Coronavirus (COVID-19) vaccine certification: evidence paper update

9. The Potential Economic Implications of Amending or Expanding Certification

9.1 Background

Analysis of the potential economic impacts of the introduction of certification were set out in the Evidence Paper and Business and Regulatory Impact Assessment (BRIA) published in September 2021^[168]. These considered the potential implications of the introduction of certification, set against the alternative of not introducing a certification scheme.

While the latter option was not thought likely to have any immediate financial implications for businesses, if the state of the epidemic required further more restrictive measures such as closures to be considered, the negative economic impact on these sectors was thought likely to be significant. The introduction of certification would allow specific high-risk settings, which had either been closed for long periods of time throughout the last 18 months or operating at reduced capacity, to remain open and to provide a safe experience for customers and to allow businesses to continue to operate.

This section builds on the analysis presented in the previous Evidence Paper on certification and the BRIA, to explore the potential business and economic implications that could arise were certification to be amended or expanded further, following on from the First Minister's Covid-19 update to Parliament of 16 November 2021. It also summarises emerging views of business stakeholder representatives, communicated since the implementation of certification began in October 2021.

9.2 Businesses and sectors affected

In the Covid-19 update to the Scottish Parliament^[169], the First Minister said the following with regard to vaccine certification:

"When the scheme launched, on 1 October, we judged that it was not appropriate at that time—given the imperative to drive up vaccination rates—to include testing as an alternative to proof of vaccination. However, we indicated that that would be kept under review. We will therefore be assessing, in the coming days, whether, on the basis of current and projected vaccination uptake rates, we are now in a position to amend the scheme so that, in addition to showing evidence of vaccination to access a venue, there will also be the option of providing evidence of a recent negative test result. That is already a feature of many other countries' certification schemes.

We are also considering whether an expansion of the scheme to cover more settings would be justified and prudent, given the current state of the pandemic. Again, let me stress that we have not at this stage taken a decision to extend the reach of the scheme. However, to allow us to engage openly with businesses in the coming days about the pros, cons and practicalities, I confirm that the kinds of setting that might be in scope are indoor cinemas, theatres and some other licensed and hospitality premises.

We would, of course, retain exemptions for people under 18, people who cannot be vaccinated or tested for medical reasons, people on clinical trials, and people who work at events or in venues that are subject to the scheme. Exceptions would also be retained for worship, weddings, funerals and related gatherings."

The First Minister indicated that consideration would be given to amending the existing scheme to incorporate proof of a negative Covid test, and to expansion of certification to additional settings. Amending the existing scheme would potentially affect those sectors and activities currently within scope of the certification system, including:

• Nightclubs and late night venues;
• Indoor cultural performance venues associated with live events, particularly larger venues that stage unseated performances;
• Outdoor venues associated with large cultural or sporting gatherings, such as larger sports stadia and racecourses;
• Conference centres, in instances where staging large scale seated or unseated live events, trade fairs, markets or exhibitions;
• Businesses involved in the organization and staging of live events, such as performers, event promoters, staging and production businesses, associated supply chain businesses;
• Ancillary businesses dependent on live events (e.g. food and drink sales, merchandising).

Expanding the coverage of the certification scheme would bring in additional settings within scope of certification. No formal announcement has been made of the scope of any expansion. Following on from the First Minister's statement, this analysis considers the potential implications were expansion of certification to include the following settings:

• Indoor cinemas
• Theatres
• Concert Halls
• Hospitality venues, including cafes, restaurants, pubs, bars, hotel bars and restaurants, and social clubs
• Cafes and restaurants in other settings, such as supermarkets, larger retail units, and other leisure settings.

9.3 Feedback from Business Stakeholders

In the period since introduction, business stakeholder responses have varied across different sectors of the economy that have been covered by certification requirements. The picture on impacts on business is still emerging, partly as a result of the policy having been introduced less than two months ago, and with legal enforcement only beginning on 18^th October 2021.

This section provides an overview of stakeholders' initial experiences of implementation and impacts from certification in the time since it entered operation.

