Publication - Impact assessment

Coronavirus (COVID-19) domestic vaccine certification: business and regulatory impact assessment

Business and Regulatory Impact Assessment considering the impacts for businesses, sectors, and consumers of the domestic Covid Vaccine Certification scheme.

Coronavirus (COVID-19) domestic vaccine certification: business and regulatory impact assessment
Options

Options

Options Considered

1. Do not introduce Certification – continue with existing baseline restrictions including in higher risk settings

2. Introduce voluntary, non-regulatory Certification in higher risk settings

3. Introduce mandatory Certification in higher risk settings

Options Description

1. Do not introduce Certification – continue with existing baseline restrictions including in higher risk settings

This option would entail continuation of existing measures, such as:

  • Face coverings
  • Check-in Scotland app
  • Track and trace
  • Capacity limits retained along with associated exemption process

2. Introduce voluntary, non-regulatory Certification in higher-risk settings

This option would feature:

  • Voluntary certification at the request of venue/event of customers
  • Not in regulations
  • Implementation supported through Scottish Government Guidance
  • No formal enforcement to ensure compliance

3. Introduce mandatory Certification in higher risk settings and remove capacity limits from regulations.

This option would feature:

  • Certification for access to specified settings required for entry
  • Mandated in regulations
  • Public use of paper vaccine certification or digital NHS Scotland Covid App NHS
  • Event/venue use of Verifier App – NHS Scotland Covid Check app to verify QR code
  • Implementation supported through Scottish Government Guidance

Sectors and Groups Affected

These Regulations will affect:

  • Late night venues with music alcohol and dancing;
  • 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 race courses;
  • Conference centres, in instances where staging large scale seated or unseated live events, trade fairs open to the public, 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;
  • Business events that entail a 'peripheral' reception or function outside of the core hours of the event, which would not be excepted should they meet the criteria for certification. Business event professionals note that the majority of high value business events in Scotland encompass receptions that would be in scope (500+);
  • Ancillary businesses dependent on live events (e.g. food and drink sales, merchandising);
  • Prospective attendees at live events;
  • Local Authorities, as they would be required to undertake monitoring and enforcement activities arising from regulations.

Assessment of Options

This BRIA has set out the relative costs and benefits of options with the intended effect of suppressing the virus whilst acknowledging and minimising the economic harms faced by businesses.

Option 1: Do not introduce vaccine certification – where baseline measures are in place, we continue with them including in higher risk settings

This option would represent continuation of existing measures in higher risk settings, but no new or additional requirements regarding Certification, either on a voluntary or mandated basis. However, the state of the epidemic may require further more restrictive measures and even closure.

Costs

This option is not likely to have any immediate financial implications beyond those associated with continuation of baseline mitigation measures.

Our Strategic Framework provides the context and principles for our response to COVID-19 and our strategic intent, which is 'to suppress the virus to a level consistent with alleviating its harms while we recover and rebuild for a better future'. Previous restrictions on the activities associated with these higher risk settings have involved reductions in crowd capacities, or temporary closure of premises.[10] As well as the economic costs, closures and restrictions have impacted on people's overall health and wellbeing. A limited, targeted system of certification is a proportionate alternative to the risk of more stringent measures and further periods of closure for higher risk settings.

Covid-19, and previous restrictions introduced to control the virus, have had a substantial impact on these sectors. Estimates of direct impacts on GDP are not available from official statistics for nightclubs and live events venues as a standalone part of the economy. Rather, they are contained within broader sections of the economy who have experienced significant impacts. For instance, during the first lockdown output fell significantly over the month of April 2020: by 77.0% in Accommodation and Food Services and by 42.6% in Arts, Culture and Recreation sector. When further restrictions were re-imposed on Accommodation and Food Services in 2021, output fell 30.5% over the month of January 2021. These figures highlight the potential order of magnitude of economic loss that could arise from closure. [11]

The 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 enduring 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 – 44.0% and 56.1% respectively, compared to 27.1% of businesses across all sectors in the period 23 Aug to 5 Sept 2021. In this latest period, 11.6% of businesses in the Accommodation & Food Services sector, and 17.9% 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 4.4% of businesses across all sectors.[12]

The sustained losses incurred by many businesses in the worst affected sectors will likely have a significant impact on their resilience. It follows that borrowing will have increased, and cash reserves will have been depleted. For example, the Night Time Industry Association have suggested that the 'typical premises' in the night-time industry has taken on around £150,000 in debt as a result of Covid-19.[13] Even as profitability approaches pre-Covid levels in the worst affected sectors, businesses in these sectors could be vulnerable to any further restrictions, particularly as key support packages such as the Coronavirus Job Retention Scheme are withdrawn. This would exacerbate the economic impact of closure for businesses in these sectors.

