Business Support

– in the Scottish Parliament on 2nd December 2020.

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Photo of Kenneth Macintosh Kenneth Macintosh Labour

The next item of business is a debate on motion S5M-23536, in the name of Richard Leonard, on business support.

Photo of Richard Leonard Richard Leonard Labour

We are regularly told by the First Minister that the best way to support jobs and businesses is to control the coronavirus, and that there is a direct correlation between public health and the public economy. There is; we know all too well that keeping the virus down will keep the economy open.

However, there is still a high transmission rate, there is the tragedy of the high death rate that we have witnessed, and there is the failure to test—which is perhaps the Government’s biggest mistake—and the failure to isolate and quarantine. Those basic principles of public health and infectious disease control were ignored, so the First Minister is right: all of that does correspond with the high rate of business closures, the deeper crisis of economic failure and the higher level of job losses than were inevitable. That is what the Government has presided over. W e face a 10 per cent crash in output, we expect unemployment to double, and our town and city centres are being hollowed out.

Do not get me wrong: I am not attributing the situation that faces small businesses and people with jobs in retail entirely to the pandemic. We cannot lose sight of the fact that we have been hearing for years warnings that our high streets and town centres are at risk. According to the Federation of Small Businesses, in its report “Transforming Towns: Delivering a Sustainable Future for Local Places”, one in 10 town-centre properties across Scotland has been vacant since 2014.

This week, 25,000 jobs are at risk across the United Kingdom in big retailers the Arcadia Group and Debenhams. When such giants are crashing, and when we know that small independent businesses in high streets and town centres across the country are also facing the threat of closure, it is time for action.

Small business Saturday is this weekend, but it will have a hollow ring to it this year, because small businesses in level 4 areas, which serve more than 40 per cent of the Scottish population, are not open for business. In fact, too many of them are boarded up. The Scottish Retail Consortium has estimated that non-food shops will miss out on £270 million—more than a quarter of a billion pounds—in lost revenue over the three weeks of restrictions across the 11 local authority areas that are currently in level 4.

That is why we say that the Scottish Government’s strategic framework business fund does not go far enough. To some, it offers only a fraction of the losses; others, it does not reach at all. That is why we do not support the Scottish National Party’s amendment, which would remove the call in our motion for more business support.

Photo of Gillian Martin Gillian Martin Scottish National Party

If it were up to Richard Leonard and he was in charge of Scotland, where would he get additional funding from?

Photo of Richard Leonard Richard Leonard Labour

I will come to that in a minute. If Gillian Martin were to read out the motion, we would hear that there are £2.2 billion-worth of unallocated resources from Barnett consequentials that the Government can spend. It is right that public health is protected—of course it is right that lives are put before commerce—but there must also be proportionate mitigation for business.

When the £30 million discretionary fund was announced by the First Minister two weeks ago, it was to assist businesses that were falling through the gaps of existing support schemes—freelancers, businesses without premises, taxi drivers, people who had recently taken the plunge to start up a new business and businesses in supply chains. I have to report that I have been contacted by taxi drivers and other businesses that are hanging by a thread and which have been scouring local authority websites for information on how they can get help. However, they are being told that local authorities are waiting for Scottish Government guidance. Because there is no guidance, the funding is not yet open for applications. Because there is no confirmation date in sight, there is no support available—so, still they wait.

What about the £2.2 billion-worth of unallocated Barnett consequentials? What about all the small businesses that are now in dire straits and need action? What about all the working women and men whose jobs are at risk? The Government must outline to Parliament and the people how that funding will be allocated to save businesses and jobs.

We also want the Scottish Government to consider the long term and to work with businesses and trade unions on that.

We all know that we cannot go back to austerity, to a deep and long recession, to crisis and contraction or to business as usual. We cannot go back to an economy that is run in the interests of the powerful and most wealthy people.

Instead of small businesses, the middle class and the working people of this country falling further behind, they should get a decent standard of living and a better share of the wealth that they create. We need a vision of an economy that serves the people, rather than a vision in which people simply serve the economy.

We need an economy in which there is a rebalancing of power between big business and small business, between landlord and tenant, between men and women and between hirer and worker. We need that so that we give people meaningful work and decent pay, and so that we do not have more division and polarization.

We need an economy in which the politics of hope take over from the economics of despair, in which our Government listens to people’s priorities, answers to businesses in need, understands the importance of job and community, hears the voice of working people and their trade unions loud and clear, and is prepared to act for the common good.

I move,

That the Parliament notes that 5 December 2020 is Small Business Saturday and that small businesses, including those in the hospitality sector, are an irreplaceable source of jobs and community across Scotland; believes that many of these businesses are at risk because of COVID-19 restrictions and a lack of financial support, and calls on the Scottish Government to urgently outline how it will allocate the remaining £2.2 billion of Barnett consequentials to provide this support and save businesses and jobs, and work with businesses and trade unions to devise a sustainable long-term plan to support small businesses.

Photo of Kate Forbes Kate Forbes Scottish National Party

Like many others around the chamber, I speak to businesses every day about the devastating impact of the public health crisis on their trade, operations and income. Much of the fragile optimism of the summer months, as we eased out of lockdown, turned to pessimism and despair as the virus resurged and additional measures were necessary to suppress the virus.

All of us have stories and examples of grief, loss and worry. However, business owners, employers and employees in many sectors have had the additional trauma and despair of staying afloat in impossible circumstances.

I want to say at the outset that I know business support—in the form of grants, non-domestic rates relief or advice and guidance—does not replace all the lost income and does not compensate for an open, thriving economy. That is why, through the strategic framework, we have sought to move away from a blanket approach to keep as many businesses and as much of the economy open as possible, and it is why our objective is to get the economy trading as fully as possible by suppressing the virus.

