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Report on the Financial Memorandum of the Prohibition of Smoking in Regulated Areas (Scotland) Bill
The Committee reports to the Health Committee as follows—
1. Under Standing Orders, Rule 9.6, the lead committee in relation to a Bill must consider and report on the Bill’s Financial Memorandum at Stage 1. In doing so, it is obliged to take account of any views submitted to it by the Finance Committee.
2. This report sets out the views of the Finance Committee in relation to the Financial Memorandum on the Prohibition of Smoking in Regulated Areas (Scotland) Bill, for which the Health Committee has been designated by the Parliamentary Bureau as the lead committee at Stage 1.
3. The Bill seeks to make it an offence to smoke, or permit smoking, in areas where food is being supplied or consumed. In such premises where smoking has been permitted, there must be five ‘smoke free’ days (the ‘five day rule’) before food may be supplied or consumed again. In addition to the promotion of a healthier lifestyle, the Bill aims to raise awareness of the dangers of smoking and passive smoking, engender a change in public attitudes towards smoking in public and assist people who wish to stop smoking by contributing towards a smoke free environment.
4. In looking at the financial implications of the Bill, the Committee considered the impact it would have on the owners and proprietors of premises where food is supplied and consumed. The Financial Memorandum published to accompany the Bill states that there are only minor anticipated costs associated with the Bill and that businesses are likely to benefit from savings in other areas. The Financial Memorandum identifies that businesses will incur costs of between £25 - £50 each to provide no-smoking signage. The Financial Memorandum estimates that the Bill will lead to approximately 49 prosecutions per year and, although it does not estimate how many prosecutions will result in court actions, it states that the Scottish Court Service will face costs of £260 for each prosecution in court. The Presiding Officer has determined that there is no requirement for a Financial Resolution for this Bill.
Consideration by the Committee
5. At its meeting on 1 June 2004, the Finance Committee took oral evidence on the Financial Memorandum from the following—
Stuart Ross, Chairman of the Year, and Colin Wilkinson, Secretary, Scottish Licensed Trade Association; then
Colin Cook, Head, Substance Misuse Division; Mary Cuthbert, Alcohol and Smoking Team Leader, and Calum Scott, Economic Adviser, Analytical Services Division, Health Department, Scottish Executive; then
Mr Stewart Maxwell, MSP, Member in Charge; and David Cullum, Clerk, Non-Executive Bills Unit.
6. In addition, the Committee considered written evidence from the Scottish Court Service, Federation of Small Businesses in Scotland (FSB Scotland), the Substance Misuse Division, Scottish Executive Health Department and the Scottish Licensed Trade Association (SLTA). The Committee also received further written evidence from the Scottish Beer and Pub Association. These submissions are attached at Appendix 1.
7. The Committee would like to express its gratitude to all those who took the time to provide evidence in relation to this Financial Memorandum. In the light of recommendations of previous Finance Committee reports that Scottish Executive officials should also provide evidence on non-executive bills, it welcomes the evidence officials submitted.
Summary of Evidence
Impact on Business - Costs
8. The Financial Memorandum states that the expected costs of the Bill will be minimal and relate entirely to signage.1 Although the Financial Memorandum sets out that all businesses where food is supplied or consumed will be affected by the Bill, the Committee’s consideration focussed on its affect on on-premises licensed outlets (for example pubs, sports and social clubs).
9. In its written evidence, FSB Scotland challenged the assertion that the Bill will not have significant financial implications.
“The consultation [conducted by Mr Stewart Maxwell MSP] suggests that proprietors have to make a straightforward choice between serving food or allowing clients to smoke … either of these actions will have a significant impact on turnover, and could potentially make small, marginally profitable businesses unviable.”2
10. In oral evidence, the SLTA stated that, where practical, most licensees would want to create a separate area for smoking and drinking and another for non-smoking and eating. It argued that as food sales provide, on average, around 20% of turnover and contribute towards the drinks trade, licensees would be reluctant to stop selling food. As the SLTA also estimates that 65% of pub-goers are smokers, it projected that 5,000 of the 11,500 on-premises licensed outlets that currently serve food would carry out the required structural alterations to create these separate areas, at a cost of £85m. The SLTA also estimates that annual revenue costs will increase by £110m, largely as a result of extra staff required to supervise the separate areas.3
11. During discussion, the Committee heard from SLTA that this estimated capital cost of £85m does not include the costs associated with providing fire escapes or disabled access. It is likely, therefore, that the provision of these facilities will add to the capital cost.
