Covid-19: Support for UK Industries

Part of the debate – in the House of Commons at 4:34 pm on 25th June 2020.

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Photo of Richard Thomson Richard Thomson Shadow SNP Spokesperson (Business and Industry) 4:34 pm, 25th June 2020

This is a timely debate that has not just highlighted the concerns of those who have put their names to these petitions but will have widespread resonance far beyond them. We have heard many excellent contributions this afternoon, with concerns raised covering a wide spectrum of sectors, including arts, tourism, childcare, events, aviation and steel—a full sweep of the economy—and enterprises of all sizes.

The UK Government package, as Anthony Browne said, was put together at speed, and as we have heard, many significant gaps have been identified. On the furlough scheme, for example, I need not dwell on the pivotal date of 19 March, which has left far too many people reliant on the good will of former employers if they are to benefit from it. The self-employed support scheme, which was unveiled after this House had broken up for the Easter recess, missed out those who were newly self-employed. Directors also missed out if they were remunerated through dividends. This makes the case, I think, for a universal basic income in that we know who everyone is, and if we give them the money to get through, then nobody, by definition, will have fallen through the cracks.

Much of the support has been based on the rateable values of business enterprises, and I can understand exactly why that is. It is clear and it is simple for local authorities to administer, but it has still left too many businesses missing out, because they were outside the relevant rateable value bands or they were not in the relevant sector, or because they were small businesses operating out of people’s homes and were therefore not on the business valuation roll.

The Scottish Government have certainly done all they can to try to plug those gaps in support with a £2.3 billion package of support. That has meant relief to the fish processing sector and to airports, support for the creative sector, plugging that gap in support for the newly self-employed, £78 million for construction and £51 million to support early-stage, high-potential companies. In all, the response amounts to over £4 billion for tackling this, when we have had £3.8 billion coming through the normal Treasury route.

However, it is important to note that the Scottish Government cannot do everything, and in trying to do more, they are finding themselves seriously constrained not only by the resource available, but by the constitutional limits placed on devolution, which have been particularly exposed in this crisis, and no more so than over borrowing powers. The borrowing powers that the Scottish Parliament has are designed to deal with cash-flow mismatches from year to year; they are not there to deal with serious amounts of investment for the future. I understand that the Finance Secretary in Scotland, Kate Forbes, has written today to the Chancellor to ask for greater flexibility around that. I hope she gets a reply that is not only swift but favourable.

This has also shown the limitations of the so-called Barnett consequentials. Too often, colleagues in Edinburgh have been left waiting to find out exactly how much is going to come through from spending decisions that have been taken in this place, occasionally finding that the money they thought was coming through was then not. It would be much better if the devolved Governments were able to decide what response they wanted to make and muster the resources at their disposal in the shortest possible time by simply having the powers to do so without reference to anywhere else.

I appreciate that we are short of time this afternoon, but I will say that borrowing powers were one of the key items identified in the report created by the Scottish Government’s advisory group on economic recovery, led by Benny Higgins. Borrowing powers were part of that, as was a series of 25 recommendations including a full review of the fiscal framework, jobs guarantees for the under-25s, prioritising a green recovery and a revised partnership between business and Government. These are all important structural changes in the economy that we absolutely need to have if we are going to make sure that the new normal is better than the old normal.

In the time remaining, let me just make a plea for the energy sector. Oil, gas and energy are absolutely crucial not just for jobs in the north-east of Scotland, but right across the UK. They are crucial if we are to maintain our energy security and effect the transition to net zero, but it is an industry on the brink of thousands upon thousands of job losses. The Scottish Government have invested £62 million to do what they can to assist in that. We desperately need a sector deal. Together with my hon. Friends the Members for Aberdeen North (Kirsty Blackman) and for Aberdeen South (Stephen Flynn), I have made a plea to the Chancellor for just such a sector deal. Again, we hope for a swift and favourable response.

In conclusion, the support to date from the UK Government has been very welcome where it has landed, but desperately missed where it has not. All too often, it has failed to land. The economic challenges we face as the crisis evolves give us a new landscape. The challenges change, but are no less urgent and much remains to be done. I say to the Minister that if the UK Government are not willing to use the powers they have to address those shortcomings and to tackle the additional issues that need to be tackled, they should devolve those powers to Governments elsewhere in these islands who will use them.