As Richard Leonard rightly said, the health crisis and the economic crisis are interdependent. Managing the virus effectively enables the economy to stay open and businesses to trade. In turn, protecting the strengths of our wider economy will have long-term health benefits because ultimately a strong, fair trading economy and business base protects and creates jobs, reduces poverty and reduces wider health harms.

Today’s announcement on the vaccine is a light at the end of the tunnel. The Scottish Government is ready to deploy the vaccine quickly and safely. I know that in many cases businesses are operating with hugely reduced trade, that reserves are almost depleted and that they have exhausted business support. However, there is hope.

I also take hope from the way that businesses—large and small—have been public spirited. I commend and thank Tesco for voluntarily choosing to refund the public finances for the support that it received through rates relief. Tesco has taken that decision in recognition of its resilience through the crisis. I know that that will not be possible for every business, but I encourage those that have been similarly resilient to follow Tesco’s lead. We are looking at providing a means by which other businesses can follow suit. I can confirm that every penny returned to us will be invested in Scotland’s recovery from Covid and will be used to support those who have been hardest hit by the pandemic—[

Interruption

.]

I have only four minutes in which to set out the Government’s position. I will take as many interventions as members like in my closing comments.

At the beginning of the pandemic, we deployed every penny of business support as quickly as possible. We have invested £2.3 billion to support businesses and recovery. There was over £48 million to help businesses affected by restrictions in October and £972 million for non-domestic rates relief. Our small business and retail, hospitality and leisure grant funds were worth £1 billion. There was over £185 million of additional funding for the pivotal resilience scheme to support key anchor businesses and the hardship fund for businesses that did not pay non-domestic rates. There was also a package of sectoral support measures, for example for seafood and fisheries.

Since November, that support has changed. Our strategic framework is complemented by the business fund that is administered by local authorities, providing set grants of up to £3,000 every four weeks to eligible businesses that have been closed or directly impacted by restrictions. That grant support is in place as tier levels are reviewed and applied locally

One of the difficulties of not having access to HM Revenue and Customs, or to a nationwide business tax, is that support for businesses that fall through the cracks must be deployed sector by sector. We will continue to announce funding for businesses that have fallen through the cracks. To that end, last month we announced another £45 million to support business, of which £30 million was for a new local authority discretionary fund and £15 million was for a scheme for the newly self-employed.

I often hear it said that we should copy English schemes. If we had copied the UK Government’s approach, there would have been no hardship fund, no pivotal resilience fund and no newly self-employed fund. There would have been less generous recurring grants for businesses caught in the tiers and levels: the smallest businesses receive less in England and those outwith tier 2 that do not have to close by law receive substantially less, if anything.

I am in no doubt about the trials that businesses face right now, in my constituency and across the country. We have used every penny at our disposal to provide support and will continue to do so where we can. The reference to £2.2 billion in the Labour motion is ridiculous, as anyone with a calculator would know. I can assure members that all funding available to us is being, and will continue to be, used to support businesses.

Photo of Kate Forbes Kate Forbes Scottish National Party

I do not think that Richard Leonard understands what budget revisions are.

Above and beyond business support, through the strategic framework, we want to give businesses across Scotland as much certainty as possible. That certainty is just as important as financial support. We will take all the necessary steps to reduce the risk of transmission and to save lives. We will work with businesses to do all that. We will listen to them and understand their needs, concerns and views and we will ensure that the support that we can resource is in place for those businesses.

I move amendment S5M-23536.2, to leave out from “; believes that” to end and insert:

“and should be celebrated and supported; recognises that many businesses are at risk because of the wider economic impacts of COVID-19 despite more than £2.3 billion of financial support allocated by the Scottish Government, including the Strategic Framework Business Fund, the £15 million second phase of the Newly Self-Employed Hardship Fund and the £30 million Local Authority Discretionary Fund; welcomes the use of Barnett consequentials to provide this support and save businesses and jobs, alongside other forms of support from the UK Government such as the Coronavirus Job Retention Scheme and the Self-Employed Income Support; recognises the ongoing work with businesses, local government and trade unions to do everything possible to support and sustain businesses of all sizes in all sectors, and agrees that the finance secretary should provide additional detail to the Finance and Constitution Committee in December 2020 with an update on the allocation of consequentials to date.”

The Presiding Officer:

I remind members that we have only four minutes for speeches.

Photo of Maurice Golden Maurice Golden Conservative

We all want to get to bed early tonight, so we should keep to time.

The level of the UK Government intervention in response to the pandemic has been without parallel. The furlough scheme has helped save a million Scottish jobs and Barnett formula consequentials have delivered an additional £8.2 billion of funding for Scotland.

Unfortunately for us all, the SNP has not been forthcoming with that money and is currently sitting on £2.2 billion of unallocated funding. The SNP Government has been told repeatedly by business leaders and sector bodies that it is not listening to the needs of business in its response to the pandemic, that its interventions have taken too long to get to businesses in need and that its support measures do not go far enough. The time for SNP inaction has to end. It is already too late for a number of Scottish businesses, but others can still be saved.

Now is the time to act. With the hope that a vaccination roll-out programme will begin any week now, we are starting to see a pathway out of this enduring nightmare, but Scotland’s small businesses need to get through the pandemic to ensure that Scotland has any sort of economy left on the other side.

Today we learned that Tesco will repay £585 million of Covid-19 rates relief, and that means that about £50 million will go to the Scottish Government. We urge that that goes to independent retailers via grant payments. It is a small sum when we consider that the SNP is hoarding billions in cash that could be spent right now. The question is why. Why is the SNP putting the livelihoods of millions of Scots at risk when it has the means to do something about it? What other priority could it have for that money?

We know what that priority is. It is the one thing that trumps all others: the obsession with independence. It is independence, and independence at all costs. We heard again this week that the First Minister may push for an independence referendum next year. The SNP is sitting on that cash, as it sees it as a war chest in the run-up to the election and the furtherance of its independence goal—[

Interruption

.]—If that is wrong, prove me wrong. Publish a plan.