12. In its written evidence, the Scottish Executive also recognised that businesses will have to incur costs for the necessary structural alterations if on-premises licensed outlets wish to continue serving food and allow smoking.4 In their oral evidence, however, officials stated that they did not consider that the number of pubs which would carry out these alterations would be as high as that anticipated by the SLTA.5
13. Mr Stewart Maxwell clarified in his questioning of the SLTA that the Bill does not require businesses to undertake any work would which result in these costs. The SLTA responded by stating that the Bill would oblige licensees to make a decision on whether to create these separate areas in order to continue to permit smoking and supply food. The SLTA argued that these alterations would be carried out by businesses who wish to avoid a significant loss of income:
“It does not force any capital spend on anyone, but there would be serious revenue ramifications for premises if there was no capital spend.”6
14. The SLTA argued that the costs to business would be lessened if several amendments were made to the Bill. The SLTA set out its argument for a ‘ratcheted approach’, whereby premises would gradually introduce non-smoking measures by banning smoking at the bar; then 20-30% of the premises; and then a total ban. The Association also stated that a requirement for designated non-smoking, as opposed to separate and un-connected, areas would negate the need for businesses to undertake expensive structural alterations. The SLTA said that this, combined with efficient ventilation systems, would create a smoke-free environment for diners. The SLTA also commented that it would prefer that the ‘five-day rule’ requirement is removed from the Bill as it believes it is too prescriptive.
15. Whilst the Committee recognised that these suggested amendments to the Bill would significantly reduce its financial impact on some businesses, it was concerned that they would also significantly impact on the Bill’s policy intention. Without separate areas being required for diners, the Committee is aware that diners would continue to be affected by smoke from other customers. As Ted Brocklebank commented:
“... the smoke does not know which of the tables are smoke free. People may not be smoking at the bar, but they will be smoking elsewhere, and the smoke goes wherever it wishes to go.”7
16. In his evidence, Mr Stewart Maxwell also stated that the measures proposed by the SLTA would not create a smoke free environment and made reference to several pieces of research to support this view.8
Impact on Business - Savings
17. The Financial Memorandum states that the Bill will lead to savings for business, especially in relation to reduced cleaning, decoration and other similar type costs.9 The Committee noted that the Financial Memorandum did not provide detail on the projected savings and sought to identify whether these savings could be realised in order to offset the projected costs.
18. In his oral evidence, Mr Stewart Maxwell stated that:
“Pubs will make massive savings as they will need to redecorate less often, have lower insurance costs, be less at risk from fires and not have to install extremely expensive ventilation systems, which is especially problematic for small pubs.”10
19. In its written evidence, FSB Scotland stated that “... it is extremely improbable that these [reduced insurance premiums] will be proportionate to the costs and lost revenue ...”11. In addition, the SLTA was not persuaded that the savings would be as significant as Mr Stewart Maxwell asserted and claimed that “... there would be a less smoky atmosphere and perhaps people would not have to paint places as often, but other than that I cannot see where any economic benefits would come from”.12
20. The Committee explored the issue of whether a smoking ban may encourage more custom from people who currently avoid going to pubs due to the smoky atmosphere. Mr Stewart Maxwell agreed that this is likely to be the case, especially if people suffer from certain illnesses. Mr Maxwell provided evidence suggesting that asthma sufferers and those with lung problems currently avoid visiting pubs as it exacerbates their illness.
Impact on Business – Experience of Other Countries
21. In the Financial Memorandum and during oral evidence, the Member in charge of the Bill highlighted the experience and success of smoking bans in other countries, namely the bans in New York, Ireland and Norway. Mr Maxwell provided statistics suggesting that businesses had not experienced any loss of trade and that compliance with the ban is between 97 – 100%. Mr Maxwell argued that it is reasonable to assume that a ban will be similarly successful in Scotland.
22. In oral evidence, the SLTA stated that it felt that these examples could not be used to support the argument for a smoking ban in Scotland. It was doubtful that these bans have been as successful as suggested by Mr Maxwell and provided data from the United Restaurant and Tavern Owners of New York which found that customer numbers had fallen by 20-30% since the introduction of the ban. In addition, the SLTA argued that there is a stronger culture of drinking in pubs in Scotland, as opposed to drinking in bars or hotels where food is usually consumed in separate areas. Thus, it argued, the implications for businesses in Scotland would be more costly as structural alterations would be required to allow a separate area for smoking and drinking and another for non-smoking and eating.