Nightclubs and Late Night Settings

Nightclubs and Late Night Settings have been required to operate a 100% checking rate should they fall within scope of the regulations. Trade bodies have provided feedback to Scottish Government on both implementation issues and emerging business impacts, both through direct engagement with Scottish Government officials and via rapid membership surveys. In general, they have reported have reported implementation challenges and substantial turnover losses among members affected by certification.

Since introduction, trade bodies representing Nightclubs and Late Night Settings have consistently provided reports of negative impacts on footfall and revenues in affected business segments. Trade bodies have consistently provided reports of members experiencing reduced footfall and takings, with one trade body indicating that members were experiencing footfall reductions of 20%-40%, and falls in revenue of up to 45%-50% (in the case of some traditional night clubs)^[170]. There have also been incidences reported of individual premises changing their offerings and business models (such as through reducing opening hours or converting their premises) to avoid falling within the requirements of certification^[171].

Trade bodies have reported several sources of implementation challenges. These have included reports of varying degrees of awareness among customers of 'hybrid' venues of whether they require certification, reports of technical issues associated with the certification app, and reports of staff members being subject to increased anti-social behaviour associated with certification requirements. Trade bodies have reported that availability of door staff has been an ongoing issue, with requirements to employ SIA-accredited staff being a requirement of licenses.

Trade bodies' surveys of members have also provided reports of some members experiencing loss of staff or management time associated with implementing certification and increased overheads^[172].

Looking forward, trade bodies have begun to highlight concerns regarding potential cancellations of Christmas bookings for individual businesses as a result of certification, and of the potential impact of footfall losses from certification on the financial viability of affected businesses, particularly in conjunction with rising costs and repayment of Covid-related debt.

Large Events

Feedback from member organisations to Scottish Government officials has indicated that those affected may have experienced additional costs associated with implementation. There have also been anecdotal reports of reductions in ticket sales in some instances, and reduced capacities at some commercial events arising from certification.

Event sector stakeholders have highlighted that public awareness of certification among some attendee segments remains low, including older and international visitors. While there has been recognition that certification extends to nightclubs, stakeholders have reported some audience confusion around the range and extent of event settings that fall within certification requirements. Stakeholders have also advised of potential eligibility challenges from non-MHRA vaccines not being accepted, in the context of business events, and the potential additional costs that may be borne by community or not-for-profit events that fall within scope.

Event sector stakeholders have advised that requirements to check vaccination status have been added to existing checking arrangements around tickets, age verification and bags. This has led to anecdotal reports of increased wait times at events, queues and crowding at event venues. Event sector stakeholders have also provided anecdotal feedback of increased aggression towards security staff and stewards in some contexts.

Events sector stakeholders have also provided anecdotal evidence of business impacts. Individual events organisers have advised of larger drop-offs in actual attendance compared with ticket sales than would typically be expected. Individual events have also provided anecdotal evidence of small numbers of individuals being refused entry to specific events as a result of certification, and of refunds being requested, but with these potentially having varied by event type. There have also been examples where certification has been mentioned as a factor in organisation of specific events: certification is in operation in Edinburgh's Hogmanay, which will be operating at reduced capacity^[173]; while certification requirements, specifically the additional queueing time, were cited as one of the reasons for Glasgow cancelling the George Square Lights 'switch on' and Christmas market^[174].

Sporting Events

Certification requirements have also impacted on a small number of sporting events in Scotland. So far, five football clubs have been affected, along with football and rugby internationals.

Feedback from affected stakeholders has indicated that there has been generally good compliance with certification requirements among those attending matches. Check rates are reported as having been generally increasing, and there have been no reports of certification directly impacting on attendance as yet. However, initial issues with the app led to a focus on visual checks. This has been maintained but app usage is growing slowly. Stakeholder feedback also indicates that there is potential for inclement weather to impact on "scanability" of QR codes, and on paper copies.

Stakeholders have reported that additional stewarding has been necessary to implement certification as currently designed. Public safety and order remains critical and would override certification checks if necessary.