Photo of Kate Forbes Kate Forbes Scottish National Party

Conservative members sit on the Finance and Constitution Committee, which scrutinises budget revisions; those have been made twice and will be made again in February. The member knows precisely where the money is going. He also knows that, since the last budget revision, there have been additional announcements; if he gets his calculator out and counts up, he will see where the money is going.

Photo of Maurice Golden Maurice Golden Conservative

The Fraser of Allander institute has been clear that over £1 billion is unallocated. The Scottish Parliament information centre has said that £2.2 billion is unallocated. Businesses are desperate right now. We absolutely have to get that money to them to ensure that they survive. I am asking the cabinet secretary to publish her plan for spending the money—not next year, but now. I am asking her to show how she will use the money to protect jobs and save livelihoods. Publish a plan and give small businesses the confidence that they can make it through the winter and be able to survive until the green shoots of spring arrive. Publish a plan and show Scotland that something is more important to the SNP than independence.

The SNP’s amendment says that the Government will provide

“an update on the allocation of consequentials to date”.

Scotland’s small businesses do not need an update on allocations to date. They need the Scottish Government to spend the billions of pounds in unallocated funding that it has been hoarding. The livelihoods of millions of Scots depend on it.

We will support the Labour motion this afternoon.

I move amendment S5M-23536.1, after “financial support” to insert:

“; recognises research by the Federation of Small Businesses, which shows that one-fifth of Scotland’s small businesses and self-employed people have had no help over the course of the COVID-19 crisis; agrees that the Scottish Government should establish a Coronavirus Business Restrictions Advisory Council to support Scottish jobs, as well as protect public health”.

Photo of Patrick Harvie Patrick Harvie Green

I welcome the opportunity to debate this issue. The Labour motion acknowledges the critical role of small businesses, not only to our economy but to our communities and our society. It makes particular reference to the hospitality sector, and it recognises the risk that those businesses face and the need for Government, businesses and unions to work together to develop a long-term recovery plan.

However, I am concerned with the way in which the issue of unallocated resources is presented. I think that we can all acknowledge that that money is not sitting idle, as some would misrepresent it. It is certainly not the case, as we have just heard suggested, that billions of pounds are being set aside for a secret plan for independence. I do not think that we should lean into that kind of nonsense. It is clear that no cabinet secretary, regardless of which party was in government, would be able to formally allocate all that money to specific budget lines at the moment, given the continued uncertainty.

The Government has to address certain important issues regarding consequentials. The Government amendment corrects the unhelpful implication; it is a bit too self-congratulatory, which is not unusual for a Government amendment, but it acknowledges fairly the necessary actions that the UK Government is taking. Just two weeks ago, the cabinet secretary told the Finance and Constitution Committee that there were general areas that the so-far unallocated resource would be earmarked for. She listed maintaining transport networks, education, and payment for people who are self-isolating.

The recent announcement of the £500 payment to health and social care staff, a policy that I welcome, was not in that list, so less will be available from the unallocated resource for the priorities that were identified in evidence to the committee just a fortnight ago. The cabinet secretary has a responsibility to come forward with clear information on that point, as soon as possible.

There are some other issues that are missing from the Labour motion. I sought to raise those issues in an amendment, but it was not selected for debate. Business support must benefit the workforce, not just business owners. I am sure that Richard Leonard agrees with that principle.

Hospitality is one of the sectors that we are all concerned about, but it has a longstanding pattern of widespread poverty pay and exploitative employment practices from long before the pandemic. It also has a low level of unionisation, which is no surprise because low standards and lack of unionisation often go hand in hand. We should all therefore welcome the more than 11 per cent increase in Unite hospitality membership during the pandemic, as many more people see that the market will never protect their interests, the Government has failed to protect their interests, and so collective action can make the difference that they need to see in their lives. There are great examples of success in the collective action that is being taken around the country, with some hospitality employers being forced into reversing damaging decisions.

There is also far more to be done, such as challenging the lack of any minimum income floor in the furlough scheme. Minimum wages in this country are too low already, with even the highest bands lying well below the living wage. Discrimination against younger workers is an accepted norm that the UK Government has deliberately exacerbated. The job retention scheme now expects people to live on far less than their normal poverty wages, so a minimum income floor would give those workers some desperately needed protection.

Photo of Willie Rennie Willie Rennie Liberal Democrat

I have worked closely with Kate Forbes on financial support for individuals and businesses, and I have to say that she is good at listening and responding. In fact, she listened so carefully to Richard Leonard and me when we proposed a bonus for health and social care workers that she found the money for it. I hope that that listening carries on today, because when she says that she has no money left, that means that she can find £180 million when the First Minister needs to make a speech to conference. I am therefore sure that she will forgive us if we are a little bit sceptical when she pleads poverty once again.

I am pleased that the Government has responded to concerns about the effectiveness of the self-isolation payments. I hope that the changes will result in a higher success rate than 24 per cent. I also hope that those who require to self-isolate in advance of a hospital appointment can claim from the fund in future.

The minister needs to work to simplify the business grant application process. It has become overly complex with short timescales, and the teams handling the claims are short-staffed. I know that councils are, in large part, responsible for that, but I hope that the cabinet secretary will work with local authorities to make those improvements.

My main requests today cover three areas. The first is the quite niche area of travel agents, outbound and inbound. That includes golf tourism, which is important to my constituency, attracting customers from the USA and all around the globe to play on the world’s best golf courses. Also included are travel agents who send local people to far-flung parts of the world. Almost all their business disappeared overnight in March, but the companies were not able to furlough their staff because the staff had to dedicate their time to getting customers’ money back for all the holidays that had been cancelled. They have been running on empty for months. Despite getting some business rate grants earlier this year, many of them do not have shops or offices, and they have been losing money every single day while paying their staff.

I know that there have been discussions between ministers and the sector and I hope that the minister will update us on those in summing up.