23. In discussion, the Committee agreed that Scotland has a different drinking culture, which should be taken into account when considering examples of smoking bans in other countries. In addition, the Committee felt that as the Irish ban has not been in force for a full year, it might be too early to draw firm conclusions.14
Compliance and Enforcement of the Ban
24. In estimating the rate of compliance with the ban, the Financial Memorandum compares the Bill with a similar statute in the state of New York where the compliance rate was 98%. It is anticipated that the compliance rate for this Bill will be similar, partly as the offence to permit smoking in a regulated area means that proprietors/ owners will have a vested interest in adhering to the law. It is intended that licensees themselves will enforce the ban and that no additional work will fall on environmental health officers. The Financial Memorandum suggests that prosecutions under the Bill will be similar to those in relation to seat belt offences and that costs can be accommodated within existing resources.
25. In written evidence, the Scottish Court Service stated that, on the basis of the information provided in the Financial Memorandum, the impact on the Scottish Court Service should be negligible and capable of being absorbed within the existing resources.15
26. In its written and oral evidence, the Scottish Executive suggested that the rate of compliance may be lower than predicted in the Financial Memorandum, at around 90 – 98%. Scottish Executive officials reasoned that the ban is more complex than the ban in New York due to the ‘five day rule’, which would make it more difficult to identify premises breaching the ban and supplying food within the five day period.
27. The Scottish Executive officials also suggested that the prosecution rate for offences under the Bill may be higher than the comparison with seat belt offences may suggest, as it would be easier to identify non-compliance. The Scottish Executive officials stated that this could create costs for the Scottish Court Service of between £1,560 and £41,600. Officials confirmed, however, that these costs could still be absorbed within the Scottish Court Service’s existing budget.
28. In relation to the enforcement of the smoking ban, Scottish Executive officials suggested in its written evidence that additional costs may be created. Officials suggested that one full time environmental health officer may be required by each local authority, at a cost of £1.027m per year, in order to ensure that the ban is being complied with. Officials also suggested that a phone line may be required in order for the public to report breaches of the ban. In oral evidence, officials stated that they had based their assumptions on the Irish example.
29. In response, Stewart Maxwell confirmed that the onus will fall on licensees to enforce the ban and cited examples of other offences which licensees must similarly uphold.16 It is expected that environmental health officers will incorporate ensuring that the ban is being upheld within their routine visits to premises and, thus, the Bill will not add substantially to their workload. With regards to the phone line which Scottish Executive officials considers may be used, Stewart Maxwell reminded the Committee that there is no requirement under the Bill for such a phone line and that it has been scaled down in Ireland after two months as it was deemed unnecessary.17
Conclusions and Recommendations
30. The Committee identified several areas that it recommends the Health Committee consider during its scrutiny of the Prohibition of Smoking in Regulated Areas (Scotland) Bill.
31. During the course of its consideration of the Financial Memorandum, the Committee’s discussion touched on many issues and assumptions which could determine the financial implications of the Bill, for example, in relation to how businesses would respond to a smoking ban and the implications of the Bill for NHS Scotland. The Finance Committee did not have time to consider on all these complex issues during its scrutiny of the Financial Memorandum, and recommends that the Health Committee may wish to consider such issues during its scrutiny.
32. Whilst the Committee is content that a smoking ban in regulated areas will have only minor financial implications for the hospitality sector, the Committee has concerns that greater costs may fall to on-premises licensed outlets. The Committee notes the evidence from the SLTA that businesses may face a loss of trade under a ban, and that such premises will, in order to prevent this, seek to undertake potentially expensive structural alterations to create separate areas for smoking and drinking and another for non-smoking and eating. Whilst the Committee is unable to verify whether the costs suggested by the SLTA are robust, it recognises that such costs will have a significant impact, especially on smaller premises. In this context, the Committee believes that the assumptions in the Financial Memorandum do not give a fair reflection of the likely costs and that these costs would be higher than if premises ban smoking altogether.
33. The Committee is doubtful, therefore, of whether the savings identified in the Financial Memorandum can be realised. The Committee recognises, however, that distinct non-smoking areas may encourage custom from people who previously did not visit pubs for medical reasons due to the smoky environment.