9.4 The Number of Businesses Potentially Affected by Amendment or Expansion of Certification

Estimated numbers of businesses and premises potentially affected by the certification requirements introduced on 1^st October were estimated in the previous BRIA and Evidence Paper. This section reproduces that analysis, as these businesses may lie within scope or be impacted by amendments to existing certification arrangements. It also provides estimates of business numbers associated with the settings set out above, to help illustrate the potential implications of amendment or expansion of certification to additional settings.

Events industry

Direct and indirect impacts on the Events Industry arising from certification would accrue to venue operators, but also potentially on event organisers, performers, support businesses and ancillary businesses, operating across a range of event types, depending on audience numbers. It is not currently possible to indicate the full range of individual events that would be impacted by the regulations, or the associated number of wider businesses affected. The following data therefore presents a summary of data on businesses associated with staging and supporting of events in Scotland overall.

It is estimated, based on the Inter-Departmental Business Register 2021 and 2020 Business Register and Employment Survey, that there are 3,725 Events Industry businesses in Scotland. Event catering businesses, performing arts, activities of sports clubs and activities of exhibition and fair organisers are such businesses in Scotland that fall under this classification.^[175] These businesses operate across 4,560 sites (as some businesses may have more than one site) and are estimated to employ around 42,250 people (2% of Scotland's jobs in 2020). ^[176]. Not all of these businesses would be in scope, however, we currently have no specific data on supply chains for these businesses. It is likely that most of these are based in cities and larger towns although it is not possible to obtain detailed data at this time.

The Business Register and Employment Survey 2020 indicates that, overall, more than half (54%) of employees in the sector work part-time.

Approximately 6,300 (11.1%) of workers in the events industry were self-employed. This is a slightly lower proportion than for the workforce as a whole (12.4%). The proportion of women working in the events industry is similar to the proportion in the overall workforce – 46.6% and 48.8% respectively. However, for Events Catering Activities, women make up 55.4% of the workforce and for Other Reservation Service and Related Activities they make up 72.9% of the workforce^[177].

Sports

For the sports sector, certification continues to potentially impact on Scottish Rugby home internationals, Scottish Football home internationals, and the home fixtures for all of Rangers, Celtic, Aberdeen, Hearts and Hibernian. The two Dundee clubs may occasionally be affected too. However, for domestic games one of the Glasgow and Edinburgh clubs will have a home fixture each week and there will be additional domestic and European cup matches where certification is required.

Late night venues with music, alcohol and dancing – Nightclubs and Hybrid Venues

It is estimated, based on the Inter-Departmental Business Register 2021 and 2020 Business Register and Employment Survey, that there are 130 businesses under the heading non-charity licensed clubs. Nightclubs and sexual entertainment^[178] businesses in Scotland fall under this classification. These businesses operate across 150 sites (as some businesses may have more than one site). In 2020, these were estimated to employ around 1,500 people. It is not possible to separate out sexual entertainment venues from this, though it is understood less than 20 operate in Scotland as of 2015. The vast majority of nightclub and sexual entertainment businesses are small (employing less than 50 people). We currently have no specific data on supply chains for these businesses. It is likely that most of these are based in cities and larger towns although it is not possible to obtain detailed data at this time.

• Based on the Annual Business Survey 2018, nightclub businesses had an estimated turnover of £84 million in 2018 (0.03% of Scotland's non-financial business economy turnover in 2018).
• Based on the Annual Business Survey 2018, nightclub businesses had an estimated Gross Value Added^[179] of £44.6 million in 2018 (0.05% of Scotland's non-financial business economy GVA in 2018).
• Based on the Inter-Departmental Business Register 2021, it is estimated that there are 130 nightclub Businesses in Scotland. These businesses operate across 150 Sites (as some businesses may have more than one site).

There are potentially premises that might be classed as pubs or restaurants in official statistics that could fall within scope of existing certification requirements.

Stakeholder estimates suggested that there may be around 300-400 premises across Scotland that operate as 'hybrid' venues (e.g. as pubs or restaurants during the day, and late night venues with music, alcohol and dancing at night)^[180].

Entertainment Venues – Cinemas, Theatres, Concert Halls

The cinema sector forms part of Scotland Leisure and Entertainment industry and includes a range of providers, including multiplex sites and independent operators. There were 71 fixed sites screening first-run film in Scotland in 2020, run by 38 organisations (31 multiplex sites and 4 independent chain sites run by 8 operators and 36 independent venues run by 30 operators).