Secondly, taxi drivers are another niche area, although Richard Leonard raised that issue as well. The new council discretionary fund is available only in level 4 areas, but in level 3 areas taxi drivers’ work is significantly affected by the restrictions and they are struggling to keep afloat.

Photo of Kate Forbes Kate Forbes Scottish National Party

The discretionary funding is available to all local authorities, not just those in level 4.

Photo of Willie Rennie Willie Rennie Liberal Democrat

That is excellent news. I am glad that that has changed as a result of my speech this afternoon—

I will take all the credit for it. I hope that the taxi firms get the support that they require, because they are really struggling. I hope that we get similar movement on the next point that I am going to raise, which is probably the most substantial one.

It concerns tourism businesses that are affected by the restrictions within a council area and the travel restrictions between areas. Bed and breakfasts, guest houses and self-catering businesses in level 3 areas cannot accept bookings from anyone outside their council area and they are also restricted by the indoor visiting rule within their council area, yet they are not entitled to access the hardship or business closure funds.

Take Hawkswood estate in my constituency, which has self-catering properties that take up to 10 people. It will not find many families that can fill a property with 10 people, but it is in a level 3 area and cannot get financial support. It is struggling. I hope that we get some movement from the Government in that area as well, because such businesses are affected in multiple ways by multiple restrictions, and the Government is not there to support them when they need it.

I hope that the minister will be able to sum up on those areas, which are important for my constituency and many others, in her closing speech.

Photo of Pauline McNeill Pauline McNeill Labour

If people think that they understand the scale of the jobs crisis, they need to multiply it significantly. We are witnessing the beginning of a jobs collapse in what we saw yesterday with the Arcadia group and Debenhams. It is really sad. It flows from the pandemic, but also from the decisions that the Government has made about lockdown restrictions. In listening to Kate Forbes earlier, I did not hear her acknowledge that for many people the situation will kill their businesses—many of those businesses will not be there after the restrictions end.

As Richard Leonard said, the support available for some of those businesses is totally inadequate; if it had been adequate, they would have had a chance of survival. We have locked down retail and hospitality at a time of year when their sales would have seen them through January. Meanwhile, their online competitors are largely unaffected. We need to understand that, because of the restrictions, thousands of businesses will lose out and thousands of jobs will be lost. Therefore, we need a jobs programme like no other, state intervention on a scale that we have never seen before and worker protections and support for businesses such as we have never seen before.

We need conditionality on a living wage on all jobs related to the public sector, but we also need to seek to protect workers in the private sector who do not have the protection of a trade union. There are deep inequalities in who is being supported through the pandemic in the job retention scheme. How many young people in the hospitality sector were dismissed without any protections, who were not in a union and have no security for their future? Many people were not furloughed and tens of thousands of self-employed workers did not qualify for the scheme.

There are far too many gaps and there needs to be an understanding that many people were left with absolutely nothing. I would like to know whether an audit has been done of the fallout from that and whether the Government thinks its plans are the right ones. We need an end to zero-hours contracts, but we also need a proper policy to end evictions so that people who are struggling with their job can have a home and some security until they can get back on their feet.

I want to talk about the young persons guarantee scheme. Every young person has apparently been offered an opportunity in education, jobs or training.

I do not understand why the Government is simply saying that it will help 10,000 people who are over the age of 25. That is not ambitious enough, which tells me that the Government does not understand the scale of the problem.

I welcome the new directorate that has been set up to run the scheme, but I ask the Government for a detailed report. We do not need government-speak about agencies and money—we need to see that the scheme is having an impact on the ground. I do not know any young person, in my family or my community, who has been contacted or knows which website to go on.

We are now nine months down the line, and I do not know anybody who knows what to do if they do not have a job. I am sorry, but that is absolutely not good enough.

Photo of Pauline McNeill Pauline McNeill Labour

I will, in a moment.

With regard to further education colleges, I have had no contact from them, with one exception. I do not know what they are doing. Without further education being involved in the scheme, we cannot offer young people the guarantee of skills and training that the minister announced. There is no joining up.

I will take an intervention from the cabinet secretary.

The Presiding Officer:

Ms McNeill has only four minutes.

Photo of Fiona Hyslop Fiona Hyslop Scottish National Party

Yes—and the debate is on business support. I say to the member that there is a website—[

Interruption

.] It was launched in the chamber on 5 November, and every single member in the Parliament—not just me—should be promoting it.

Photo of Pauline McNeill Pauline McNeill Labour

I did not mean to shout over the cabinet secretary, but that was my point: a website is not good enough. In my city of Glasgow, we are worried that there is no recognition of the problems. We do not have a plan for aviation or the return of the music sector, and we do not have a job creation scheme or an intervention to support jobs. We need Government ministers to start taking on that massive challenge, but so far it has been mostly talk.

Photo of Stuart McMillan Stuart McMillan Scottish National Party

The debate is very important, and it has provided the Scottish Government with an opportunity to highlight some of the support packages that it has introduced this year. However, it is clear that there is still more to do; I do not think that any member in the chamber would say that there is not.

I welcome all the support that has been introduced so far by both Governments, as I highlighted a few weeks ago in a similar debate. I will not be churlish and ignore the finance that has come from the UK Government. However, it is important to recognise that it has come not from the Treasury savings account but from the Treasury credit card. Nevertheless, it was the right thing to do.

I touched on the furlough scheme in a previous debate. In general, it has been of huge assistance. However, as we know, there have been eight different versions of the furlough scheme announced by the Chancellor of the Exchequer, Rishi Sunak, three of which have not been implemented. Although the extension of the scheme until March 2021 will help to prevent job losses, it has come too late for many businesses and workers in all our constituencies and regions.

Some businesses had already taken the difficult decision to make people redundant because of the unnecessary confusion caused by the UK Government and the expectation that the furlough scheme would be withdrawn. Some of those jobs and businesses may have been saved if the UK Government had stopped its London-knows-best approach and listened to others for once. It took six months of pressure from the Scottish Government and others to eventually get the chancellor to do a U-turn on the furlough scheme. I say to the chancellor and the Scottish Tories that it is clear that many businesses did not have six months to waste.