34. The Committee also has concerns that comparisons with smoking bans in other countries should not be made without reference to Scotland’s drinking culture. The Committee is also aware that there has not been a sufficient time lapse for the full impact of the smoking bans in New York and Ireland to be properly understood. The Committee recommends that the Health Committee may wish to consider these wider issues during its consideration of the Bill.
35. The Committee believes that, as a result of the ‘five day rule’, monitoring compliance of the ban may prove more complex than suggested in the Financial Memorandum. It would seem unlikely, therefore, that any additional costs for enforcement could be met from within existing resources.
SUBMISSION FROM SCOTTISH COURT SERVICE
The Bill seeks to introduce new categories of offence which would result in additional cases coming before the courts. However, the Financial Memorandum indicates, on the basis of experience of similar legislation in other jurisdictions, that the number of cases reaching the sheriff courts is likely to be small. Hence the impact upon the Scottish Court Service should be negligible and capable of being absorbed within the existing resources.
SUBMISSION FROM THE FEDERATION OF SMALL BUSINESSES IN SCOTLAND
The Federation of Small Businesses is Scotland’s largest direct-member business organisation, representing 18,000 members. The FSB campaigns for an economic and social environment which allows small businesses to prosper. Representing a large number of hospitality and catering business across Scotland, the Federation welcomes this opportunity to comment on the detail of the proposals contained within the Financial Memorandum. The FSB intends carrying out more detailed consultation of its members on smoking restrictions following the publication of the Scottish Executive’s anticipated consultation document on passive smoking.
Whilst we support the public health objectives of the present Bill, we believe that the Financial Memorandum underestimates the real costs that these proposals would have to businesses. It will have an impact on many licensed premises’ turnover and the current wording would require almost all small establishments serving food to invest in significant alterations or ban smoking throughout their premises, even in areas where food is not served.
Costs on Individuals, Companies and Other Bodies
Loss of Trade
We disagree with the assertion that, “There is also clear evidence from other jurisdictions that there will be no loss of trade costs to businesses.” Evidence from other countries on the impact of a smoking ban on customer levels in pubs is contradictory. The introduction of the ban on smoking in public places in Ireland is so recent that any analysis of its impact must be regarded as at best provisional, and the relevance to Scotland of the impact of bans in other countries is questionable.
The Financial Memorandum makes no mention of the differential impact of the Bill on different types of establishment. For example, many pubs rely on a small number of customers for a significant proportion of their regular turnover, and there is a perception that this group of clients is most likely to stop visiting premises where smoking is banned.
Provisions of Bill
The Bill would ban smoking in small, single roomed premises where any kind of food is served. The only alternatives for proprietors would be to stop serving food, which makes up the majority of many establishments’ profits, or to carry out expensive alterations to set up areas with a so-called ‘buffer zone’. The consultation suggests that proprietors have to make a straightforward choice between serving food or allowing clients to smoke, but as argued above, either of these actions will have a significant impact on turnover, and could potentially make small, marginally profitable businesses unviable.
Many establishments currently allow smoking in the Public Bar but prohibit it in areas where food is being served, but under the Bill this will no longer be permissible where there is a connecting door between the rooms. The current wording of Section 1, sub-section 2 extends the proposed prohibition to any enclosed space adjoining a controlled area, which will effectively ban smoking in any part of premises which serves food, even if no food is served in that particular area. Obviously, blocking off doors and connecting corridors to establish buffer zones as required by the Bill would be expensive and often impractical due to emergency exits, access to toilets and so on.
We therefore suggest deleting Section 1 subsection 2 so the ban only applies to controlled areas and not adjoining areas, as this subsection would have the unintended consequence of banning smoking in all parts of any establishment that serves food, even in areas where food is not served.
Signage and Training
The costs to business of extra signage are acknowledged in the Financial Memorandum, and we agree that these would not be significant. As with all changes in regulations, additional training of staff would be required which would also have a cost to business.
The Memorandum suggests that non-smoking premises are likely to enjoy reduced insurance premiums but there is no detail on the scale of these savings and it is extremely improbable that these will be proportionate to the costs and lost revenue outlined above.