The risk of additional restrictions, similar to those existing prior to August 2021, being considered or re-imposed is considered greater under this option.

Benefits

There would be little additional public health benefit in the adoption of Option 1, over and above that arising from continued use of baseline measures in higher risk settings.

Under this option, affected businesses would continue to trade under current conditions, and would not be required to adhere to any further restrictions. They would also not incur any additional business infrastructure and staffing costs with regard to Certification.

Option 2: Introduce voluntary, non-regulatory, Certification in higher risk settings

Under this option, it would be at the discretion of individual businesses and events venues to choose whether to require evidence of vaccination from customers at point of attendance. Guidance would be provided by the Scottish Government and there would be no formal monitoring of compliance or enforcement.

Costs

Depending on the choices made by venues and customers, this option could impact trade and revenue for participating venues either positively or negatively, adding to pressures on individual businesses' viability.

If businesses chose to implement Certification, they would potentially incur direct financial costs arising from ensuring compliance, such as installation of IT hardware and software or hiring and training additional staff to check customers' vaccination status. The extent of these costs would likely vary across businesses, depending on the scope to integrate them into existing staff functions, IT or physical infrastructure. Additional costs would be incurred by participating businesses, but not by those electing not to take part.

Businesses choosing to implement Certification could potentially be perceived by some customers as less risky environments. They could also conversely lose some customer footfall: people without vaccination status would be refused entry, and others may be reluctant to attend if entry delays were onerous or their friends were unable to attend: data from Scottish surveys conducted by YouGov show that just over a quarter (28%) of respondents agree that the scheme is unfair on those who are not vaccinated.[14]

Non-participating businesses could experience reputational impacts, with perceptions of being 'riskier' venues. This could generate loss of trade and revenue.

Voluntary use of Certification by businesses could lead to a transfer of unvaccinated customers to non-participating venues and events, which could increase the risk of transmission within these settings.

Benefits

This option would have more public health benefit than Option 1, with some positive impact on reducing the risk of transmission in higher risk settings. However, this benefit would be limited for two reasons. First, it would be unlikely that all relevant businesses would choose to implement Certification. Secondly, even where business chose to implement it, there would be no means of ensuring that they do so effectively since, by definition, there would be no enforcement.

Participating businesses may receive reputational benefit from putting controls in place, and being perceived as less-risky environments. They may also receive additional footfall and revenues as a result.

Option 3: Introduce mandatory Certification in higher risk settings and remove capacity limits from regulations

Costs

Under this option, those without vaccine status would be unable to gain entry to late night venues with music, alcohol and dancing, or specified indoor and outdoor live events.

Costs from this option will potentially arise from: reductions in footfall and attendance at venues and events covered by the Regulations; cancellation of events and refunds to customers; associated cash-flow impacts; and additional direct costs incurred by affected businesses to ensure compliance with the Regulations.

Conversely, as the percentage of the population who are vaccinated increases, implementing certification could potentially be perceived by some customers as creating less risky environments. The removal of capacity limits and exemptions may free up resource for event planners and local authorities which can be diverted to implementation of Certification, thereby reducing costs.

A limited, targeted system of certification is a proportionate alternative to the risk of more stringent measures and further periods of closure for higher risk settings which would have significant financial implications for the businesses affected. The policy would be in force from 5am on Friday 1 October 2021, although would not be subject to enforcement until 18 October 2021. We will allow a period of slightly more than two weeks – until 18 October – before a business would face any enforcement action for non-compliance with the requirement to operate a reasonable system and maintain a compliance plan. This period – effectively a grace period – will allow businesses to test, adapt and build confidence in the practical arrangements they will have to introduce to comply with the scheme. The policy will be subject to three-weekly reviews.

Scottish Ministers will also continue to assess whether any less intrusive alternative measures could be introduced to achieve the same combination of policy objectives in respect of the higher risk sectors concerned. The current default position would be that the certification provisions, along with the rest of the Principal Regulations would be due to expire on 28 February 2022.

  • Loss of revenue through reductions in footfall and attendance

Businesses subject to Certification may experience a reduction in customer footfall and attendance, as those without proof of vaccination would be refused entry. Customers may view Certification as a barrier, especially if groups socializing together are divided into certified and non-certified. This could lead to a reluctance to visit venues and attend events where Certification is needed, opting to visit venues and events which do not require it. Those affected may also choose to stay at home. Taken together, these may result in loss of direct footfall for businesses.