No one can deny that, with Covid-19, 2020 has been an unprecedented year. In addition, in just under four weeks’ time, we are going to crash out of the European Union—the most successful trading bloc—against our will. As things stand, no deal has yet been reached, which adds even more uncertainty to the chaotic picture that we have been witnessing for months.

Business talks about certainty, and the pro-union side spoke all about it during the 2014 independence referendum. There is certainly no certainty now. There is no certainty about leaving the EU or about business success post Covid-19, unless we are talking about the supermarkets. I have been critical of Tesco in the past, but I welcome its announcement today, and I would like the other supermarkets to do the same. There has been no certainty from a London elite who care little for other parts of the four nations and who act only when decisions affect the south. The north-west of England can tell that story, too.

I have seen how the Scottish Government, with the limited financial powers of this Parliament, can assist businesses in my constituency. When Texas Instruments announced that it was going to close its Greenock plant and make nearly 300 people redundant, after many months and a huge effort by many people, the Scottish Government’s investment of over £13.7 million, as part of a £47 million package of total investment, saved those jobs. Those jobs have remained, which is helping the small business sector in my community.

When Ferguson Marine in Port Glasgow was about to go under, the Scottish Government used its powers to save the yard and the 300 jobs in it. More jobs are being created, including apprenticeships, and they are helping the economy in my community.

With the full financial powers of independence, more of the business support that has been requested or demanded could be delivered—obviously undertaken in partnership with the business community. Acting swiftly—as compared with the dither and delay by the UK Government on the furlough scheme—would certainly help, and more certainty could be provided for the economy, as the Scottish Government could be responsive and would not need to wait for the Barnett consequentials in order to do things. With independence, the Scottish Government can cut out the sophistry of the UK and get on with the job of governing for the business community and for the people of Scotland.

Photo of Jamie Halcro Johnston Jamie Halcro Johnston Conservative

We have heard from around the chamber about some of the challenges that small businesses face. I welcome the opportunity to reflect on those challenges, particularly those in my region. As a Highlands and Islands MSP, I am keenly aware of the opportunities and the challenges that small businesses face. Compared with other parts of Scotland, we seem particularly entrepreneurial: small employers are considerably overrepresented in my region, and they are the backbone of our regional economy.

Much of that comes from necessity. This is not about national businesses or global chains reaching into our communities; it is about small businesses that are part of those communities, growing organically and working to create jobs and build livelihoods.

Seasonal employment around the tourist season remains significant in some parts of the region, offsetting losses from other times of the year and stretching out the impact of what might often be a restricted tourist season, so it is especially hard to see once-viable enterprises go to the wall or be under threat of doing so as the result of a virus that has been unprecedented in its impact on all our lives. Across Scotland, hundreds of desperate decisions have been made in offices, shops and pubs and over kitchen tables as business owners question whether they can continue or whether the pressure of their finances has become overwhelming.

For too many people, those decisions have already been made. Unfortunately, the limited data that we have on the impact of the pandemic on rural Scotland will show us what has happened only after a significant delay, but we can see from around the Highlands and Islands the number of businesses that have shut up shop or that never reopened after the first lockdown—businesses that were unable to make the sums add up.

We know that delays in getting support to such businesses can be the difference between them carrying on or failing. We also know how co-dependent businesses can be in smaller communities. A local hotel can be the linchpin for a whole range of local suppliers, and an events business that has been shut down by restrictions may have been the driver of demand in the nearby hospitality sector.

Too often in the equations cooked up in St Andrew’s house, that simple principle seems to have been forgotten. As the Federation of Small Businesses has made clear,

“Thousands of businesses which supply our retail and hospitality sectors are facing similar levels of hardship as those that have been hit directly.”

One message that we have heard continually from many sectors is that support has come only when it was fought for. Equally, when one sector was granted a package of support, others were often left out or were simply treated as an afterthought.

In the Highlands and Islands, many of our small businesses are facing a hard winter. That is not to say that the support available has not been welcome, but in many cases there are real worries that—to quote the Scottish hospitality group—grants and other help will simply not “touch the sides” of the losses that businesses have suffered.

The main glint of light has been the furlough scheme, which has helped businesses across the UK, large and small, to keep staff on and has protected the best part of a million jobs here in Scotland. About £8.2 billion has come to Scotland to deal with the pandemic as a result of UK Government decisions—an unprecedented figure. As the Fraser of Allander institute has highlighted, however, the Scottish Government has held back key sums, failing to get them in a timely way to the businesses that need them.

We are now in the 10th month of Covid restrictions of varying levels of severity. It has been a long slog for many businesses and employees, with a reactive Scottish Government that has too often taken too long to step up and act. We now need an approach from the Scottish Government that looks beyond the next month and that avoids disproportionate impacts on small businesses or on certain regions in our country, with a vision that considers how we emerge, how we recover and how we rebuild after the pandemic.

Photo of Gillian Martin Gillian Martin Scottish National Party

This is a time of year when we would normally be talking about small businesses in our respective constituencies and urging people to buy local, support our independent shops and cherish the diversity of offer on our high streets. In Aberdeenshire, those shops are thankfully still open, and those small businesses need our support more than ever. I make this plea to any of my constituents who are watching the debate to please get their Christmas presents, where possible, from the high streets of our market towns of Turriff, Inverurie, Ellon and Oldmeldrum; to support the struggling self-employed microbusinesses that have no Christmas fairs this year; to find their favourite local makers online where they continue to sell; to buy Christmas trees, wreaths and flowers directly from their local florists and garden centres; and to get their turkeys from our farm shops. This year of all years, doing that is more important than ever.