SUBMISSION FROM SUBSTANCE MISUSE DIVISION, SCOTTISH EXECUTIVE HEALTH DEPARTMENT
1. The Finance Committee has invited officials for views on the assumptions in the Financial Memorandum regarding the costs that will fall as a consequence of the Bill to the Scottish Executive and for any views on the overall figures and assumptions contained in the Financial Memorandum. A full Regulatory Impact Assessment has not been prepared on the Bill but this paper outlines officials’ preliminary views on the assumptions made within the Financial Memorandum.
2. It should be noted that, to inform future policy on smoking in public places, the Scottish Executive is shortly to undertake a wide-ranging consultation and evidence gathering process. While legislative action is clearly an option, the Scottish Executive is currently adopting a neutral position in relation to the Bill on the basis that it is premature to reach a decision on legislation until we have time to review and consider all the evidence from the consultation in its entirety.
COSTS ON THE SCOTTISH ADMINISTRATION.
Compliance, prosecution and smoking prevention
3. The Financial Memorandum assumes compliance rates based on evidence from New York and prosecution rates from prosecutions in respect of seat belt offences. It also refers to current expenditure devoted to smoking prevention activity which includes passive smoking although makes no assumptions about future expenditure.
4. Financial assumptions made in the memorandum are based on a 98% compliance rate, a 1.52% annual prosecution rate and prosecution costs of £260 per hearing. On this basis it estimates that 640 licensed premises may not comply initially and, with the applied prosecution rate assumption, 10 prosecutions of proprietors/ owners each year at a cost of £2600. It concludes that these costs are low and, therefore, could reasonably be absorbed within existing budgets
5. More recent evidence from New York18 suggests that the compliance rate may be slightly lower at 97%. The more complex nature of the measures contained in the Bill would also suggest a higher rate of non-compliance initially. Moreover, it could be argued that prosecution rates could also be higher than assumed because it may be easier to catch non-compliance with a smoking ban than non-compliance with the seatbelt law.
6. With this in mind and for illustrative purposes only if we assume a compliance rate of between 90 and 98% and an assumed prosecution rate of between 1 and 5% per annum this would produce prosecution costs ranging from £1560 to £41,600. Again this range of costs is comparatively small and could reasonably be absorbed within existing budgets.
COSTS TO LOCAL AUTHORITIES
7. The Financial Memorandum assumes no additional enforcement officers would be required to enforce the Bill. However, in Ireland, primarily as a result of the newly introduced blanket ban on smoking in the workplace with only few exemptions, an additional 41 people have been hired with a specific remit to deal with tobacco control. It could be argued, therefore, that the more complex nature of the proposals contained in the Bill would present much more of an enforcement challenge than is the case in Ireland. It would seem not unreasonable to assume, therefore, 1 fulltime environmental health officer in Scotland per local authority would be necessary, this would add an additional burden of £1.156m pa. Additional costs could also be incurred to “police” the ban outwith core working hours.
8. Another potential cost (highlighted in a number of the local authority submissions on the Bill) is the resource requirement for information provision in support of novel legislation of this type. In Ireland, for example, a compliance help-line has been set up which allows customers to phone and report alleged breaches of the ban. A very rough estimate might suggest a cost of £50-100K for the first year based on the Irish experience.
COSTS ON INDIVIDUALS, COMPANIES AND OTHER BODIES
9. The Financial Memorandum suggests that compliance costs for businesses would be minimal -£25-50 each. However, this only takes into account the estimated cost of new signage. Account is not taken of the cost of structural alterations which would be necessary if an operator wishes to allow smoking to continue in some parts of the premises while food is served elsewhere. To avoid this burden, some venue operators might opt either to ban smoking completely or to stop serving food altogether.
10. In terms of impact on income, the Financial Memorandum assumes there will be no loss of trade/income to businesses and points to evidence (in the policy memorandum) that laws banning smoking in restaurants and bars in other countries had no negative impact either on revenue or jobs. While, there is evidence from New York –where a complete ban is in place- of an increase in business for bars and restaurants, with tax revenues up by 8.7% (April 2003-January 2004), it is impossible to tell from the available information to date the extent to which this is due to the smoking ban as opposed to other relevant factors.
SUBSTANCE MISUSE DIVISION
SUBMISSION FROM THE SCOTTISH LICENSED TRADE ASSOCIATION
We are here representing the Scottish Licensed Trade Association which has a membership of approximately 2,200 licensees. Most of our members are self-employed business people engaged in trading in pubs and hotels but we also represent some restaurateurs, entertainment club owners and take home operators.
