Coronavirus (COVID-19) business support: equality impact assessments

Strategic Framework Business Fund

Name of Grant:

Strategic Framework Business Fund

Policy Lead

Andrew Baird

Legal power used:

Section 126 of the Housing Grants, Construction and Regeneration Act 1996.

Grant Overview:

The Strategic Framework Business Fund (SFBF) was developed in response to the introduction of the Health Protection (Coronavirus) (Restrictions and Requirements) (Local Levels) (Scotland) Regulations 2020 which implemented the Strategic Framework. This committed the Scottish Government to adopting a localised approach to balancing the Four Harms arising from Covid-19 with specific restrictions aimed at suppressing the virus imposed by Local Authority area through the introduction of Protection Levels. The Strategic Framework created five distinct Protection Levels (0-4) with the scope and scale of restrictions on the economy and society increasing or decreasing as local authorities moved up or down the levels. In seeking to suppress the virus, the Strategic Framework imposed specific legislative restrictions on the operations of businesses, the scope and scale of which were determined by the Protection Level of the Local Authority in which they were located. The majority of these restrictions fell on businesses in the Hospitality, Leisure and Non-Essential Retail identified as being settings associated with transmission of the virus. Through the Regulations Scottish Ministers were given the power to determine which Protection Level each local authority area should be placed, based on data about the trajectory of the pandemic and its impact on life and health in that area. Scottish Ministers were obliged to revoke any restrictions or requirements introduced under the Regulations as soon as they were no longer considered to be necessary.

In recognition of the impact on businesses, the SFBF was established to provide financial support to businesses liable for Non-Domestic Rates that were required to close or to make specific adaptations to their operations as a result of restrictions imposed through the Strategic Framework. Crucially, the objective of this fund was to support businesses in remaining financially viable for the period restrictions were in place and was not intended to replace lost income or to cover operating losses incurred. Administered by local authorities, all businesses liable for Non-Domestic Rates and subject to specific restrictions on their operations from 2 November 2020 were eligible for ongoing financial support through the SFBF in the form of payments of up to £3,000 every four weeks depending on whether they were closed or restricted. As with previous grant schemes, awards were also contingent on the Rateable Value of the premises from which the business operated.

In response to the significant financial challenges experienced by businesses arising from the introduction of national (excluding Islands) Protection Level 4 restrictions on 26 December 2020, between January and July 2021, the Scottish Government introduced the following top up funds for businesses utilising the eligibility criteria and architecture developed through the SFBF:

• Hospitality, Leisure and Retail January Top Up;
• Strategic Framework Business Fund Transition Payment and Business Restart Grant
• Glasgow and Moray Localised Restrictions Fund
• 5^th June Localised Restrictions Fund
• Routemap Extension Restrictions Fund

Executive Summary:

The extraordinary measures taken by the Scottish Government to protect the right to life and right to health for the people of Scotland throughout the Covid-19 pandemic have placed unprecedented pressures on Scotland’s economy and business community. Health protection regulations required certain businesses to close or placed specific restrictions on their operations at different times between March 2020 and August 2021. Many others were impacted by significant reductions in demand due to these restrictions or as a result of the introduction of domestic and/or international travel restrictions.

Since the start of the pandemic, the Scottish Government has spent £4.3 billion in providing direct financial support to those businesses impacted by Covid-19 restrictions and regulation. As the impacts of restrictions were felt differently across the business community, varying according to factors such as sector and location, a range of different funding streams were developed to target financial support towards specific sectors or types of business based on the challenges they were experiencing as a result of the pandemic. Given the unprecedented challenges presented by Covid-19 it was necessary to develop financial support schemes at pace to ensure that funds were distributed rapidly in the interests of preventing business closures and preserving jobs. The Strategic Framework Business Fund and derivative schemes were no exception to this although, as with other funds, we have maintained a commitment to review the delivery of these funds and to update policy where necessary.

The variable impact of the pandemic on different demographic groups in Scotland and the inequalities created by this are well understood. Throughout the pandemic the Scottish Government has taken measures to mitigate these inequalities where possible. In line with its responsibilities under the Public Sector Equality Duty, as enshrined in the Equality Act 2010. In developing the SFBF and its derivative funds, the Scottish Government has considered how it can eliminate unlawful discrimination, advance equality of opportunity and foster good relations between people who share a protected characteristic and those who do not.