The anticipation of delays in entry and experience of the customers entering venues and events where Certification is required may influence choice, opting for less onerous options. Loss of trade and revenue for participating venues could heighten pressures on individual businesses' viability.

The extent to which unvaccinated groups will reduce footfall in nightclubs and adult entertainment venues, and attendance at live events, is currently unclear. Current vaccination uptake data (see Table 1 below) indicates that notable minorities within younger age groups may not have taken up both vaccine doses by the point at which Certification would be required under this option.

Table 1: Vaccination Uptake, by Selected Age Group. Source: PHS Dashboard.
  Taken Up First Dose by 23rd July Taken Up First Dose by 26th September Received Second Dose by 26th September
% Total (nearest 000's) % Total (nearest 000's) % Total (nearest 000's)
Aged 18-29 70.4% 587.5 76.4% 637.2 62.9% 524.7
Aged 30-39 80.1% 584.5 83.4% 608.7 74.6% 544.3
Aged 40-49 90.0% 607.1 91.5% 617.0 86.3% 581.9
All aged 18+ 89.8% 3,987.6 91.8% 4,076.8 86.0% 3,818.6

On Monday 20 September, second dose uptake was 83.8% for those aged 16 and over. Forecasting suggests a second dose coverage of the 16+ population of between 83.9% and 86%, with a central estimate of 84.3% by 30 September. Trend analysis suggests that first dose coverage of 16 and 17 year olds may reach between 73.1% and 78% (central estimate: 76.1%) by 30 September. Also on Monday 20 September first dose coverage for this age group was 69.6%. Applying forecasting to 18 to 29 year olds indicates a second dose coverage of between 62.6% and 66.4% by 30 September. Similarly, for 30 to 39 year olds, second dose coverage is estimated to reach between 74.6% and 76.2% by 30 September.

There is some pre-pandemic evidence to suggest that attendance at live music events varies by age. For instance, in 2019, 37 per cent of adults were estimated to have attended a live music event in the preceding 12 months. This rate was higher among 16-24 year olds (50 per cent), 25-34 year olds (45 per cent), and 35-44 year olds (39 per cent).[15] However, there is limited data available on the demographic characteristics of those that attend late night venues with alcohol, dancing and music, and live events of sufficient scale and characteristics to fall within the requirements of this option.

It is also currently unclear whether those who attend late night venues with alcohol, dancing and music, and live events have greater or lesser likelihood of having been vaccinated than those in younger age profiles overall.

The data set out in Table 1 may suggest that individual businesses with large shares of those aged 18-29 in their customer base could be initially exposed to loss of footfall and revenue under this option due to their customers being unable to show proof of vaccination. Substantial loss of footfall over a sustained period of time may present challenges for individual businesses' financial positions. The scale of potential exposure would be expected to diminish over time, as larger numbers of people become vaccinated. The duration of impact would be influenced by uptake among younger groups, and preferences for alternatives.

In addition, industry stakeholders have highlighted that there may be negative impacts arising from groups of customers choosing to avoid venues where certification is required in response to some of their members not having appropriate vaccination certification. There may also be impacts on footfall at individual venues should the process of checking certification add to the time taken to enter venues. However, there may also be improved footfall and associated revenues from increased perception of venues requiring certification as being of lower risk than alternatives. YouGov polling data for Scotland in late September suggests that, while for one in three (30%), such a scheme would make them more likely to visit a venue or event that requires it, just under one in five (19%) say that it would make them less likely to do so. At the same time, over two in five (45%) would like to see the scheme rolled out to other types of events and venues.[16]

  • Loss of revenue through cancellation of events and customer requested refunds

Live events businesses, including concerts and trade fairs open to the public, may also experience additional impacts under this option if unvaccinated customers who had bought tickets for events before the commencement of this option are subsequently unable to attend. This may generate demand for refunds or transferability of tickets leading to additional cash-flow pressures for event organisers who may not be protected in Terms and Conditions, as it was not a stated condition of entry.

Customer cancellation costs may partly come from overseas visitors who have difficulties proving their vaccination status. The Verifier app for business has been developed to be able to read QR codes from the other UK nations as well as from any individual using the EU Digital Covid Certificate scheme. However, there is still a risk of lost business at larger events that have a significant international audience beyond the EU. For example, Edinburgh's Hogmanay in 2019 had visitors from 58 different countries.