My name is Stuart Ross and I hold the position of Chairman of the Year of the SLTA which is akin to a non-executive role on the board of directors of a company. I am also Chief Executive of the Belhaven Group Plc which is Scotland’s largest regional brewery with turnover in excess of £100m per annum, an estate of 240 pubs and in excess of 1,400 members of staff. I have been able to use information obtained within Belhaven to help the SLTA prepare this submission as we are endeavouring to address the financial implications of the Bill not just on the membership of the SLTA but on the wider field of the entire Scottish licensed trade including sports and social clubs.
I am joined today by Colin Wilkinson who is the Secretary of the SLTA and the pivot of the organisation in terms of member services and administration. The SLTA offices are based in the west end of Edinburgh.
We have approached our submission in the following manner, addressing three questions:
Question 1 – How will the licensed trade react to the Bill?
We see four options.
(a) Licensed outlets will cease to supply food in regulated areas which will therefore become non-regulated.
or (b) licensed outlets will continue to supply food and impose a ban on smoking in regulated areas.
or (c) where licensed outlets already have segregated areas, food will be served in one regulated area with another area being a non-regulated area where smoking is permitted.
or (d) licensed premises will create segregated areas in order to enable food to be supplied in the regulated area and to allow smokers to continue to drink (but not eat) in the non-regulated area.
It is our submission that options (c) and (d) will be heavily favoured by most members in the trade as licensees will not want to concede food turnover (which we estimate at 20% of total take) but neither will licensees wish to put wet sales at risk by disallowing smoking completely. Many public houses serve food until mid-evening hours and thereafter prioritise wet sales.
Table 1 attached shows that there is a total of approximately 11,500 on-premise licences in Scotland, including registered clubs. Based on a survey of Belhaven pubs and other information available to us, including much estimation and guesstimation at this stage, we contend that almost 50% of Scottish licensed premises would opt to provide segregation – 5,000 in total.
Of that 5,000, we estimate that 50% would choose to create a new bar in the segregated area in order to comply with the level of supervision which is necessary to properly control and manage the sale of alcohol in accordance with the 1976 Act.
Question 2 - What will be the capital cost of providing non-regulated areas?
Can I now refer you to Table 1, attached to this paper. We estimate that the capital cost of compliance with the Bill will be in the region of £85m. However, costs may be well in excess of that, depending on the views of local regulatory authorities on matters such as the provision of fire escapes and facilities for the disabled.
Segregation may prove to be more difficult for many outlets than has been suggested in this memorandum. Businesses not able to provide regulated and non-regulated areas will suffer competitive disadvantage which will result in financial failure due to loss of turnover. It is impossible to put a figure against this, particularly in the short time span available to us since we received your invitation to address the Finance Committee.
The figures used in Table 1 have been derived from a survey completed within Belhaven where we assessed 38 pubs individually and calculated the costs involved in providing segregated areas in each of them (in 7 of the pubs it was not practical to segregate). We then averaged the costs over the 31 pubs where segregation is thought to be feasible.
The capital costs can be split into three main areas:
Can I now talk you through the table in a bit more detail.
Question 3 – What will be the ongoing annual revenue cost to the trade in terms of compliance with the Bill through operating both regulated and non-regulated areas?
Can I now refer you to Table 2, attached to this paper and, again, I would like to communicate to the Committee the assumptions made in preparing it.
It is our contention that the total cost of compliance to the licensed trade will be £110m per annum and we believe this to be a conservative estimate.
Can we now comment on paragraph 63 of the Explanatory Notes to the Bill. It would appear that the sponsor of the Bill is clearly of the view that no adjustment would be made to licensed premises in the manner which we have suggested. We believe it is hugely simplistic, and wholly unrealistic, to suggest that the licensed trade would react to the Bill by maintaining the status quo in terms of operational modus operandi, thus implementing a total ban on smoking in premises where food is served. To do so would simply create a divide in the licensed trade between wet driven/smoking pubs and food driven/non-smoking pubs. Whilst this may be the sponsor’s objective, the commercial implications for individual licensees are so material that dramatic changes would be made in the physical structure and operational modus operandi of the majority of licensed premises.
