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Finance and Economy (Covid-19)

– in the Scottish Parliament on 5th May 2020.

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Photo of Kenneth Macintosh Kenneth Macintosh Labour

The next item of business is a ministerial statement by Kate Forbes on finance in relation to Covid-19.

Photo of Kate Forbes Kate Forbes Scottish National Party

The Covid-19 outbreak has required an unprecedented response from the Government. It has focused primarily on the health of our citizens but also on the needs of our economy in response to the significant steps that we have taken to keep people safe. That has meant that significant additional resources have been deployed, or redeployed, from the budget that the Parliament passed in March.

Our action to date has been swift and targeted. We committed early on to pass on all health and social care consequentials, which are currently estimated at £620 million, including those for hospices, to support our front-line services. We launched a £350 million package to support welfare and wellbeing. Partly from that, we have provided an extra £175 million for local government, and we have underwritten integration authorities’ costs in order to reduce delayed discharge.

Within days of the outbreak, we committed £320 million to a package of small business grants and sector-targeted rates reliefs, and then we expanded that into a £2.3 billion business support package. That has removed this year’s business rates liability for retail, leisure, hospitality and aviation, and for all other businesses it has in effect removed the inflationary increase in the poundage. It has offered £1.3 billion in grants for small businesses and for retail, leisure and hospitality, and now we have added a £100 million fund to support the newly self-employed and small and medium-sized enterprises, addressing gaps in United Kingdom Government provision.

The scale of the challenge required us to move quickly. Therefore, I feel that it is important to have the opportunity to update Parliament on the budget implications of the outbreak, and of the actions that the Scottish Government is taking to protect the interests of Scotland’s people, communities and businesses. I will provide regular updates on our financial approach to Parliament and the Scottish Fiscal Commission, and I will provide detail later this month, for Parliament’s approval, of an early summer budget revision.

Our health and care services are at the front line of the efforts to tackle Covid-19, and we are working closely with the UK Government to ensure that all additional costs are fully funded. We are providing additional funding for national health service boards and integration authorities, and we are responding to the urgent need to continue to ensure that front-line workers have the appropriate personal protective equipment. Along with my colleagues in Wales and Northern Ireland, we are seeking clarification from the Treasury that our committed PPE spend to date will be covered by Barnett consequentials relating to spend by NHS England and for the social care sector. As the Cabinet Secretary for Health and Sport indicated last week, we have provided a direct delivery of PPE to care homes and have worked with local partners to significantly improve the operation of local PPE hubs.

On the economy, I am proud that we are delivering a strong package of support worth around £2.3 billion for businesses in Scotland. We have provided £50 million to effectively freeze the non-domestic rates poundage at 2019-20 levels, and we are the only country in the UK to do so. We have committed £824 million to provide 100 per cent rates relief to properties in the retail, hospitality, leisure and aviation sectors, and we are the only part of the UK to support the aviation sector in that way. We have made £1.3 billion of support available through two grant schemes for small businesses and for retail, hospitality and leisure. We estimate that around 3,500 properties in the broader economy will benefit from a £7,500 grant in Scotland; their equivalents will receive nothing in England.

I am delighted that on 30 April the Scottish Government opened applications for a £100 million package of additional grant support for small and medium-sized businesses and newly self-employed people. Today marks the opening of the second phase of our original business grants funding scheme, which will relax the restriction on multiple properties.

Unfortunately, we do not have the resources to protect every single business from the economic damage of Covid-19. However, by last Tuesday—a week ago—over £526 million of grants had been paid out to businesses, and I thank local authorities for mobilising their resources so quickly to get those grants out.

The £350 million package of communities funding that was announced by the Scottish Government on 18 March, in advance of the UK Government’s announcement of support for local government, ensures that local authorities, community groups and the third sector are able to support people and communities that are affected by Covid-19. Since its launch, we have already committed over £182 million from the package across various funding streams. Over £100 million has been allocated to local authorities through our £50 million hardship fund, an increase of £22 million to the Scottish welfare fund and a £30 million food fund. Over 160,000 free school meals are being distributed each day by local authorities, and the funding for those is supported by that investment.

We have committed considerable other investment to charities and community organisations. To date, we have provided significant additional resources and flexibilities to local government, including committing £175.6 million of direct funding and further flexibility, including de-ring-fencing grants. We will also provide additional support for health and social care through integration joint boards. The Scottish Government had already committed £175.6 million to local government before we had an indication that the UK Government would provide us with additional consequentials for local government, and in the past week or so, we have received an indication of £155 million of consequentials from local government spending in England. That money will be available to local government in full, but in order to make decisions on how it should be distributed among councils to top up the original £175.6 million, I need details from the Convention of Scottish Local Authorities on the funding pressures that its members are facing so that the money can be spent fairly on the areas of greatest need.