It was previously estimated that there were 1,530 employees working in film exhibition in Scotland (based on Office for National Statistics and BFI methodology) however this figure is likely to be an underestimate as it removes multi-arts venues and misses organisations that aren't registered under the specific tax code for cinemas^[181].

Based on the data we have available, which is dependent on how businesses are registered, there are 590 registered businesses in the performing arts, support activities for performing arts and operation of arts facilities (IDBR 2019). Around 570 of these are classified as small businesses with 49 employees or less. These 590 businesses employ 4,400 people. Additionally, there is also a very high proportion of freelancers/self-employed working in the sector.

Hospitality Venues

The hospitality sector has a significant footprint within Scotland. The sector is a significant employer: in 2020, the sector employed around 137,000 people. This is comprised of: 41,000 employed in Hotels & Similar Accommodation; 36,000 in licensed restaurants; 29,000 in unlicensed restaurants & cafes; 4,500 in licensed clubs (which includes nightclubs, social clubs etc); and, 26,000 in public houses & bars^[182].

There are also a substantial number of business premises within the hospitality sector across Scotland. Scottish Government analysis based on the Assessor's Non-Domestic Rates Valuation Roll and the IDBR^[183] suggests there are approximately 13,600 business premises that could be classed as hospitality premises. These include over 3,200 public houses, almost 3,000 restaurants, approximately 2,700 cafes, over 2,200 hotels, and over 2,400 other licensed premises (such as social clubs and bowling clubs), in addition to premises classed as nightclubs.

However, it is also recognised that there are a range of hospitality settings that could be affected by certification, but which may not be contained within these estimates. These could include:

• Cafes situated within supermarkets, department stores, garden centres, bookstores, and larger retail units;
• Sit-in hospitality venues within transport hubs (e.g. airports, train stations, bus stations)
• Cafes situated within visitor attractions, museums and galleries;
• Cafes in sports facilities (e.g. leisure centres);
• Hybrid venues (particularly though not exclusively in rural Scotland) – such as post offices, village shops, community libraries, community arts centres.

It is currently challenging to provide precise estimates of business premises that include these facilities. Initial Scottish Government analysis based on data held by Food Standards Scotland^[184] suggests that there are of the order of 4,400 Pubs & Clubs recorded as food businesses at Scotland level; and over 10,700 premises recorded as restaurants, cafes or canteens, in addition to businesses identified as hotels and guest houses.

9.5 Potential Nature of Economic Implications

9.5.1 Context

The sectors that would be affected by certification are also those that have been hard hit by the impact of the pandemic as a result of restrictions that have required long periods of closures and limits on their operating capacity. Hospitality venues operated under significant restrictions on trade, and sustained periods of closure, between March 2020 and August 2021, as have venues like theatres, cinemas, concert halls, live performance venues and sports arenas.

Over the course of the pandemic, businesses in Accommodation & Food Services sector and Arts, Entertainment & Recreation sector have consistently been more likely to report decreased turnover than businesses across all sectors – 46.8% and 61.0% respectively, compared to 27.6% of businesses across all sectors in the period 4-17 October 2021^[185].

During this period, 9.1% of businesses in the Accommodation & Food sector, and 14.7% of businesses in the Arts, Entertainment & Recreation sectors reported their turnover had decreased by more than 50% compared to what would normally be expected, compared to 4.2% of businesses across all sectors.

Hospitality continues to experience difficult trading conditions; for instance, BICS data indicates that:

• Between 18-31 October 2021, 80% Food & Beverage Service businesses were 'fully' trading; 16% were 'partially' trading; and 4% had paused trading, but intended to resume within 2 weeks;
• Between 4-17 October 2021, 44% Food & Beverage Service businesses saw turnover below normal expectations for the time of year, a similar proportion to those seen since July. Within this, 28% reported turnover more than 20% below normal expectations;
• Between 4-17 October 2021, 31% expected turnover to decrease in the next 2 weeks.