We have not had time to challenge the statement made in paragraph 66 of the Explanatory Notes to the Bill where it is stated that “there is clear evidence from other jurisdictions that there will be no loss of trade costs to businesses”. We would ask the Committee, through the Convener, if he would allow us further time to study the policy memorandum at paragraphs 29 to 37 and respond with our views on it at a later date. Our members are extremely fearful of the financial and economic impact of a ban on smoking in public places and it is very important from our point of view to understand any fact-based information provided from countries where smoking has either been totally banned or partially banned along the lines of this Bill. Can the Convener advise us how we can gain access to the aforesaid policy memorandum.
Thank you for having invited the SLTA to make this submission which we hope you have found both helpful and informative.
THE PROHIBITION OF SMOKING IN REGULATED AREAS (Scotland) BILL
LICENSED TRADE COMPLIANCE COSTS – CAPITAL
THE PROHIBITION OF SMOKING IN REGULATED AREAS (Scotland) BILL
LICENSED TRADE COMPLIANCE COSTS – REVENUE
1. Additional cost of labour to staff bars created in non-regulated areas:
1 member of staff for 98 hours per week per pub = 98 hours
Number of pubs creating bars in non-regulated areas = 2,500
Annual cost to the trade in terms of increased labour = £107,000,000
2. Additional annual energy cost in respect of power supply to the bar area for dispense equipment, hot water, downlighting, etc £500 per pub
Number of pubs as above 2,500
Annual cost to the trade in terms of increased energy £1,250,000
3. Additional annual cleaning and consumable charges in order to maintain required standard of hygiene in the bar area and to provide sufficient glassware, etc £600 per pub
Number of pubs as above 2,500
Annual cost to the trade in terms of increased cleaning and consumable expenses £1,500,000
Total additional annual cost £109,750,000
SUBMISSION FROM SCOTTISH BEER AND PUB ASSOCIATION
Further to your letter of 2 June 2004 in relation to the above, we do of course welcome the opportunity of being involved in the consultation.
Within the content of your correspondence you specifically asked that we consider the SLTA’s submission for further comment or additional figures.
Firstly, by way of general comment, we would advise that Stuart Ross, who led the SLTA submission as their Chairman of the Year, is an immediate Past President of Scottish Beer & Pub Association and is currently a member on our Executive Board.
The financial model presented covered the whole hospitality sector within the licensed trade and we wholly endorse the paper presented and have nothing to add in relation to the costs implications on compliance to the proposed Bill.
SUBMISSION FROM STEWART MAXWELL
Prohibition of Smoking in Regulated Areas (Scotland) Bill
At the meeting of the Finance Committee on 1 June 2004, I undertook to provide additional information to the Committee relating to questions asked by Jermey Purvis MSP in respect of smoking cessation rates and savings to the National Health Service in Scotland.
In their response to the Health Committee’s call for evidence, The Royal College of Physicians of Edinburgh state that “International evidence indicates that a ban on smoking in public places reduces smoking rates by 4% as well as reducing the risks associated with second hand smoke (Fitchenberg, British Medical Journal 2002; 325:188-91”
The Chief Medical Officer, in his Annual Report for 2003 Health in Scotland 2003, estimates that smoking accounts for 35,000 hospital admissions each year, with the cost to the NHS in Scotland an estimated £200 million.
Stewart Maxwell MSP
cc: Susan Duffy, Clerk to the Finance Committee
1 Paragraph 63, Financial Memorandum.
2 Written submission from Federation of Small Businesses, Appendix 1.
3 Stuart Ross, Official Report, 1 June 2004, col. 1464-5.
4 Written submission from Scottish Executive Health Department, Appendix 1.
5 Calum Scott, Official Report, 1 June 2004, col. 1485.
6 Stuart Ross, Official Report, 1 June 2004, col. 1480.
7 Ted Brocklebank, Official Report, 1 June 2004, col. 1479
8 Stewart Maxwell, Official Report, 1 June 20004, col. 1498-99.
9 Paragraphs 48 and 63, Financial Memorandum.
10 Stewart Maxwell, Official Report, 1 June 2004, col. 1494.
11 Written submission from FSB Scotland, Appendix 1.
12 Stuart Ross, Official Report, 1 June 2004, col. 1470.
13 Official Report, 1 June 2004, col. 1498.
14 Fergus Ewing, Official Report, 1 June 2004, col. 1501.
15 Written submission from the Scottish Court Service, Appendix 1.
16 Stewart Maxwell, Official Report, 1 June 2004, col. 1496-7.
17 Stewart Maxwell, Official Report, 1 June 2004, col. 1492.
18 The state of a smoke-free New York City: A one year review.