This continues to be an incredibly difficult time for people across the country and my sympathy is with every family affected and with those touched by every life lost. That is why ensuring that Scotland has the support that it requires to deal with Covid-19 and to recover from its effects continues to be the top priority for the Government. Our actions have been welcomed by the private and third sectors alike and are making a real difference to the lives of people in Scotland.

I would like us to do more, but we are constrained—financially and through our limited devolved powers. We currently anticipate an estimated £3.5 billion in Barnett consequentials this year to support the Covid-19 response. That funding is welcome, and I place on record the constructive conversations that I have had with my counterparts in the Treasury. We remain committed to ensuring that every penny at our disposal will be spent on safeguarding Scotland’s interests, but it does not cover the need. I will continue to engage with the Treasury to ensure that Scotland’s NHS and businesses get the funding that they need.

That is the only source of additional funding that is available to us without appropriate borrowing powers, but nobody can argue that it reflects the full magnitude of what we have needed, and will continue to need, to face this unprecedented situation. Other Governments are free to borrow to fund their Covid-19 response, but we have no powers to do that, given the unnecessary restrictions that are imposed on our borrowing powers by the fiscal framework. It is one of the remarkable aspects of the fiscal framework that Scotland’s national Government cannot borrow in the way that Scottish local governments can.

The longer-term health and economic impacts of Covid-19 in different parts of the UK remain uncertain. It is important that Scotland’s public finances are not exposed to undue risk on the basis of circumstances outwith our control. We will continue to engage with the UK Government—as we have been doing—to make sure that that does not happen. The UK Government must surely now recognise the fundamental flaws that are inherent in the fiscal framework and must permit further flexibility to allow us to respond to the crisis. For example, I have asked the UK Government to guarantee that the Barnett consequentials that have been notified thus far are not subsequently reduced, thereby clawing back money from the Scottish budget at a later date.

The inherent uncertainties of the fiscal framework are well documented and have been much debated here. If that was true before the health and economic crises, it is even more accurate now. Putting party differences to one side, I hope that there will be unity in Parliament on the importance of managing our budget position with additional fiscal flexibilities, through borrowing, guaranteed consequentials and managing future reconciliations.

Fairness and transparency are essential here and also sit at the core of Scottish Government tax policy. We recognise the challenges that are presented by tax avoidance behaviours and remain vigilant, particularly regarding the financial assistance schemes that have been announced by both the Scottish and the UK Governments.

To even begin to think radically about big responses to big issues, or about ideas such as a universal basic income, we need enhanced taxation and other powers. We will continue to make that case.

We have published our overarching framework for decision making, which describes the approach that the Scottish Government will take to the initial transition out of the current lockdown arrangements. We will keep that approach under review.

Although it is hard to be precise about future impacts, the legacy of Covid-19 will last for a considerable time. There will be a continuing public health response. There will be changes within society—in the way people and businesses interact with each other and to models of service delivery—as we look to restart and to recover the economy.

As the framework notes, before this crisis we were focused on making Scotland a greener, fairer and more prosperous country. Although that has not changed, our starting point has. We will work with, and will all learn from, Scotland’s private, third and public sectors and from Governments around the world.

I want to continue to invest to support Scotland. For the avoidance of doubt, I say that the recovery will not and should not be a time for austerity. It is essential that we take the opportunity of recovery and think radically, embracing digital technologies and low-carbon reforms. To do that, we need to think long term, we need to work across party lines and we need the powers to invest in our future.

In the past few weeks, we have seen businesses across Scotland repurpose to deliver new products and services. I am proud that many have pivoted their operations to deliver support for the NHS supply chain, thereby saving jobs and lives. Through necessity, we have seen sectors embrace new technologies and innovation at a rate and scale that would ordinarily have taken years.

The Scottish Government must play its role in maintaining that speed and momentum, moving with pace towards a new high-tech, low-carbon economy. To realise that vision, we need to catalyse our most innovative and emerging sectors, ensuring that they fulfil their full potential as economic propositions in their own right and as sources of innovation for our wider economy.

I am therefore pleased to announce that, from next week, Mark Logan—a well-known name—will lead a short-life review of the Scottish tech ecosystem. He brings a wealth of experience, accumulated through 25 successful years in building Scottish tech start-ups, culminating in the success of Skyscanner, one of the most significant European tech unicorns. I have been clear with Mr Logan that we are looking for clear, ambitious and deliverable proposals that allow us to seize the opportunities that economic recovery present. He is passionate about creating an ecosystem that provides opportunities for a new generation of tech talent, and I look forward to receiving his recommendations.