Despite rapid growth in recent months, GDP in the Accommodation & Food Services sector as at August 2021 was still 11.2% below the position in February 2020. GDP in the Arts, Culture & Leisure sector was also 16.8% below its pre-pandemic position^[186].

The sustained losses incurred by many businesses in worst affected sectors will likely have a significant impact on resilience. It follows that borrowing will have increased, and cash reserves will have been depleted for many businesses. Even as profitability approaches pre-COVID-19 levels in the worst affected sectors, businesses in these sectors could be vulnerable to any further COVID-19 measures and restrictions, particularly as key support packages such as furlough scheme are withdrawn.

Some of the sectors potentially affected by certification are also seasonal businesses, with a substantial portion of annual turnover being generated in December. Pre-pandemic, the Food Services sector, which includes cafes and restaurants, was estimated to generate around 9.1% of its overall annual average turnover in December, compared with around 7.3% and 7.4% in January and February. The Beverage Services sector, which includes bars and pubs, was estimated to generate around 9.8% of its overall annual average turnover in December, compared with 7.2% and 7.1% in January and February^[187]. These estimates are for these sectors overall – individual businesses may generate a more substantial portion of their annual turnover in the lead-up to Christmas.

9.5.2 Potential Impact Cost Implications for Affected Businesses

The previous Evidence Paper and BRIA described a range of potential cost impacts on businesses associated with implementation and delivery of certification. These costs are described again below. These may already have been incurred by businesses covered by certification to date. However, for businesses affected by an extension or expansion of the certification scheme, these costs would likely be additional, and would accrue to a potentially large number of businesses and premises.

An extension or expansion of certification to a wider range of settings would potentially result in implementation costs for businesses and administration challenges at a time when businesses in the sectors have weak cash flow. Consequently, individual businesses may experience a deterioration in their operating conditions, diminishing their resilience to cope with further impacts.

Examples of costs that could arise may include:

• Additional resource for recruiting or training staff to check certification.
• Dedicated hardware to scan or read certification (mobiles/tablets) and/or install technology to check QR codes at automatic entry barriers.
• Cancellation of tickets and refunds
• Additional policing costs arising if there are scenes of disorder at sports stadia due to long queues caused by certification checks.
• For business events, additional complexity of exempting one element of the programme (e.g. standing receptions), with associated cost and reputational risk of denying delegates who are attending this and all other elements in a work capacity. Business event professionals have shared that the majority of high value business events in Scotland encompass receptions that would be in scope (500+).
• Loss in revenue if customers choose to visit venues and events which do not require certification (see next section of impact on footfall and revenue).

The extent of these costs would likely vary across businesses, depending on the scope to integrate them into existing staff functions, use existing IT infrastructure, or physical infrastructure. These costs may be higher for businesses which have not delivered a similar function historically, such as venues which have previously not had a need for door staff and may now require staff to check certification at the point of entry.

Staff costs represent a large component of the overall running costs of businesses in these sectors. For example, in Accommodation and Food Services sector staff costs account for 42% of total costs and in Arts, Culture and Entertainment sector staff costs account for 18% of total costs (compared to 25% across all sectors)^[188].

Overall impacts on staff costs would likely vary across businesses depending on several factors, particularly whether the regulations' requirements could be accommodated within existing staff responsibilities or would require additional staff. If the latter were required, costs would be influenced by factors such as numbers of staff required, and number of hours required each week. It is not currently possible to give an estimate of the overall magnitude of additional staff costs for the reasons set out above. However, hourly and weekly gross wage costs for occupational groups that would be affected by the regulations are set out the Table 5 below. It should be noted that these statistics do not include non-wage labour costs, such as Employers' NIC and pension contributions:

Table 5: Gross Mean Hourly and Weekly Pay, Selected Occupations, 2019

	Mean Gross Hourly Pay, £			Mean Gross Weekly Pay, £
	All	Part-Time	Full-Time	All	Part-Time	Full-Time
Security Guards & Related Occupations (SOC 9231)	£11.09	£12.50	£10.91	£409.30	£216.20	£467.60
Bar Staff (SOC 9265)	£8.37	£8.38	£8.36	£151.90	£123.30	£303.40