In doing so, the Scottish Government drew on a wide range of sources to understand the impact of restrictions on those with protected characteristics including statistics published by both the Scottish Government and the Office of National Statistics as well as insights from the Annual Population Survey, the Department of Business, Enterprise and Industrial Strategy’s Longitudinal Small Business Survey as well as from organisations such as Close the Gap and the Social Metric Commission.

Every effort is made to ensure that Equality Impact Assessments (EQIA) are published timeously. However, the speed at which it has been necessary to ensure mechanisms are in place for supporting businesses impacted by Covid-19 restrictions has resulted in delays to completing EQIAs for a number of business support funds.

Key Findings - impact assessment of benefits and/or disadvantages.

Advancing Equality

By distributing financial support through the SFBF and its derivative funds, the Scottish Government acted to mitigate the impact of these regulations on businesses to support them in remaining financially viable while restrictions were in place. In doing so, this assessment shows that the SFBF and its associated funds acted to advance equalities by protecting businesses in sectors that impact on the lives of those with protected characteristics disproportionately. Alongside the Coronavirus Job Retention Scheme (CJRS), the SFBF and its associated funds protect and preserve jobs in sectors which employ a disproportionately high number of people from among groups with protected characteristics particularly young people, women and minority ethnic groups. Data from the Office of National Statistics (ONS) shows that minority ethnic groups, women and young people have a significantly higher likelihood of being employed in the Retail, Hospitality and Leisure sectors than they are within other sectors of the economy. Financial support distributed through the SFBF and its affiliated funds also targeted those sectors which have instances of insecure employment and low pay and are least resilient to financial shocks. It is worth noting that data from the Department of Business Energy and Industrial Strategy’s (BEIS) Longitudinal Small Business Survey shows that a high proportion of businesses across the retail, hospitality and leisure sectors (78%) identified as having employees with protected characteristics. More detail on this is provided in the assessment against individual groups with protected characteristics is set out below.

But the SFBF and its associated funds do not only advance equality by preserving jobs, they also protect businesses in sectors where there is a disproportionately high number of women-led and ethnically minority-led businesses thereby protecting the livelihoods, assets and investments of those with protected characteristics. Data shows that the proportion of women-led and minority ethnic-led businesses across the Retail, Hospitality and Leisure sectors is higher than the average across all other sectors. Statistics from BEIS also show, however, that businesses within the Retail, Hospitality and Leisure sectors are significantly more likely to operate from specific business premises that are liable for Non-Domestic Rates. An average of 85% of firms across these three sectors identify as operating from designated business premises, 6% higher than the average across all sectors of the economy.

By supporting businesses required to close or adapt their operations as a result of regulations, the funding provided through the SFBF and affiliated funds will necessarily go towards retail, hospitality and leisure (RHL) businesses which are more likely to be owned by and/or employ people from groups with protected characteristics and in doing so will contribute towards advancing equality by helping to prevent against business closures and job losses in these sectors.

Eliminating Discrimination

While the SFBF and its associated funds were established specifically to support businesses in meeting overhead costs associated with operating from premises, it is important to recognise that many businesses impacted by restrictions introduced through the Regulations were not eligible for support through the SFBF and its associated funds. The following types of businesses have been identified as being impacted by restrictions but not eligible for support through the SFBF or its derivative funds:

• Businesses subject to specific restrictions but that do not pay Non-Domestic Rates i.e. Mobile Close Contact Service providers or B&Bs/Guesthouses that pay Council Tax)
• Businesses that operate from closed or restricted sectors i.e. personal trainers, exercise instructors and performers
• Businesses that rely on entering domestic premises i.e. cleaners and tradesmen
• Businesses in the supply chain of closed or restricted sectors i.e. food and drink manufacturers and wholesalers, taxi and private hire vehicle drivers.

Further detail is provided in the individual assessments below but evidence suggests that individuals with specific protected characteristics are over-represented across these groups. While specific data on the number of mobile close contact services is not available, the fact that 93% of people identified as working in the hair and beauty industries are women suggests that the vast majority of mobile close contact service providers, and therefore ineligible for the SFBF and its associated funds are women. Similarly, research by the UK Government’s Department for Transport on the demographic profile of the taxi and private hire vehicle sector shows that the impact of restrictions on this sector has a disproportionate impact on older men and individuals from minority ethnic groups. Further detail on the mitigating actions taken by the Scottish Government in order to support those sectors impacted by Covid-19 but ineligible for the SFBF and affiliated funds are set out below.