That the fiscal challenges from Covid-19 are significant is beyond doubt, but our priority must continue to be protecting lives and supporting the economy through this turbulent period. In Scotland, our recovery and future renewal will be guided by our long-term vision of investing in an inclusive, sustainable, wellbeing economy. How we design and deliver our recovery can help us make progress towards that vision.

We will recover, and the Scottish Government is determined that Scotland will emerge stronger, with a fairer and more sustainable economy, with opportunities for all.

Photo of Donald Cameron Donald Cameron Conservative

I thank the cabinet secretary for advance sight of her statement. I was pleased to see her welcome the anticipated £3.5 billion of funding from the UK Government to spend in Scotland and hear her acknowledge the constructive conversations that she has had with the Treasury.

The cabinet secretary’s statement concentrates on the broad, longer-term budgetary outlook, which we will take time to digest and respond to in due course. However, it is concerns around the Scottish Government’s economic interventions that remain the priority for many of the people who we represent, given the immediate impact on their livelihoods, whether that is delays in getting business support to those at the front line, or the continuing disparity in treatment between businesses in Scotland and their counterparts in the rest of the UK.

Although we continue to welcome many aspects of the Scottish Government’s funding package, there remains widespread dismay—and, indeed, shock—that it will not deliver, at once, direct to local authorities, the £155 million coming to Scotland through consequentials. That is not merely a storm in a teacup. Our local authorities are at the forefront of delivering vital services to the most vulnerable, but they have yet to receive any details of what the funding can be used for and how much they will receive; they have also been told that they should use their reserves to meet current costs. That is unconscionable and unacceptable. When will every penny of the £155 million funding go to local authorities? Will the Scottish Government give them full discretion over what the money can be used for?

Photo of Kate Forbes Kate Forbes Scottish National Party

At the risk of repeating myself, I have just said that every penny of that £155 million will go to local government. We recognise the cost pressures that they face and we recognise the enormous amount of work that they have done—much of which has been on the front line—in response to Covid-19.

We have already given local authorities £175 million in light of the pressures on them.

I say this having already mentioned the constructive working relationship that I have with the Treasury. The member will appreciate that, in many respects, the Scottish Government has moved faster than the UK Government, and we provided funding before we had any indication that consequentials would be available. We did so in relation to support for businesses, local authorities and charities. The consequentials came after we had already made our own announcements.

I hope that Mr Cameron will appreciate the points that I have made about funding local authorities. He mentioned, too, the disparity between the Scottish Government’s and the UK Government’s responses to business. We have taken that approach in light of the differing needs of the Scottish economy. Small businesses in Scotland are benefiting from such support; they would not be doing so if they were in England. For example, those in the aviation, fishing and creative sectors here are benefiting, while their counterparts elsewhere are not.

It is important that, with the powers and resources that we have, we ensure that our response to the coronavirus is robust and tackles the issues that need to be tackled. The nature of devolution is such that we are able to take different decisions to achieve different outcomes in order to protect the people, economy and communities of Scotland.

Photo of Richard Leonard Richard Leonard Labour

I thank the cabinet secretary for advance sight of her statement. The section on support for the economy refers to support for businesses, which is welcome. However, at no point does the statement mention unemployment, even though we know that that is a real and present danger to working people in communities right across Scotland and even though there is a particular dimension to it.

Last month, the Institute for Fiscal Studies estimated that workers under the age of 25 are two and a half times more likely than older workers to have been laid off, because of the concentration of young people in shut-down sectors such as hospitality, hotels and non-food retail. We also know that long-term unemployment among young people is especially damaging.

Will the Scottish Government therefore produce a new plan for jobs? As part of that, will the cabinet secretary consider providing funding for the introduction of a high-quality, trade union-backed jobs guarantee scheme to tackle unemployment? Will she target under-25s as part of such a scheme?

Photo of Kate Forbes Kate Forbes Scottish National Party

To be clear, when it comes to the economic measures that we have put in place, my two priorities have always been, first, to ensure that workers and employees have money in their pockets and, secondly, to protect the productive capacity within the structure of our economy.

The points that Richard Leonard has raised are well made. Our economic analysis demonstrates that certain demographics are being hit far harder than others by the current crisis. There is an age element to that, and there is also a gender element. The Scottish Government has been having twice-weekly ministerial discussions with the Scottish Trades Union Congress and general council members. We have already agreed with the STUC a joint statement on fair working principles during the crisis. The points that Richard Leonard has made and points that the STUC and the GMB have made in their most recent campaigns will be considered in our on-going examination of how we might ensure that, when we come out of the crisis, we have a fairer, more equal society than we had when we entered it.