If live events businesses are unable to ensure that their show is financially secure in advance – through guaranteed ticket sales – they may cancel events. Equally, if ticket sales are at risk, there could be a subsequent impact on the ability of event organisers to secure exhibitors, performers and sponsors – a major source of revenue – and similarly may cancel events due to a lack of viability. Cancellation of events may also arise if the direct costs of ensuring compliance, such as additional stewarding, threaten the viability of the event. Cancellation of events would impact on a number of sectors, including the tourism industry.

  • Direct costs to ensure compliance and enforcement

The NHS Scotland Covid App will be provided for free, the accompanying Guidance on how to implement within businesses now being live on the Scottish Government website. Under this option, businesses could incur direct financial costs to ensure compliance. These could include one-off costs associated with IT hardware to allow staff to check customers' vaccine status, on-going costs such as hiring and paying additional staff to check it, and recurring costs associated with staff training.

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 do not charge for entry and have previously not had a need for door staff but may now require some to check vaccination status at the point of entry.

Staff costs represent a large component of the overall running costs of businesses in some of these sectors. For example, in the Accommodation and Food Services sector overall, labour costs are estimated to account for 42% of total costs at a sectoral level, compared to 25% across all sectors, while in Arts, Culture and Entertainment sector labour costs are estimated account for around 18% of total costs.[17]

Overall, impacts on staff costs would likely vary across businesses depending on several factors, particularly whether the Regulations' requirements are accommodated within existing staff responsibilities or require additional staff. If additional staff is 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 in Table 2 below. It should be noted that these statistics do not include non-wage labour costs, such as Employers' NIC and pension contributions:

Table 2: Gross Mean Hourly and Weekly Pay, Selected Occupations, 2019. Source: ONS, Annual Survey of Hours and Earnings 2019, Tables 15.1a, 15.5a
  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

It is noted that there is a widely reported difficulty in securing sufficient numbers of stewarding staff at present due to labour shortages, which could be exacerbated during COP26. There is also evidence of continued strong growth in vacancies in hospitality staff.[18] Both of these could create challenges for affected businesses in recruitment staff required as a result of the Regulations. However, it is possible that more people could be encouraged to return to the industry if they perceived the workplace as less risky.

The magnitude of these costs would be closely linked to the level of enforcement expected from businesses, the footprint of venues and flow of customers at venues and events. The Regulations would impose a legal requirement on the person operating the business or premises to implement a reasonable system to ensure that only those fully vaccinated or exempt are admitted, with guidance used to set out what reasonable measures may be in different settings. In order to achieve our aims, the Scottish Government has proposed that a reasonable system would include enabling businesses to check vaccine certificates initially either visually or by scanning the QR code, with a view that the number being scanned increased over time. For late night venues, and for smaller events, the expectation would be that this would transition over the first month of operation to a 100% check on entry, given the option for a visual check. For large events, the Scottish Government has proposed that what is reasonable should be assessed by business on a venue by venue basis, after taking account of the Scottish Government's guidance.

It has been indicated by businesses that a 10-20% visual check at sporting events may be achieved with minimal additional resource. 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 of £5,000 per game, 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.

It has been suggested in engagement with sports stakeholders that providing scanning technology to stewarding staff to check QR codes, if it were a requirement, could cost in the region of £35,000 at our largest sports stadia.

Alternatives to staff checking certification in person are being considered, with Scottish football clubs considering the potential to pre-load vaccine certification on to season ticket databases to minimise costs and disruption on match days due to the high proportion of season ticket holders attending matches. The development of such capabilities would require an initial investment and ongoing administrative costs to operate. It is not clear what the cost of this infrastructure would be at this time.

This option may have further financial impacts on events which run over a prolonged period of time such as trade fairs and exhibitions which often run over a number of days. The combination of extended event times and changeover in attendees may require additional staffing capacity to allow for certification checks, in addition to standard ticket checks.

For business events there is additional complexity of exempting one element of the programme (e.g. standing evening 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+).

There may be additional costs to Option 3 associated with enforcement. The Local Authority Covid-19 Expert Officer Group has estimated the costs to Local Authority Regulatory service at £225,000, based on the assumption that there are 2,000 businesses and 500 events in scope in the initial 6 months. However given the limited scope of the scheme it may be possible for these to be absorbed as part of the work of Environmental Health Officers. Subject to the repeal of capacity limits on live events, the local authority resource could be re-directed to support implementation of Certification.

It is noted that through stakeholder engagement businesses noted that there is a significant risk to the reputation of businesses based in Scotland or those holding events in Scotland that cannot be quantified. But this could also be used to demonstrate that Scotland is a safer place for events to take place and is similar to the approach of many other countries.

