The Economy

Part of the debate – in the House of Commons at 4:13 pm on 8th July 2020.

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Photo of Alison Thewliss Alison Thewliss Shadow SNP Spokesperson (Treasury) 4:13 pm, 8th July 2020

First, I want to say that with the Government and the Chancellor there is always a catch. Nothing is quite so shiny once we pull back the label and see what is underneath. I enjoy looking through the statement, picking around for the detail and the unanswered questions that many in this House have raised and did not have answered.

The Prime Minister’s so-called new deal was neither new nor a deal sufficient for the challenge ahead of us—“Build, build, build” was plagiarised from President Duterte of the Philippines—so I have no hesitation in repeating the calls we have made for an £80 billion stimulus to protect household incomes and grow the economy.

Just as the clinical impact of covid-19 has varied over different geographical areas, so too will the economic impact. It has been a global crisis with very localised effects, and the economic response should reflect that. That is why Scotland’s First Minister has proposed that Scotland should have greater financial powers, for example, over borrowing, so that we can shape our own targeted response to this pandemic, meeting Scotland’s specific needs. The potential benefits to Scotland are clear. Where we have had the power, the Scottish Government have spent £4 billion on covid-19 and more than £2.3 billion to help businesses, well above the Barnett consequentials. The Scottish Government, however, are operating with one hand tied behind their back. According to the Fraser Of Allander Institute, the Scottish Government can borrow up to £450 million per annum for capital investment, with a cap of £3 billion. On resource spending, they can borrow up to £600 million per annum, with a cap of £1.75 billion, but only for forecast error and cash management; they cannot borrow to fund discretionary resource spending.

The fiscal framework could not have envisaged covid-19 and must now be reviewed, as a matter of urgency, to allow the Scottish Government the flexibility to respond to this crisis. It is not just us calling for this; the Northern Irish and Welsh legislatures are also calling for this flexibility for their own needs. The Government would do well to listen to these requests, because they are made on a cross-Government, cross-party basis and with good intent at their heart.

I want to talk about some of the choices the Government can make quickly to help recovery in Scotland. Glasgow has five higher education institutions: the University of Strathclyde, Glasgow Caledonian University, the Glasgow School of Art, the Royal Conservatoire of Scotland and Glasgow University. This week, the Institute for Fiscal Studies published a new report warning that the higher education sector faces losses ranging between £3 billion and £19 billion and that several universities could be at risk of collapse due to the pandemic, yet there is nothing in the statement about this looming crisis.

The Government need to think about how they want to help this vital sector recover and support innovation. At the very least, it would be beneficial to have the graduate work visas extended to those already here on a tier 4 visa and the maintenance of home student fees for EU students. This would be a lifeline post-covid for cities such as Glasgow and for universities across the UK.

Local government is also struggling in Scotland. Wes Streeting put well the challenges facing local government across the country in the context of dealing with coronavirus and a decade of austerity orchestrated from Westminster. More money to support local government would of course be welcome, but also useful would be the demand from the Convention of Scottish Local Authorities for a 12-month payment holiday from the Public Works Loan Board, which would be instrumental in helping local authorities manage the constraints arising from covid-19. I urge the Government to consider this.

Local authorities, along with other employers, would also benefit from a reconsideration of the winding up of the furlough scheme, which NIESR has said would result in a 2.5% reduction in the UK’s GDP—a not insignificant sum. I think it would be a grave error to wind this scheme up too early and have repeatedly made my feelings clear on this. Businesses cannot be left to fail. We have seen awful news this week of job cuts across sectors and industries but primarily from businesses in tourism, hospitality and retail, which have suffered the most.