Photo of Andy Wightman Andy Wightman Green

I thank the cabinet secretary for advance sight of her statement.

She stated that fairness and transparency are essential and that vigilance is vital in relation to tax avoidance. Will she regularly publish details of which businesses and ratepayers have received grants in relation to properties that they occupy? How will vigilance in relation to tax avoidance be carried out? For example, will there be scope to claw back grants awarded to companies that engage in tax avoidance?

Photo of Kate Forbes Kate Forbes Scottish National Party

The areas mentioned in both of Mr Wightman’s points have already been the subject of discussion and consideration. He will know that our powers to crack down on tax avoidance are far more restricted than those of the UK Government. The publication of details of grants is an area on which I have been quite keen to see movement. There are general data protection regulation and other issues in relation to that, but in order to address his two points I will say this: if there is additional information that I am able to publish, I would like to do so. For example, as he will know, we have already taken steps to publish details of the distribution of grants at local authority level. If we are able to publish more granular data, I would be keen to do so.

Photo of Willie Rennie Willie Rennie Liberal Democrat

The finance secretary must know that councils are frustrated by the strings that have been attached to the money that they need to deal with the crisis. They are doing the right thing in the middle of the crisis; I hope that the finance secretary will do the right thing, too.

Many businesses that have a higher rateable value are struggling without the grant support. As the lockdown continues, will the finance secretary consider proposals to support those businesses, because I fear for their future?

What discussions has the finance secretary had with the Treasury on a universal basic income?

Photo of Kate Forbes Kate Forbes Scottish National Party

Local government is doing the right thing; I have been blown away by the way in which employees across local government have stepped up to the plate, most of them working from home and working incredibly long hours in order to get grant support out, for example. I want to ensure that they have the resources that they need and I will work constructively with COSLA to do that.

I assume that the businesses that the member refers to are those above the rateable value threshold of £51,000. I recognise that there is a gap. That is one of the main reasons why we put in place the £100 million fund and, in particular, the pivotal enterprise resilience fund, which is designed to try to support those businesses that are too big for grant funding but which are key to local economies—they often support a much wider supply chain and keep many jobs going. The enterprise resilience fund was designed to help those businesses.

The member will appreciate that we have to deliver a fixed, balanced budget. There are no quick and easy ways of creating additional headroom, for example to extend our business support. The only way of doing that just now is through additional consequentials, and I have regular discussions with counterparts in the Treasury in order to secure further funding to deliver a more generous business support scheme than the one that we have at the moment, in particular when it comes to recovery.

The member asked another question that I did not note down—

Photo of Willie Rennie Willie Rennie Liberal Democrat

It was about a universal basic income.

Photo of Kate Forbes Kate Forbes Scottish National Party

When it came to mobilising our systems, whether through local authorities or enterprise agencies, what constantly struck me was that the fastest way of getting support directly into people’s pockets was through Her Majesty’s Revenue and Customs. There was no other scheme, and of course the management of HMRC is reserved.

I believe that we need to consider a universal basic income, not just for crises such as this one but beyond them. It is a subject of discussion—in a sense, it is part of that wider package of discussion around additional powers. These points are not being made for constitutional or political reasons; they are being made to ensure that we can respond to crises such as this one and support people and businesses in our communities.

Photo of Bruce Crawford Bruce Crawford Scottish National Party

I am sure that the cabinet secretary will agree with me that a healthy and dynamic university sector is crucial to the future of the Scottish economy. Like many sectors, universities face an existential challenge and a financial threat because of Covid-19. For example, I know that the University of Stirling has a deep and mounting deficit of many millions of pounds. The university is clear that without additional financial support from Government, it faces significant redundancies and course closures. Will the cabinet secretary therefore undertake to discuss the situation with the UK Government as a matter of urgency?

Photo of Kate Forbes Kate Forbes Scottish National Party

I assure the member that the issue is already being discussed as a matter of urgency. I know that the Deputy First Minister, John Swinney, has had regular discussions with his counterpart in the Department for Education—they are both facing similar issues and they have made joint representations to the Treasury, looking for funding. Our understanding of the announcement that was made over the weekend is that it does not in any way go far enough towards supporting the further and higher education sector, and I know that the Deputy First Minister is looking actively at how we can support that sector.

Photo of Maurice Golden Maurice Golden Conservative

The First Minister has promised help for the oil and gas industry, but last week she said that she had not yet decided what that support would be. Oil and gas workers are losing their jobs and cannot afford to wait any longer. Can the cabinet secretary confirm when a decision will be reached and what support the Scottish Government will provide?

