Covid-19 Fiscal Implications

Part of the debate – in the Scottish Parliament on 16th June 2020.

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Photo of Rhoda Grant Rhoda Grant Labour

As the debate started, I feared that it was going to be an argument about which Government had done more. However, there were, in fact, many thoughtful contributions. I am glad about that, because the truth is that we are not through the pandemic and that the required response that we are making now will need to be continued into the future. We will need a lot more intervention to recover from what we have been through, and both Governments need to continue to intervene.

Alex Rowley pointed out that the economy was in a bad place before the pandemic, which makes recovering from it even worse. However, we must always remember that this is about people, their future and, sometimes, their very survival. We represent them here, and we must do that as we frame the way forward.

Much of the debate has been about the fiscal framework. It is very clear that it is not fit for purpose. It was never fit for purpose, and I do not understand why the Scottish Government signed up to it in the first place. It needs to be changed at the time of the review. Even Donald Cameron talked about the £1 billion black hole, which happened before Covid-19. We need to look at flexibility, and Jackie Baillie suggested that one form of flexibility could be more time to pay back that £1 billion. However, I fear that we may need more than that, because I do not think that borrowing and reserves are enough to meet the level of intervention that our communities need. That flexibility can be gained only through good will from both of our Governments. They need to negotiate that and find a way forward. We, in our amendment, urge them to do so.

Alex Rowley and Sarah Boyack talked about the Government’s role in the economy and what it could do; about renewables jobs, which are going elsewhere while our yards sit empty; and about the work that we could be doing with community heat networks, such as retrofitting, to meet our climate change obligations. We want a job guarantee scheme that pays people who could be doing the work that is desperately needed. We need an industrial strategy to manage the economy that we want. Bruce Crawford was quite right to point out that we have a disproportionate dependence on things such as tourism. We must ensure that that does not happen going forward.

The best way of getting revenues to pay for our response is to make sure that people are working and paying taxes. It is good to see converts to the windfall tax and the social responsibility levy, but we must make sure that people are working in order that taxes are paid, and we must use all the levers that the Government has at its disposal to make sure that that happens.

A number of members talked about local government, which really is at the front line of delivery. As Sarah Boyack pointed out, councils have already spent an additional £145 million, so they need the consequentials that came to the Government. When I speak to councils, they are often waiting for not only money but advice and guidance on how to proceed. In education, the situation is even more stark, as councils need advice on how to reopen schools.

There is a cost attached to social distancing. Let me be clear: I am not suggesting for one moment that we should not meet the cost. As Tom Arthur said, what is most important to the economy is that we suppress the virus, and changing the required distance between pupils without scientific proof would cause huge problems in our schools. Therefore, we need more teachers and classrooms, we need to reopen buildings, we might need to use community or church halls, and we need more buses to transport children to school. We cannot simply say that children can go to school for one day a week—that is not good enough. With every day that passes, the attainment gap is widening and some children are receiving no education at all. They are from families that cannot afford iPads, or, if they have iPads, they cannot afford broadband to give their children access to education.

Those who can afford to do so will invest in tutors. Who would not do so to enhance their child’s life chances? However, that means that the attainment gap grows and grows. Parents also need to know when their children will be going to school, because they need to go to work if we are reopening workplaces and have enough money in the economy that shops are required.

It is about not only school education but nursery education. Parents need to know what advice is being given, because, primarily, they need to know that their children will be safe. We need to build on such requirements to give people the confidence to go back to school and work. However, we cannot simply go back to the economic norms of austerity. If the pandemic has shown us one thing, it is that austerity was a political choice and one that must never be revisited.

Our economy cannot be rebuilt on the low pay of our key workers, whom we must reward not only with esteem but financially. We must invest in our future and, in doing so, create a country that is worthy of their efforts, because they have borne the brunt of the pandemic.