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.

  • Impact of fluctuating levels of restrictions

There is a long lead-in time to plan and prepare for most events. As such, irrespective of the size of the enterprise, fluctuating levels of restrictions are particularly difficult for events as organisers have little certainty about whether their event will actually be able to take place, resulting in them carrying significant risk. This is exacerbated by the lack of availability of cancellation insurance for events due to the pandemic. A reinsurance scheme has recently been introduced by the UK Government[19]. However, it is unlikely that those events covered by Certification would be eligible for insurance to cover costs of implementation as the insurance policy has to be in place before the measure affecting operation if the event is announced. The introduction of Certification halfway through the planning process of an event may lead to disruption as it would entail additional costs to businesses, as outlined in the Options section. On the other hand, Certification could increase that sought-for certainty that the event will take place.

Benefits

This option would result in the most benefit to public health and would reduce the risk of infection and transmission of the virus and subsequent hospitalisations and pressure on the NHS. SAGE said that one approach to reducing the risk of non-isolated cases entering high risk settings is a COVID certification scheme - based on negative testing, vaccination, or proof of prior infection. SAGE considered with a medium confidence that a certification scheme could have medium effectiveness.[20] We acknowledge that the public health impact would grow as the percentage of certification checks is increased, recognising that operators may need to take a graduated approach to building up the percentage of checks. As the frequency of checks rose, with both customers and businesses getting used to the scheme, the robustness of the scheme from a public health perspective would increase.

Reducing transmission would benefit business as it would reduce the likelihood of implementing more onerous restrictions or closing sectors completely.

There may also be additional benefits to affected venues and businesses should this option result in a competitive advantage for settings in scope, as they would be perceived as 'less risky' environments. This may provide reassurance to previously reluctant or risk-averse customers and encourage greater attendance, with positive revenue impacts. This is supported by evidence on public attitudes: research carried out by YouGov for the Scottish Government highlighted attitudes towards the benefits and concerns of a Certification scheme. Around three quarters (74%) would be happy to share their vaccination status or test results via a certification scheme to allow entry to a venue and 62% say that this would make them feel more comfortable if they were to go to a venue or an event (up from 58% in early June).[21] More recent polling data for Scotland shows that over half of all adults (56%) say that they support the introduction of Certification, with only slightly fewer (52%) believing that this scheme is a good way to help control the spread of the virus. Around a quarter (26%) oppose the scheme.[22] Earlier data from spring, such as a British-wide survey on the requirement of vaccine passports between 26 March – 9 April, showed that there was 72% support for their use at large public events (vs 63% average comparators).[23] Further UK-wide polling conducted on 7-8 April with 1,705 adults indicated that respondents were most supportive of using 'Covid certificates' in large capacity venues such as music festivals (62%) and sports stadiums (62%), closely followed by six in ten (60%) who would support nightclubs requiring patrons to show evidence they are immune or have recently tested negative for the virus.[24]

Option selected: Option 3

As part of a package of mitigation measures, such as mandatory face coverings in some settings, provision of contact details in hospitality, test and protect with support for people to self-isolate and quarantine requirements for high-risk international arrivals, Certification should ensure that only fully vaccinated individuals or people who are exempt are present at these events, reducing the risk of infection and severe illness leading to hospitalisation amongst the attendees. SAGE have acknowledged the potential benefits of introducing a vaccine certification scheme in conjunction with a package of other NPIs to limit contact between infected and susceptible individuals, thereby minimising the risk of infections and serious disease.

Therefore, based on the current scientific evidence and balancing the direct harm of Covid (Harm 1) with the harm on wider society and the economy (Harms 2, 3 and 4), Option 3 has been deemed proportionate to protect public and economic health. Initially, the scheme will not include a negative test result as an alternative to proof of vaccination, but this will be kept under review. At this stage, we do not consider that including testing results would be appropriate and, indeed, could undermine one of the policy aims of the scheme: to increase vaccine uptake. Also, it is important at this stage to prioritise PCR lab capacity for Test and Protect purposes and while promoting regular LFD tests is an extremely important aspect of our overall approach, further work would be required on an optimal approach to incorporating testing, including consideration of the appropriateness of self-testing in this context.

At this point in time, Scotland will be the only European country that will adopt a vaccine only certification scheme with no option to provide a negative PCR or antigen test result or proof of recovery from a previous Covid-19 infection within a predetermined time period. The proposed certification scheme in Scotland is also narrow in scope compared to most comparator countries with some countries requiring certification for all indoor settings.


Contact

Email: covid19-certificationhub@gov.scot