Photo of Kate Forbes Kate Forbes Scottish National Party

I understand that concern. Without wanting to be political in any way, I point out that, as the member will know, most of the powers to intervene in the oil and gas industry are reserved. One of the most obvious areas is ensuring that there is furlough support to the industry. We are actively considering what offer we can provide. My colleague Paul Wheelhouse has regular meetings with the industry and is working closely with it to understand what more the Scottish Government can do with our powers and resources. However, any intervention needs to be done jointly, because most of the powers still rest with the UK Government.

Photo of Gillian Martin Gillian Martin Scottish National Party

I do not wish to labour the point that has just been brought up, but it is important. Before the crisis, oil and gas workers were to be at the heart of a just transition away from fossil fuels to low-emission energy. That just transition is more pressing than ever, as oil and gas companies are making many workers redundant because of a combination of the pandemic and the low oil price. What has been done to assist former employees and contractors, many of whom have been refused furlough and who of course do not have the opportunity to find other work because of the pandemic? Has the cabinet secretary had discussions with the UK Government on what it could do to assist the people who work in the sector, which is still important because we have not yet had the just transition? The situation is affecting many families in my constituency.

Photo of Kate Forbes Kate Forbes Scottish National Party

We have had those discussions. Support is available for those people, whether that is welfare support or, when we come to recovery, support to help them through a period of redundancy and into work. As I said in my earlier answer, we must work in collaboration with the UK Government, because many of the most significant levers to intervene in the oil and gas industry, which is going through an incredibly difficult time, rest with the UK Government. On funding support and what else we can do, we are in constant dialogue with the industry to understand what action we can take, and we will take that action to protect jobs.

Photo of Jackie Baillie Jackie Baillie Labour

I welcome the cabinet secretary’s statement, particularly because her previous position of not telling Parliament the detail of budget allocations until the summer revisions was neither transparent nor sustainable.

The Scottish Government was not asked to submit plans to the UK Government before money was released; indeed, businesses, food banks and health boards have not been asked to submit plans or costs to the Government before money is released. The second tranche of £155 million for local government is for social care and homelessness, which are critically urgent areas, and councils in England already have the money to spend. Therefore, why is the cabinet secretary now asking for plans to be submitted in advance? Does that point to a lack of trust in local government? If she truly believes that the issue is a storm in a teacup, why did the Scottish National Party councillors on COSLA vote against her to demand the release of the money now?

Photo of Kate Forbes Kate Forbes Scottish National Party

Local authorities in Scotland already have £175 million to support the coronavirus effort, and that money was available to them before local authorities in England got funding. The absurd thing about this debate is that, two weeks ago, the First Minister said that she would pass on the consequentials for local government to local government in Scotland. Since the beginning of April, local government has been working on a cost collection exercise to identify the biggest pressures on it right now. I want to ensure that the money is spent in the areas of greatest need. It is not unreasonable to ask local authorities to complete the cost collection exercise that they promised me two weeks ago that they would do to determine how the money can best be spent. When all is said and done, local authorities are getting £155 million on top of the previous allocation of £175 million because of the tremendous work that they are doing.

Photo of Willie Coffey Willie Coffey Scottish National Party

My question is on behalf of small businesses in my constituency such as opticians, barbers and hairdressers, many of which are struggling financially despite the welcome help that they have received so far. Can the cabinet secretary assure them that the Government is looking at what the safety arrangements might be for businesses? When might we be able to share that thinking with them, so that they can begin to prepare their businesses to reopen when it is safe for them to do so? Will small businesses still be eligible for some financial support as they slowly get their operations back up and running?

Photo of Kate Forbes Kate Forbes Scottish National Party

I am working closely with Fiona Hyslop and other cabinet secretaries to develop an approach that will unlock the economy safely and build on the framework for decision making that was published about two weeks ago. That approach will set out the range of factors and judgments that the Government will need to consider in order to allow the economy to safely transition beyond lockdown. We are working closely with business groups, trade unions and others as part of that process. We need a transition that will reflect the public health advice and offer businesses a clear way forward, both in the short term and as part of a longer-term recovery process. We will set out further advice on that approach in due course; we will also continue to engage with the UK Government and the other devolved Administrations to shape the UK-wide response.

Photo of Michelle Ballantyne Michelle Ballantyne Conservative

I will add a point about COSLA’s cost collection exercise: it is part of councils’ due diligence process; it is not being done as a result of a request by the cabinet secretary.