As part of assessing the impact of the SFBF on groups with protected characteristics, consideration has also been given to the variable awards given to businesses based on their rateable value and the sector in which they operated. This was done in the context of larger awards being given to hospitality businesses with a Rateable Value over £51,000 through the RHL January Top as well as the higher awards given to hospitality and leisure businesses comparative to non-essential retail (including close contact services) through the SFBF Transition Payment and Restart Grants. In doing so, we identified that hospitality businesses were eligible for up to £64,000 in financial support across the SFBF and its affiliated schemes depending on location and Rateable Value, the most of the three sectors. This compared to £45,750 for businesses in the leisure sector and £31,500 for non-essential retail. It is worth noting that, of the three sectors, businesses in the hospitality sector have the highest proportion of both women-led and minority ethnic-led businesses as well as employing the highest proportion of young people.

We recognise that a high number of women work in or own close contact services businesses which, through the SFBF, received less financial support than hospitality and leisure businesses.

Decisions on award levels for both the January Top up and the Business Restart Grant were, however, taken based on an assessment of the impact of restrictions on these sectors and the costs associated with restocking and resupplying following a lengthy period of closure.

Fostering good relations

Businesses within the RHL sectors are important spaces for social and community interaction providing an opportunity for engagement across and between groups with protected characteristics and helping to foster good relations between these groups. Businesses in the RHL sectors promote engagement between and across groups in a number of ways. As well being shared spaces, as highlighted above, there is a clustering of several different groups with protected characteristics in the RHL sectors including young people, women, minority ethnic groups and those experiencing socioeconomic disadvantage. By sharing workplaces this promotes close interaction and engagement between these groups including those with intersecting protected characteristics. In providing financial support to businesses in these sectors to remain financially viable through the restrictions, the Scottish Government is therefore acting to foster good relations between groups with protected characteristics.

Age: Older People and Children and Young People

There is extensive research on the detrimental impacts of restrictions introduced to control the spread of Covid-19 on children and young people. Particular attention has been paid to the impact of restrictions on the incomes and career prospects of young people both of which have been specifically recognised by the Scottish Government. Employment figures published by the Office for National Statistics (ONS) show the extent to which the impacts of Covid-19 on the labour market in Scotland have fallen disproportionately on young people many of whom are employed in sectors subject to restrictions including the hospitality, leisure and retail sectors which were all required to close or modify their operations through the Strategic Framework. 2019 data from the ONS related to the employment of young people shows the following:

• Hospitality - 37% of employees working in the food and beverage services and accommodation sectors were aged between 16 - 24 compared to an average of 12.3% across all other sectors.
• Leisure - 27% of employees working in the sport, amusement and recreation sector are aged between 16 – 24.
• Retail – 22% of employees working in the retail sector are aged between 16 – 24.

The long term ‘scarring’ impacts of the pandemic on the career prospects of young people have also been highlighted by organisations such as the Institute for Fiscal (IFS) and the Social Metrics Commission the latter of which has shown that young people (18 -24) are 7% more likely to experience a negative labour market outcome as a result of Covid-19 that those aged 25 – 44.

Of the groups of businesses identified as not being eligible for support through the SFBF the primary sector where young people appear to be disproportionately impacted is in the arts and creative industries sector where 24% of performers are between the ages of 16 and 24 comparative to their 12.3% labour market share.

Older people also experience disadvantage as result of the criteria determining eligibility for the SFBF and its associated funds. 44% of accommodation managers/proprietors in Scotland are over the age 55 compared to a labour market share of 20%. Similarly 41% of taxi and private hire vehicle drivers in Scotland are over the age 55 compared to a labour market share of a 20%.

Sex: Men and Women

An assessment of the restrictions introduced through the Strategic Framework similarly shows that, like young people, these also had a disproportionate impact on women primarily driven by two factors, high numbers of women-led businesses in the retail, hospitality and leisure sectors as well as a clustering of female employment within these sectors.

The Department of Business, Enterprise and Industrial Strategy’s Annual Business Population Survey (2019) shows that 15% of retail businesses are women-led, a figure which rises to 16% in the leisure sector and 21% in the hospitality sector. These are all above the average number of women-led businesses across all sectors which is 14%.

2019 data from the ONS related to the employment of women shows the following:

• Hospitality - 53% of employees working in the food and beverage services and accommodation sectors were women compared to an average of 48.8% across all sectors.
• Leisure - 40% of employees working in the sport, amusement and recreation sector are women.
• Retail – 61% of employees working in retail sector are women.

Both men and women experience disadvantage as a result of the eligibility criteria for the SFBF and its derivative funds which exclude specific business despite being impacted by Covid-19 as highlighted above. 91% of tradespeople and 95% of taxi and private hire vehicle drivers are men compared to a labour market share of 51.2%.