In Scotland, in contrast to other countries, the Government has had to make business support and public health decisions against the backdrop of other impactful decisions that were made in areas over which we do not have control. For the purpose of the debate, the most obvious one is the fiscal arrangement that we have as a devolved nation. The money that we have is the money that we have, and we cannot borrow any more.

With those constraints, the Scottish Government has still been able to deliver more than £2.3 billion-worth of support to a wider range of businesses than has been supported in other parts of the UK. That funding has helped those who have had to temporarily cease trading because of affected supply chains; it has provided grant support, which addresses the issues that the newly self-employed person faces because the UK Government has frankly ignored them; and it has given discretion and flexibility to councils to decide who is eligible. Throughout this period, I and my constituency office team have challenged a few decisions that the local authority has made regarding local businesses, and we have been able to get support to the latter when that flexibility has been a little bit wanting.

Is what we are doing enough? Of course it is not. The full green recovery will take so much more. To borrow 4 per cent of our gross domestic product, as Germany has done, to front load that recovery might be enough. That is what SNP members would like, and it would be immensely helpful if every MSP could get behind the Scottish Government in those calls for borrowing powers and more fiscal flexibility. I am an optimist—what can I say?

I would like to see a renewed focus on any remaining Covid business disruption support for the very small businesses that have fallen between cracks in eligibility—the hardest-hit people from the creative industries, for example, as well as businesses in the beauty and lifestyle, travel, tourism and events sectors, a high proportion of which are, incidentally, women-led. Many are sole traders who operate out of their homes, and we know that they have not had the benefit of furlough or support delivered through the rates system.

I have a plea for more help for those who have graduated from our colleges and universities this year. They do not need more training; they need opportunities. Many of those graduates were hoping to start their freelance careers in the sectors in which salaried secure jobs do not exist and have not existed for some time, such as the creative industries, and they need specific assistance.

I, too, welcome that Tesco is refunding the support that the Scottish Government gave it at the start of the pandemic. The cabinet secretary’s immediate commitment to give that £60 million to those businesses and communities that have been hit hardest during Scotland’s recovery from Covid is absolutely the right one. I hope that other large businesses that are now finding their feet will join Tesco in giving back, so that we can do what we can to redeploy those funds to the small businesses that are finding the situation that much harder.

Photo of Daniel Johnson Daniel Johnson Labour

I listened to the cabinet secretary’s opening comments with an increasing sense of despair. In essence, she said that the assistance that was in place was in place, and that despite the increasing evidence that we are facing an absolutely catastrophic situation in terms of jobs, there would be no new money and no new schemes.

What she offered was a sympathetic ear and hope for the new year. As Pauline McNeill pointed out, however, businesses simply will not be here then, and hope will be insufficient. I thank goodness that I am not a retailer anymore. If I were, I would be sitting on thousands of pounds-worth of stock that I would have had to commit to back in August and September, with no possibility of selling it, which would leave me ruined. If the cabinet secretary can explain to me what she says to retailers in similar situations, especially in level 4 areas, I would be interested in her answer.

Photo of Kate Forbes Kate Forbes Scottish National Party

I will make two points. First, as I said in my speech, we will continue to make every penny that we have available to retailers and others who need it most. There will be more announcements of business support.

My second point is that the fastest way to support businesses is to get the economy back open and trading. Any form of business support is just a sticking plaster, and does not compensate for lost income.

Photo of Daniel Johnson Daniel Johnson Labour

Quite simply, SPICe and the Fraser of Allander institute say that that is not correct. The Scottish Government has not spent every penny that is available to it. With regard to controlling the virus, I am afraid that that confidence has gone. Other countries have managed to keep those sections of the economy open through testing and tracing, and this Government has simply failed. The consequences will be lost businesses and lost jobs.

I am proud that, in my constituency, there is a richness of independent retail and hospitality businesses. It is with a sense of incredulity that those businesses hear that they are non-essential. Edinburgh is a city that thrives on tourism and its diversity of independent businesses. Those businesses are not non-essential—they are absolutely critical to the functioning of Edinburgh’s economy. Hospitality in level 3 and 4 areas is completely shut down, and those businesses feel that their Government’s responses to date have been crude and without detail and rationale.

As many members will have been, I have been having extensive Zoom calls with groups of businesses, particularly hospitality businesses, in my constituency. They have been doing a lot of work. We have been in discussion with businesses that represent 450 premises across Edinburgh, and they are clear that 5,000 of their jobs in the city have already been lost, and 3,000 more jobs will go if the current restrictions stay in place.

The businesses are also clear that the assistance that has been provided to date is completely insufficient. Collectively, there has been £650,000 of assistance, but that is only £1,500 per business. That is it. That amount does not even cover part of a day’s trading at this time of year. It is a drop in the ocean compared to the hundreds of thousands of pounds-worth of losses that those businesses will be making.

I have still not had a response from the First Minister to my letter in which I set out very reasonable suggestions, such as the alteration of trading windows, limited alterations to the sale of alcoholic drinks, restricted seating times and improved safety standards. Those modest measures could improve the ability of the businesses to continue to trade.

The reality is that the restrictions would be difficult to manage at any time of year, but this time of year is utterly critical. Businesses, whether they are in retail or hospitality, are utterly dependent on the next few weeks to make the money that they need to survive through the rest of the year. The economic impact of the situation is simply not being recognised. Those businesses need more than hope—they need help.

Photo of Rachael Hamilton Rachael Hamilton Conservative

I refer members to my entry in the register of members’ interests.

I thank the Labour Party for securing the debate, given the unprecedented circumstances of the pandemic in which we find ourselves. The motion mentions small business Saturday, which, in normal times, is a roaring success. Scottish Conservatives are hugely supportive of businesses in Scotland, and, in my constituency of Ettrick, Roxburgh and Berwickshire, I would normally be out supporting them on the high street.

The extent of the value of business is hard to measure. It is not only the economic output that matters, but the impact that the businesses have on society by combating loneliness, providing local knowledge, being advocates for the high street and for Scotland, and creating job opportunities to give people a step up on the ladder.