My question is about business and follows on from the question that Willie Coffey just asked. Business is the one area that is not political and does not make statements for political purposes. Businesses are now about survival and protecting the jobs of the people whom they employ. The Scottish Government has consistently emphasised geographic variation—it talks about that again its framework for decision making. Many businesses—in fact, all the businesses across Scotland that export—have supply chains and customers across the UK. The UK Government has already started to bring out its guidance on returning to work and businesses south of the border are starting to reopen. If Scottish businesses cannot start to reopen alongside them, they will lose competitive advantage, which is the very thing that Fiona Hyslop said would not happen when she gave evidence to the committee of which I am convener. I ask the cabinet secretary to take the issue seriously. The framework for decision making suggests that there will be no further guidance until 28 May, but that will be too late for many businesses.

Photo of Kate Forbes Kate Forbes Scottish National Party

The member will know that we have tried very carefully to have an open and honest conversation about what transition out of lockdown will look like. We take very seriously people’s health, protecting lives and ensuring that we will move beyond the current period only when it is safe to do so. I do not want to speak about my constituency, but some of the businesses that had been starting to reopen there have closed again because of the outbreak on Skye over the past week.

We need to take these decisions very carefully; they need to be informed by the best medical and scientific advice that we have available. There is a burden on all our shoulders to ensure that the decisions that we make will minimise harm—to the economy, yes, but ultimately to people.

Photo of Tom Arthur Tom Arthur Scottish National Party

It is difficult to envisage sectors such as grass-roots music venues and travel agencies being able to return to their pre-coronavirus capacity for a considerable time—perhaps not until there is a vaccine. What consideration has the Government given to supporting those businesses to repurpose over what could be quite an extended recovery period?

Photo of Kate Forbes Kate Forbes Scottish National Party

Such an approach will most certainly have to be part of our recovery. In our initial business support response, we tried to do two things: minimise people’s fixed costs, for example by removing non-domestic rates in many cases for not just a few months but a full year; and provide grant support. That support will still be available, but I think that Tom Arthur’s point about helping people to transition and to repurpose their businesses, which we have already seen during the crisis, will need to form part of our recovery.

Photo of Colin Smyth Colin Smyth Labour

Everyone understands that the support that is provided to businesses is changing all the time and that more support will be provided. Will the cabinet secretary consider fully addressing the unfairness in the fact that a hospitality business in Cumbria with a rateable value of just over £15,000 is entitled to a £25,000 grant, but a similar business just over the border in the south of Scotland with the same rateable value is entitled to a grant of just £10,000?

Can she tell me why one of the requirements for applicants for the new hospitality hardship fund is to have a business bank account, which is not a legal requirement for sole traders and partnerships? There is concern among, for example, owners of guest houses who pay council tax and not rates that they could be denied the only support that they thought they might be entitled to, because they have a separate but personal bank account for carrying out guest house transactions. Will they be entitled to a grant from the hardship fund or will they be ruled out because of that unfair technicality?

Photo of Kate Forbes Kate Forbes Scottish National Party

The member will know that eligibility for the grant scheme is based on the non-domestic rates system and on the Scottish small business bonus scheme, which is the most generous in the UK. The support that the grant scheme offers reflects the thresholds in the small business bonus scheme. That means that hundreds of businesses in the wider economy that are eligible for the small business bonus scheme are getting grants in Scotland that would not get them elsewhere in the UK. For example, if a business in Scotland has a rateable value of £17,000 and it is not in retail, leisure or hospitality, it can get a grant. If it was elsewhere in the UK, it would not get that.

At the end of the day, when we draw thresholds, my job is to make sure that the money goes as far as possible, helps as many businesses as possible and reflects the challenges in the Scottish economy. That is what we have done with the grant scheme.

The requirement to have a business bank account has been raised as an issue, including in my constituency, as some small businesses do not have such accounts. One difficulty with the scheme, which is not linked to a tax system, is that we need to ensure that we reduce fraud levels. Given our limited resources, I want the money to go as far as possible and to help as many businesses as possible. We therefore have to have consideration of due diligence and to minimise the fraud risk, and requiring a business bank account was considered to be a much simpler means of doing that than putting in place more bureaucratic systems.

If I can review that and change it, I would like to do so, but I need to make sure that the high levels of fraud that have been seen in other similar schemes will not be reflected in these schemes. We need to make sure that every single penny is used to help as many businesses as possible.

Photo of Angela Constance Angela Constance Scottish National Party

Travelyard is a small bespoke service in West Calder, in my constituency. As an organisation, it has worked tirelessly to bring stranded travellers home. It is meeting its obligations to customers—and incurring costs in doing so—as an agent that offers its customers 100 per cent refunds for cancellations, and rescheduling. It is doing all that despite the evaporation of a large volume of its business and profits, and on top of that it is being driven demented in pursuing business interruption insurance claims.