Conversely, 93% of close contact service providers, 84% of domestic cleaners and 53% of fitness instructors are women compared to a labour market share of 48.8%.

Race

The Department of Business, Enterprise and Industrial Strategy’s Annual Business Population Survey (2019) shows that 5% of retail and 5% of leisure businesses are ethnic minority-led, a figure which rises to 7% for the hospitality sector. These are all above the average number of ethnic minority-led businesses across all sectors which is 4%.

2019 data from the ONS related to the employment of women shows the following:

• Hospitality - 11% of employees working in the food and beverage services and accommodation sectors were from an minority ethnic group compared to an average of 4% across all other sectors.
• Retail – 6.4% of employees working in retail sector are from a minority ethnic group.

The hospitality sector has the highest proportion of non-UK nationals in the workforce in distribution, hotels and restaurants – 12.5% of its workforce were non-UK nationals^[1] in 2019.

According to Close The Gap’s report^[2], Black and Minority Ethnic women are more likely to work in a sector that has been shut down; more likely to be in insecure work which puts them at increased risk of loss of hours and earnings; and are concentrated in low-paid service sectors which are more susceptible to redundancies over the course of the crisis.

Minority Ethnic Groups are also disproportionately represented among some of business types impacted by restrictions but not eligible for support through the SFBF, particularly the taxi and private hire vehicle sector where those identifying as Asian British make up 37% of the sector.

Disability

Specific data on business ownership and employment by sector is not available to fully assess the impact of the SFBF and its associated funds on those with a disability. 9% of SME employing sole traders registered as having a disability.

In addition, 26.6% of the accommodation and food services sector workforce had a long-term condition or illness in 2019, compared with 27.5% for Scotland overall.

Religion and Belief

No discernible impact

Sexual Orientation

No discernible impact

Pregnancy and maternity

No discernible impact

Gender reassignment

No discernible impact

Marriage or Civil Partnership

No discernible impact

Socio-economic disadvantage: any people experiencing poverty

According to the Social Metrics Commission those employed prior to the crisis and already in the deepest forms of poverty have been most heavily impacted by the economic fallout of the pandemic. For example, compared to those more than 20% above the poverty line, those more than 50% below the poverty line have been more likely top been furloughed, had reduced hours or wages, or lost their job.

Impacts have also varied significantly between workers in different industries. For example, 81% of those working in hospitality and leisure have been negatively impacted, compared to just 16% in financial services.

Research by the Fraser of Allander Institute shows those employed in the tourism and hospitality sector - those hardest hit by Covid-19 - already face precarious employment, the lowest hourly pay of any sector, the lowest hours worked per week, and are more likely to be in poverty. The poverty rate for households with a worker in these sectors is 28%, compared to the Scottish average of 19%, with child poverty at 41% amongst these households, compared to 24% across Scotland.

The SFBF has therefore supported sectors which are predominantly low paid and insecure, with employees most at risk of slipping into poverty. It has prevented businesses from issuing redundancies and those who are often low-skilled having to find alternative employment.

Stakeholder Engagement:

We have engaged extensively with businesses and their representative organisations during the pandemic. In the year to March 2021 the Scottish Government had more than 1,270 ministerial engagements with business, including virtual conferences, roundtables and calls.

Engagement with business leaders included regular communication with HMRC, CBI, FSB, IoD, SCC, SCDI, SFE, STUC, Scottish Retail Consortium, Scottish Tourism Alliance and Scotland Food and Drink etc.

This provided an opportunity to listen to stakeholder views, test ideas, share information about progress and discuss and address specific issues identified by sectors and individual businesses.

Mitigations –

Recognising that specific businesses impacted by restrictions are not eligible for financial support through the SFBF and associated funds the Scottish Government has set up a number of other grant support schemes for the purposes of ensuring that those experiencing financial hardship, as a result of Covid-19 receive appropriate support.

This included schemes for the wedding sector, taxi and private hire vehicle drivers, accommodation providers that pay Council Tax rather than Non-Domestic Rates, as well as the Local Authority Discretionary Fund which identified businesses that operate from closed or restricted sectors those that rely on entering domestic premises and those in the supply chain of closed or restricted sectors as types of business that local authorities should consider supporting.

Next Steps (if any)

N/A

Declaration and Publication

I have read the Equality Impact Assessment and I am satisfied that it represents a fair and reasonable view of the expected equality impact of the measures implemented.

Signed:

Date: 18/10/2021