Okay, thank you. I think that that brings us to the close of this session. I would like to thank witnesses very much for sharing their experience and expertise with us this morning, and we will now move into private session for the remaining item on the agenda.