Right now, many businesses will be wondering how they will survive this winter. Due to levels restrictions, they are losing out on normal Christmas trade, particularly businesses in the service sector, which rely on people and the trade of physical goods and services and which support more than 500,000 jobs in Scotland.

It is true that there is a fine balance to be struck between managing public health and the economy, but the SNP’s excuses are not acceptable. I am ashamed that Kate Forbes is sitting on that money and, in an intervention, telling members that she will spend it. When will she spend the money?

Photo of Rachael Hamilton Rachael Hamilton Conservative

I will not take an intervention. Kate Forbes can deal with that point in her closing speech.

On the hospitality sector, senior figures from the licensed trade, law and businesses in Edinburgh have accused the SNP Government of shameful inconsistency in protecting the economy of cities around Scotland. Roddy Dunlop QC, the dean of the Faculty of Advocates, has called out the inconsistency between Scotland’s cities and described it as “unbelievable”. He has demanded an explanation, which businesses deserve.

We know from FSB research that one fifth of Scotland’s small businesses and self-employed people have had no help over the course of the crisis, as many members in the chamber have mentioned. That is totally unacceptable, and the buck stops with the SNP Government. Maurice Golden highlighted the fact that the Government is sitting on £2.2 billion of Barnett consequentials that should, rightfully, be in the hands of businesses around Scotland, which are on their knees.

The Fraser of Allander institute revealed that the Government is hoarding more than £1 billion at Holyrood instead of using it to protect jobs and support businesses. More than anything, that precious funding should be used wisely on grants and loans to support job retention, which is crucial as we continue to weather the storm. I thank our lucky stars that Scotland is part of a union that has the might of the furlough scheme, and many members whose constituents have benefited from the scheme should be shouting from the rafters about that. [

Interruption

.] No—I will not take an intervention.

I welcome the points that are raised in the Labour motion on protecting jobs and the need for greater support for businesses. The Conservatives will support the motion, given the urgency of the situation in which we find ourselves.

The UK Conservative Government has stepped up to the mark for businesses around Scotland, providing certainty to the tune of £9.5 billion and extending the schemes that have protected jobs across every part of our country. However, the Scottish finance secretary, Kate Forbes, complains ad infinitum that it is not enough. She stashes the cash and fails to redistribute it to businesses that desperately need it. Businesses do not have votes; people have votes. Could those squirreled-away pennies magically reappear in the spring to fund the list of ministerial announcements that were splashed at the SNP conference over the weekend? We will soon see.

SNP members spend their time talking about a four-day week and independence—Stuart McMillan banged on about independence in his speech—but it is the Conservatives who are working to protect the jobs of hard-working people and businesses around our United Kingdom.

I urge members to vote for our amendment, which recognises that we need a coronavirus business restrictions advisory council. I urge the SNP Government to take its fingers out of its ears and to listen and pay attention to businesses instead of cooking up an ideological and damaging referendum.

Photo of Joan McAlpine Joan McAlpine Scottish National Party

The Covid-19 pandemic has brought profound challenges to businesses and communities around the world. Small businesses contribute enormously to our economy and provide countless jobs in our communities, but they are economically vulnerable. To address the new challenges, the response must be innovative, flexible and adaptive, which is what the Scottish Government’s response has been, including through the design of schemes that are not available in England, as the cabinet secretary outlined.

The fiscal powers of the Scottish Government are constrained. As long ago as late March, David Phillips of the Institute of Fiscal Studies said:

“as it stands, the funding arrangements for devolved Governments may not be appropriate for the task in hand. This is because they have limited reserves, constrained borrowing powers, and the funding flowing to them as a result of the Barnett formula may not reflect the challenges that they face”,

including not having powers to borrow, which sums up the problem. The Scottish Government is bound by law to produce a balanced budget and cannot respond quickly to emerging needs by borrowing. Scotland should not be refused the fiscal flexibility that is needed to prevent the healthcare crisis from spiralling into an economic crisis. I think that we all agree that, sadly, that process is already well under way.

I welcome the Scottish Government’s commitment to spending all £8.2 billion of the Covid Barnett consequentials on supporting our response to Covid-19, and I welcome its reprioritisation of significant sums to combat the virus. However, the UK Government’s 2020 spending review puts barriers in Scotland’s way. It offers only limited information on the 2021-22 Scottish budget envelope, as it covers only one year. That makes it impossible to plan with any certainty. We experienced a similar scenario earlier this year, when the UK Government’s budget was not announced until March. The delay created serious difficulties in our budget setting and scrutiny processes.

Now more than ever, the UK Government must give the Scottish Government the powers that are needed to respond to the challenges of the pandemic. If we are to build back better, we need in our hands the economic tools for the job.

Within those restrictions, the Scottish Government has done well in designing the strategic framework business fund, which provides grants to help businesses that face closure or restrictions to trading. I particularly welcome the £30 million discretionary fund to assist businesses in areas such as my region, which, although they are in level 2, are affected by restrictions elsewhere—whether that is related to travel or because they operate in both Scotland and England—which stop their customers coming or affect their supply chains.

However, I am concerned that, on an operational level, some local authorities do not seem to be rolling out the discretionary fund quickly enough. I would appreciate it if the cabinet secretary could provide her understanding of how many councils have gone live with that excellent fund that the Scottish Government provides.

For the Scottish economy to bounce back in a way that is fair and equal, we need to support small business. In order to do that to the best of our ability, the Scottish Government needs full financial powers, so that we are no longer held back by UK budgetary decisions.

Photo of Jamie Greene Jamie Greene Conservative

The virus has affected us all, but, although some have kept their health, they have lost their livelihoods.

There are more than 125,000 Scots looking for work. For many, the jobs simply are not there. It has been a devastating year for businesses, including small businesses and shops that are local employers. One example is LAH Travel in West Kilbride, which has completely lost its market. It is not alone. More than 8,000 travel jobs in Scotland have been lost or are at risk. Huge retailers such as the Arcadia Group and Debenhams employ thousands of people and they have been added to the long list of economic victims of this horrible virus.