Source: ONS, Annual Survey of Hours and Earnings 2019, Tables 15.1a, 15.5a: Earnings and hours worked, region by occupation by four-digit SOC: ASHE Table 15 - Office for National Statistics (ons.gov.uk)

It is noted that there is a widely reported difficulty in securing sufficient numbers of stewarding and hospitality staff at present, due to labour shortages. For instance, in the period 18-31 October 2021, 61.2% of businesses in the Accommodation and Food Services Sector reported that vacancies were more difficult to fill compared to normal expectations for the time of year, and 52.7% reported having a worker shortage^[189]. Hospitality stakeholder organisations have highlighted challenges in the availability of SIA-accredited door staff^[190]. There is also evidence of continued strong growth in vacancies in areas like hospitality^[191]. These could create challenges for affected businesses across affected sectors in recruitment of numbers of staff required as a result of regulations. Stakeholder organisations have also provided anecdotal feedback of increased anti-social behaviour directed towards staff in some settings as a result of certification, which could create additional challenges for staff recruitment, retention and wellbeing.

The magnitude of these costs will be closely linked to the level of enforcement expected from businesses, the type and footprint of venues, and flow of customers at venues and events. Current certification arrangements have varied across settings: for instance, late night venues have been required to operate a 100% check on entry, given the option for a visual check. For large events, spot check arrangements have been in place.

Prior to the introduction of certification, it had been indicated by businesses that a 20% visual check at sporting events may be achieved with minimal additional resource, however the Scottish Football's COVID-19 Joint Response Group estimates that the cost of creating and staffing an outer cordon in sports stadia could cost upwards to £5,000 per game, and that is before technological infrastructure costs.

The technology investment may be a one-off expenditure for businesses, with requirements to issue staff with dedicated hardware to read certification such as mobile phones or tablets.

There may be additional costs associated with enforcement and subsequent policing due to Certification. Given the limited scope of the certification scheme we would anticipate these being absorbed as part of the work of EHOs and Police Scotland relating to enforcement and adherence at larger events.

Businesses involved in the organisation and staging of live events and ancillary businesses dependent on live events (e.g. food and drink sales, merchandising) may experience knock on effects from the impacts experienced by venues and events. The impact on business profitability has been raised consistently with many sectors highlighting that their members are already running with high levels of debt due to closures during the pandemic and therefore a reduction in customers or an interruption to normal trading will put some business premises in a more difficult financial position.

9.5.3 Potential Implications for Footfall and Revenue

Expansion of certification may also impact on footfall, which in turn could result in a loss of trade and revenue for participating venues, with consequent pressures on individual businesses' viability.

The previous Evidence Paper and BRIA described the potential for impacts on footfall and revenues for businesses affected by certification. It is challenging to directly identify the impact of certification on losses of footfall and turnover experienced by individual businesses, owing to the relatively short space of time that certification has been in place, and potential impacts from other contributory factors. However, emerging reports from stakeholder organisations in the hospitality sector suggest that nightclubs and late night settings affected by certification have experienced substantial reductions in footfall and revenues since introduction of certification^[192].

However, for businesses affected by an extension or expansion of the certification scheme, footfall impacts would potentially be additional, and could be felt by a potentially large number of businesses and premises.

Footfall in the settings that currently fall within certification requirements, or could fall within them, is potentially substantial. YouGov polling for 2-4 November^[193] suggests 44% of those polled had visited some form of hospitality venue – any cafes, restaurants, pubs or bars - in the previous week.

Polling evidence for 2-4 November also suggests that, in the previous week:

• 33% had sat inside a café or restaurant;
• 20% had sat inside a pub or bar;
• 9% had visited a DIY store or garden centre;
• 8% had visited a museum, gallery, library, cinema, or theatre;
• 5% had been in a nightclub or late night venue;
• 10% had been to any sort of venue/event eligible for certification (a nightclub or late night venue or large event)..

