6. Estimate the economic impact of zoning, dispersing or closing down AE sites
This chapter describes the evidence gathered for the three suggested policies of zoning, dispersal and closing down the industry. Many of the issues differ between cities and are therefore dealt with on a city-by-city basis.
When investigating the effects of a dispersal policy we investigated dispersal within city centres and dispersal within a wider area in each city. The general consensus among the industry and other stakeholders is that AE establishments would not survive if they were forced to locate outside city centres, as they rely on alcohol related nightlife as their key business. Dispersing within city centres would produce a different effect within each individual city. In general the industry itself was not in favour of dispersal even within the city centre, and opinions of other stakeholders were mixed. The overall economic impact of dispersal would depend on the size of the proposed area in which the establishments were dispersed.
Aberdeen and Dundee
There was little support for dispersal in these cities. Aberdeen is already fairly well dispersed throughout the city centre, and Dundee has a very low-key industry. Dispersal outside the city centre was not favoured by the licensing board as a viable option due to possible adverse effects on property prices if AE establishments were dispersed more widely to existing suburban residential areas, and the fact that AE establishments would not survive.
It was also mentioned by the industry and economic development practitioners that if AE venues were dispersed too widely then associated areas may not attract the same number of visitors in Aberdeen.
The industry was against dispersal either within the city centre or to a wider area. It saw dispersal as irrelevant to solving any problems and argued that trade would be affected. The larger venues could survive outside Tollcross/Lothian road as they rely partly on reputation and e-bookings, however, none were in favour of this as the current area is in the centre of the nightlife zone. Wider dispersal outside the city centre would cause major problems for the industry and most businesses would be unsustainable - the industry is 'numbers driven' and needs the footfall found in the city centre.
Other stakeholders had mixed opinions regarding dispersal. Economic development practitioners argued that dispersal of AE within the city centre would be an improvement, as it would dilute the negative effects and erase the current 'sleaze area'. Tollcross would therefore improve as a residential and business location. Visit Scotland argued against this, stating that if AE venues were dispersed to other areas they would be harder to control and may impact on tourism and business outside the current unofficial 'tolerance zones'. A comparison was made with the closing of prostitution tolerance zones in Edinburgh, which has lead to increased complaints in other areas. There would be a problem of NIMBYs if AE venues were moved to residential areas.
As with Edinburgh, the industry view was that businesses would not survive outside the city centre. It was argued that dispersal within the city centre would have little effect as they tend to operate independently of one another and serve slightly different markets. The industry in Glasgow is not centred around any one area of the city centre, therefore businesses were fairly neutral towards a small zone dispersal policy.
The attitude of other stakeholders again reflects the localised effects of the AE industry in Glasgow. One aspect of dispersal within the city centre, that was seen as beneficial by the local authority, was that venues could be moved from specific locations that were felt to be unsuitable, such as in retail areas, to more suitable locations within specific night time entertainment streets. This was seen as having a positive effect on businesses previously next to AE establishments. However, there would be negative localised effects on the new areas, and the Council were keen to avoid the creation of a 'red light district' in Glasgow (see below).
There was little support for zoning AE establishments, either from the industry or from other stakeholders. There was a widely held perception that zoning would intensify existing problems associated with AE - particularly the downgrading of an area and subsequent problems for businesses trying to capture an upmarket or family market. Hence the economic impact of such a policy would be likely to be negative.
It was argued by the industry that the creation of AE zones could cause more argument, upset and opposition from residents and businesses of any area designated as a zone. In addition there was concern that prostitutes may be drawn into the zone. A zone could exist if confined to the 'clubland' area of the city centre, but most of the AE venues are already located there, albeit dispersed within this area.
Zoning AE in Dundee was perceived by some in the industry to be akin to creating ghettos, which could turn into red light districts creating further problems, such as attracting brothels and on street prostitution, resulting in the decline of a whole area.
Regulation relating to the way workers dance or the way the industry is advertised, was seen as more effective than zoning in controlling the industry.
Attitudes to zoning in Edinburgh were mixed. Although the AE establishments are already loosely clustered, the industry was against tighter zoning, stating that it would create a stigma that they did not want attached to their business and claiming that there was no evidence to support that zoning is necessary. Interestingly, they also perceived problems in that no existing residents and businesses in the proposed zone would support it, and the value of retail and residential property may be adversely affected if AE establishments were zoned too tightly.
Support for zoning came from other businesses that felt that it would be good for all businesses (both AE and non- AE) for AE to be separated. They argued that customers would know where AE venues were and would not disturb other businesses. Children would not be affected, as parents would know about the area and would not go there. In addition it was argued by businesses (although not be the police themselves) that zones would be easier for the police to control. Some businesses felt zoning was an option if confined to a small area (like Soho in London), rather than the current wide cluster found in Edinburgh.
There was wider support for a general 'night time zone' rather than a specific AE zone in Edinburgh. Separating businesses into day and night, and operating these in independent areas may be beneficial for both sectors.
There was little support for zoning in Glasgow. The industry saw zoning as counterproductive as it may result in overprovision in zoned areas. This could lead to a drop in standards as businesses compete. For example venues may overload with dancers, dancers may 'overstep the mark' and clubs may offer cheap drinks as an incentive, leading to drunkenness.