What can the Scottish Government do? How will it persuade the UK Government to ensure that there is more bespoke support for the unique travel sector by offering, for example, commission protection schemes and better support for companies that are making insurance claims, given that a high proportion of companies in the tourism sector have inadequate or irrelevant insurance?

Photo of Kate Forbes Kate Forbes Scottish National Party

It is accurate to say—and it is well documented—that the coronavirus business interruption loan scheme has not been able to help as many small businesses, by any stretch of the imagination. If we look at the average loan amount, it is quite clear that loans are disproportionately going to much bigger businesses, leaving small and medium-sized businesses without that support. That is why the Treasury introduced the bounce back loan scheme, which is another option. I know that it is difficult because this is not a time when businesses want to accrue more debt, least of all our small and medium-sized businesses.

We regularly raise those issues with the UK Government to ensure that there is more support for particular sectors. When it comes to the unique travel sector, I imagine that some businesses will be able to benefit from the new £100 million loan fund, the smaller fund of which is specifically targeted at the travel, hospitality and tourism sector. That might be a means of filling the gap that the member has identified.

Photo of Edward Mountain Edward Mountain Conservative

As the cabinet secretary knows, the Highland economy is highly reliant on tourism, and that is especially true of our small bed and breakfasts. The Scottish Government has set up the tourism and hospitality hardship fund, which is worth £20 million and is open to all tourism and hospitality businesses. However, as the cabinet secretary has made clear, many small B and Bs will be ineligible to claim because they do not meet the criteria in that they do not have a separate business bank account, despite having all the necessary regulatory consents. How many small B and Bs does she estimate the £20 million fund will actually help?

Photo of Kate Forbes Kate Forbes Scottish National Party

Obviously, that will depend on the grants that are being provided, and we have designed the schemes specifically to be as bespoke as possible. The fund that the member mentioned can give £3,000 grants, but businesses can get grants of up to £25,000. The amounts that businesses get will determine the number of businesses that receive grants. At the moment, that scheme is not oversubscribed, so I would encourage B and Bs to apply for it.

I have already addressed the point about business banking. That is the tension that we live with: when we are distributing public funds, we have a responsibility to ensure that we take appropriate steps to minimise the risk of fraudulent claims. If the member has an additional point that he wants to raise with me after this meeting, I will be happy to address it.

Photo of Annabelle Ewing Annabelle Ewing Scottish National Party

On the key issue of economic recovery, for any alterations to lockdown restrictions to work, it is vital that social distancing in the workplace is secured. At the moment, in many cases, it would appear that it is being left to individual employees to raise concerns with their MSPs when they are told that they are expected back at the workplace but they are concerned about the conditions that will pertain. Would it not be a more reasonable approach to put the onus on the employer to demonstrate that social distancing can indeed be achieved?

Photo of Kate Forbes Kate Forbes Scottish National Party

The member makes a good point. We will keep our guidelines constantly under review and we will take decisions only when the scientific advice is clear that it is safe to do so. Until that point, there is absolutely an onus on businesses. We expect all businesses to adhere to the current guidance, which is designed to keep people safe, and that includes social distancing.

Although people have been living with lockdown for almost seven weeks, it is critical that people continue to follow that Government guidance, and there is an expectation on employers that they will protect their employees and ensure that the working environment is safe.

Photo of Lewis Macdonald Lewis Macdonald Labour

On 17 April, the cabinet secretary said about the oil and gas industry:

“Our strong steer is that we expect employees to be furloughed, not made redundant—that is why that support exists.”—[Official Report, 17 April 2020; c 15.]

With so many workers now facing redundancy, what would she say to those employers that have taken the view that the job retention scheme does not apply to them?

Photo of Kate Forbes Kate Forbes Scottish National Party

That is a disappointing position for those employers to take. The scheme is available. We have worked with the oil and gas industry to ensure that support is in place. At a time of national emergency, when people are struggling, it is extremely disappointing that employees have been made redundant when support is in place.

I do not dispute the challenges that are facing the oil and gas industry or the wider economy, but at a time like this, when we are theoretically all in it together, there is a responsibility on employers to treat their employees with respect, to protect them and to help them through these difficult weeks. Unusual and extraordinary Government funding is in place to help employers to do that, and I expect employers to make use of it to ensure that their employees continue to be paid.