Generally levels for each of these are higher among 18-29 year olds than other ages (with the exception of garden centres/DIY stores). Pre-pandemic, there was also evidence to suggest that larger portions of 16 to 24 year olds, 25 to 34 year olds, and 35 to 44 year olds had visited cinemas and attended live music events in the previous year than the share of the population overall. However, a lower share of 16 to 24 year olds and 25 to 34 year olds had visited the theatre than the population overall^[194].

Footfall could be impacted in the following ways:

• Those without certification would be refused entry (which in turn depends on numbers vaccinated)
• Others may be reluctant to attend if non-certificated friends were unable to attend
• Entry delays could deter customers if onerous.

The extent of economic harm would arise from the numbers of unvaccinated people within the population overall, and those who are not fully vaccinated in the previous fortnight to expansion at the point at which certification requirements would come into effect. If people within this group were unable to enter settings, this would represent a loss to the potential customer base to affected businesses and sectors, and therefore a source of economic harm. The depth and duration of economic harm would depend on the speed with which people became eligible for certification, and the availability of alternatives to vaccine certification, such as a negative test result.

Under the current requirement for a minimum of 2 weeks between individuals receiving their second dose of vaccine and being eligible for certification, vaccine update data^[195] suggests that:

• Around 88.1% of the overall population aged 18+ had received two doses of vaccine by 17 November, and would therefore be eligible to access certification by 1st December.
• Among younger age groups, this proportion fell to 69% of those aged 18- 29, and 77.6% of those aged 30-39, and 87.7% of those aged 40-49.

Should those currently unable to access certification be unable to access premises that require it, this could generate reductions in footfall and turnover for affected premises. In settings where tickets are purchased in advance, it may also generate requests for refunds, creating additional cashflow challenges for individual businesses.

It may be possible that, going forward, custom could increase if customers feel safer, particularly amongst higher spending older customers. Options that include proof of negative Covid test results (e.g. lateral flow tests) would offset economic harm to a degree because it would increase the number of potential customers able to access the venues (given that not all people eligible to have double vaccination have done so, for a variety of reasons). This would apply to business affected by potential expansion of the scheme, and those that already fall within existing requirements. Some businesses may also choose to offer lateral flow tests to customers on arrival, potentially increasing their costs.

9.5.4 Wider impact on consumer choice and markets

Certification will potentially restrict some consumers' ability to attend venues affected by certification, and potential displacement to less regulated settings, such as private house parties. This may place increased pressure on businesses involved in these activities through reduced footfall and turnover, with consequent pressures on business viability. This pressure may encourage business exit if sufficiently severe and long-lasting; however, it will also be influenced by consumers' decisions around vaccine uptake, and the duration and severity of the wider pandemic.

9.5.5 Impacts of closure

However, if the state of the epidemic requires further more restrictive measures such as closures to be considered, the negative economic impact on these sectors is likely to be significant.

COVID-19, and previous restrictions introduced to control the virus, have substantively affected the hospitality, events and cultural sectors. For instance, during the first lockdown output fell significantly over the month of April 2020: by 77.2% in Accommodation and Food Services and by 44.6% in Arts, Culture and Recreation sector. When further restrictions were imposed on Accommodation and Food Services in 2021 output fell 33.7% over the month of January 2021. These figures highlights the potential order of magnitude of loss in economic output that could arise from closure^[196].

Relative impacts of the pandemic on sector viability have varied between sectors and business size bands, with sectors more seriously affected by restrictions for longer periods have endured longer periods of lack of viability (e.g. Accommodation & Food Services, Arts, and Entertainment & Recreation). Over the course of the pandemic, businesses in Accommodation & Food and Arts, Entertainment & Recreation sectors have consistently been more likely to report decreased turnover than businesses across all sectors.

The sustained losses incurred by many businesses in worst affected sectors will likely have a significant consequences for resilience. It follows that borrowing will have increased, and cash reserves will have been depleted for many businesses. Even as profitability approaches pre-COVID-19 levels in the worst affected sectors, businesses in these sectors could be vulnerable to any further restrictions, particularly as key support packages such as job retention scheme are withdrawn. Unlike the first and subsequent lockdowns, the support schemes in place in future will be different with, for example, the furlough scheme having ended in September 2021. This would exacerbate the economic impact of closure for businesses in these sectors.