Other problems connected with zoning were the attraction of unlicensed and unregulated 'fringe' operations, also other activities such as prostitution and drugs. The Council drew a parallel with the Glasgow prostitution tolerance zone where people feel uneasy walking and driving. They argued that this may kill a whole section of the city and create a retail "dead zone" as very few businesses want to locate next to an AE establishment. Local neighbouring businesses drew a comparison with red light districts, such as found in Germany, that have problems with prostitution, drugs, violence and noise. It was also seen by the Council as important that no area of the city should put all its 'eggs are in one basket'.
Economic development practitioners also argued that zoning AE would have significant negative impacts on existing business in the zone area. Such a development may create a commercially sterile area and is likely to be detrimental to potential investors. In addition there is no area of Glasgow city centre that would be considered suitable for such a zone as every area is earmarked for high value added investment.
The only circumstance that neighbouring businesses felt zoning may work was if the zone was confined to an area of night time entertainment and away from established retail, office and residential streets.
Closing down the AE industry
The impact of closing the industry at a Scottish level as seen by Visit Scotland would be that the overall level of visitor expenditure would be likely to fall as AE is an integral part of much of the group tourism to Scottish Cities. Visit Scotland argued that if the AE industry was closed down, some of this tourism would go to competitor cities, both within the UK and abroad, particularly Eastern Europe, which is emerging as a serious competitor due to low prices of goods and services.
All dancers stated that they could find alternative employment if there were no opportunities in AE, however, those in Aberdeen and Dundee reported that they may not be able to match current earnings.
Estimates from the previous chapter indicate that the effect of closing the industry at a national level would be equivalent to between £4.1m and £6.5m in terms of annual output. In terms of employment there would be a loss of around 312 FTE direct jobs, and 378 FTE direct, indirect and induced jobs. The views on the impact at a city level varied from city to city as detailed below. However, the decrease would be much less that this if AE establishments converted to other uses ( e.g. clubs), although conversely there would be negative impacts on tourism etc. as discussed previously.
Aberdeen and Dundee
As mentioned earlier, economic development practitioners in the local authority regarded the AE industry as an important feature of Aberdeen as an international city. If the industry was closed, it was argued that visitors may spend less money and may have a less positive impression of Aberdeen as a place to do business.
Our primary research indicated that wages and turnover were higher in Aberdeen and Dundee than in Edinburgh or Glasgow, therefore the economic impact of closing the industry would be relatively high. Dancers reported that they would be able to source alternative employment, but that it may be difficult to match what they currently earn in AE. It was also reported that colleagues who are single mothers from disadvantaged backgrounds would definitely struggle to match earnings and may not be working at all if not employed in AE.
The quantitative impact of closing the industry in Aberdeen and Dundee combined is estimated as £379k and £599k lost annual output from the industry, plus around £1m lost annual expenditure from industry workers. There would be around direct 96 FTE jobs lost from dancers and other industry workers such as bar staff, security and management.
In terms of overall expenditure in the city economy, the effect of closing the AE industry in Edinburgh would probably be quite small. However, the impact on the Stag night business would be significant and would hurt certain sectors, such as hotels, restaurants and bars.
The industry and industry workers argued that closing venues may force the industry underground as the demand would still exist. It was argued that it may be better to keep it legal and controlled for the benefit of the workers. In addition, the police stated that if AE establishments were forced to close then owners may turn to other activities where money could be processed. This might not be a casino as they are tightly regulated, but would be other businesses that do not involve traceable stock.
Some neighbouring businesses felt that the impact of closing the industry could be positive as:
- The image of the old town around Grassmarket would be more in line with tourists' expectations as 'genteel and historic'.
- Levels of crime some felt to be associated with the industry would drop and the area would increase in value.
The economic impact in terms of workers would depend on the ability to find alternative employment without a significant drop in income. Although our sample was small, most of the dancers interviewed reported that this would not be a problem. Most of the dancers earned a decent wage, but were not on the levels of income often rumoured to be associated with the industry. The quantitative impact of closing the industry on dancers' earnings is detailed in Chapter 4.
"I could easily find work in other place, I have management experience. I would be OK income wise. There are not big bucks here. I just need to pay the rent and buy food."
"I would not have a problem getting another job. I am at college ( HND) and I have experience working in shops"
"No, I would be OK. Income from dancing is varied, but a secure job would probably provide just as much."
In quantitative terms the impact of closing the industry in Edinburgh is estimated as £497k to £783k lost annual output from the industry, plus around £787k lost annual expenditure from industry workers. There would be around direct 142 FTE jobs lost from dancers and other industry workers such as bar staff, security and management.
The effect of closing the AE industry was seen as small on a citywide basis. AE was not regarded by the local authority as an essential part of Glasgow city economy, and relatively less important than it is to Edinburgh.
The local authority also argued that closing would have a positive impact as AE related tourism was seen to displace other tourism. Closing down AE venues would diversify the tourist market and attract a better quality of tourist. This was compared to the experience of Dublin, where the tourist board backtracked on earlier policies and Stag and Hen nights are now discouraged. It would also free up areas of the city for other businesses.
It was also argued by the local authority that if the AE sector was closed, alternative outlets such as casinos would be heavily regulated and would not pose a problem. New casino developments would likely only be granted if part of a wider new development or redevelopment such as a hotel. If the decision was made only for Glasgow, neighbouring local authorities would be likely to take the same view as Glasgow regarding licensing, so there would be no overspill effect.
In quantitative terms the economic impact of closing the industry in Glasgow would be smaller than in Aberdeen/Dundee or Edinburgh. The impact is estimated as between £277k and £454k lost annual output from the industry, plus around £293k lost annual expenditure from industry workers. There would be around direct 74 FTE jobs lost from dancers and other industry workers such as bar staff, security and management.