Photo of Kenneth Gibson Kenneth Gibson Scottish National Party

While many businesses are struggling to survive, supermarkets are making huge profits, and not just through increased sales. Across the UK, Tesco will receive £585 million in rates relief, while it paid out £635 million in dividends just last month. Meanwhile, prices have gone up and discounts and special offers are increasingly rare, which is pushing up costs for customers.

Just a few minutes ago, the cabinet secretary criticised the UK interruption loan scheme because a lot of the money for the loans is going to big businesses. Is it not time to reconsider some of the rates relief for supermarkets, with that relief being switched to support smaller businesses?

Photo of Kate Forbes Kate Forbes Scottish National Party

Although we keep many things under review and I know that Fergus Ewing is in regular dialogue with the supermarkets, it is for precisely that reason that we have ensured that our business support focuses on the small and medium-sized businesses in Scotland, which are the backbone of the Scottish economy and of multiple local economies. Our criteria ensure that more small businesses will get a grant in Scotland than elsewhere, precisely because of the way that we have tailored that support.

I recognise that there will be much debate about the rights and wrongs of how we support businesses, but at the end of the day, with the limited resources that we have, we have ensured that we protect the small and medium-sized businesses rather than prioritising the big businesses.

Photo of Brian Whittle Brian Whittle Conservative

I spent yesterday speaking to a number of businesses in my region to see how they are coping in the current crisis. As the cabinet secretary might imagine, a lot of businesses are not sitting idle but are looking at ways to adapt their working protocols to enable them to stick to Government guidelines and at how, when the time is right, they can get back to work while ensuring the health and safety of their employees.

A sector return, when the time is right, is being talked about a lot. What consideration has the cabinet secretary given to how we can enable and help businesses that are able to stick to Government guidelines to get back to work? That might allow for more finance to support those businesses that currently cannot get back to work.

Photo of Kate Forbes Kate Forbes Scottish National Party

That is very much part of our thinking just now. When it comes to transitioning out, it is clear that those businesses that can adhere to social distancing will be able to go back to work first. This virus is going to be with us for not just a matter of weeks, but for months and maybe longer. We must therefore ensure that our businesses can adapt to meet the Government guidelines in order to protect people and keep them safe.

When it comes to our thinking around transitioning out of this, it will be on the basis of which businesses can adapt to social distancing. In some cases, they will need to make structural changes to their business; they will need to make changes to the way in which they operate and the things that they do. Many businesses have already had to do that through this period, and that will continue. That is precisely the thought that we are giving to transition.

We have already published documentation and the First Minister published more yesterday in the form of the “Coronavirus (COVID-19): test, trace, isolate, support strategy”. We will continue to review those guidelines and, when it is appropriate to do so, we will publish further guidelines to give advice to businesses.

Photo of Neil Findlay Neil Findlay Labour

What very specific advice would the cabinet secretary give to workers who have been told that they are furloughed and who are working from home full time, but who receive only 80 per cent of their wage and feel that they cannot raise issues with their employer for fear of repercussions?

Photo of Kate Forbes Kate Forbes Scottish National Party

The advice that I would give them is that that is completely unacceptable and should not be happening. Where it is happening, and where Neil Findlay feels able to raise it with me or others in relation to specific businesses, he should, because those businesses should not be doing that.

When it comes to the furlough scheme, there is an expectation that if somebody is working full time, they should be paid as a full-time worker; if they are furloughed, however, they should be paid at 80 per cent. There are very clear guidelines and strict criteria around what a person can and cannot do as a furloughed employee.

To go back to the advice that I would give, as we discussed earlier, we of course raise and discuss these matters with the unions on a twice-weekly basis, and I encourage workers to raise the issue with either a union or with somebody else who will listen.

Photo of Alex Cole-Hamilton Alex Cole-Hamilton Liberal Democrat

The 100 per cent rates relief was extended beyond the hospitality sector to include airports and other ancillary named businesses. However, one kind of business that is not included in that is airport car parks, of which there are many in my constituency. They are big employers and they suffer an existential threat through not being included in the ancillary businesses around airports. What consideration will the cabinet secretary and her Government give to including airport car parks in the rates relief scheme?

Photo of Kate Forbes Kate Forbes Scottish National Party

Although I will give consideration to any sector or business that needs support, we have a restricted budget when it comes to extending support. A case has obviously been made by a number of other sectors for that support and I am happy to review any proposal; however, at the end of the day, our greatest challenge is around affordability.

We have tried to do things differently and to approach the issue on a sectoral basis, which is why airports have support. When it comes to extending that further, the challenge is affordability. There is another—legislative—challenge about retrospective rates relief, which I will not go into now.

The Presiding Officer:

Before we move to the next item of business, I remind members to observe social distancing when leaving or entering the chamber.