We know that things are bad when the Government’s chief economist says that the jobs that we have lost during the pandemic might not return until at least 2023. I think that he is being overly optimistic.

Yesterday, I took part in a debate in the chamber about the mental health of young people. Youth unemployment now sits at around 14.5 per cent: it has nearly doubled since the start of the pandemic. That should be of huge concern to all of us.

We have already had a debate today about what happens when the Government does not get it right. Yes, Governments try to soften the blow, but let us face it—when Governments legislate to shut down businesses, ban travel and restrict people from leaving their homes, that comes at a cost to finances, physical and mental health and employment. I know that we are not alone; we are not unique. Parliaments all over the world are probably having debates just like this one.

I know from speaking to businesses in my region that the support that they get from the Government means so much to them. It has a direct effect on their ability to employ staff and stay open during these tough months. The furlough scheme, as much as it has been berated in the chamber today, is a direct intervention that does not come naturally to Governments but that has undoubtedly saved hundreds of thousands of jobs in Scotland. It has delivered, but no Government can afford to pay people to sit at home forever, because we have to build a resilient health and social care system and we have to properly fund public services. We need to get businesses back open, working, paying tax and employing people.

The UK chancellor promised from day 1 that he was prepared to do whatever it took to support Scotland and every part of the UK as much as possible throughout the crisis. I believe that he has lived up to that promise.

I do not often share an economic view of the world with Richard Leonard, but he is right to bring the debate to the chamber, because the lack of support that so many of our businesses need should cause us sleepless nights, because we shut those businesses down. They followed the rules, and we often gave them just a few days’ notice, under the premise of the public health emergency. As Daniel Johnson correctly pointed out, we said that they were not essential, but they are. Every job is essential to those who work in a business that is being closed.

Time and again, there have been gaping holes in what has been offered in support, compared to what is needed in support and what has actually been delivered in support. Following months of warnings about an existential crisis for outdoor education centres, only last month did they finally get some money.

We must be clear. If the finance secretary is sitting on Barnett consequentials—and there is debate about whether she is or is not—she must get that money to where it is needed. If, as she claims, there is no money left in the pot, the question is, where is it?

Every penny must be accounted for. Every penny that is due to Scottish businesses must go to them. Any money that is spent in the Scottish economy must go to the economy. Businesses need that support. They need it now. They need cash in the bank. The head-in-the-sand approach to the economic crisis that we face is not sustainable.

I support the amendment in the name of Maurice Golden.

Photo of Kate Forbes Kate Forbes Scottish National Party

I have never been in opposition, but I would have thought that it would be easier to secure results for constituents if members dealt in fact. It does them no favours to pretend that the full £2.2 billion is unspent.

However, I will start with a point about transparency. In this unprecedented year, I accept that there is a need for additional information. That is one of the reasons why we had the extra budget revision in May, and why I offered, exceptionally, to set out more information to the Finance and Constitution Committee in a December update, which will happen in the coming days. When it comes to business support, my commitment is to keeping that committee updated, as far as possible, in order to aid its scrutiny.

People who work with the budget, including those who sit on that committee, will know that the UK Government’s guarantee has been very helpful for planning ahead, but it also means that there is less transparency on what generated the available consequentials, and that funding can be given unexpectedly to the Scottish Government by the UK Government. That allows us to go further when it comes to business support, as well as covering things such as vaccines and the continuation of the transport system.

Some—not many—members raised very constructive ideas about specific sectors and businesses. Gillian Martin talked about being an advocate for the businesses in her constituency—as she has been, and as other members have been who have raised specific points with me which we have tried to resolve. To repay the warm words that Willie Rennie bestowed on me, I say that he, too, has been very constructive in raising specific issues that can sometimes—not always—be resolved.

The discretionary funding is of course a partnership with local authorities. As members are always quick to remind me, when we do things in partnership there is a role for local government in coming to an agreement. The Convention of Scottish Local Authorities has agreed, internally, the distribution, and we have been agreeing the guidance with it. That guidance, as I am sure everybody would accept, needs to strike a balance between clarity, to make sure that we support the sectors that we have mentioned, such as taxi drivers, and discretion, reflecting for example the fact that businesses in the Western Isles may have different needs to those in the middle of Edinburgh.

On Willie Rennie’s other point, I hope that we can announce additional sectoral support for some of the businesses that he mentioned, including travel agents in particular. Work is going on specifically with the travel agents, to ensure that we capture them all.

Maurice Golden said that business support does not go far enough. I agree. If all members agree on one thing, it is that the need far outstrips the funds available. However, we must be realistic. The funding in Scotland has gone further than the UK policies that generated the consequentials. I am not content just with being slightly better than England. We need to make sure that we tailor our support to the businesses that need it.

Some members talked about long-term recovery. Our primary focus is very much on the immediate response to the economic crisis and businesses in distress, but there are questions about long-term recovery, the future of town centres, reskilling and retraining.

Jamie Halcro Johnston said that we need to look beyond the next month. I agree, which is why I make a plea, when it comes to the budget situation. The future is uncertain, so we must use our funding not just to help businesses now, but to ensure that, in the middle of February, there is funding so that businesses can get the recurring grants.

The Presiding Officer:

The cabinet secretary has about 10 seconds left.

Photo of Jamie Greene Jamie Greene Conservative

I will be quick, then. How much extra money has Covid cost the Scottish Government and where has the money come from?

Photo of Kate Forbes Kate Forbes Scottish National Party

As we set out, the vast majority came from the UK Government in the form of consequentials, with an element of reprioritisation, the details of which are in the budget revisions that are regularly published.

I must come to a close, Presiding Officer. The future is uncertain. We will continue to work with business organisations—this morning, I met the FSB. I am always happy to speak to any member about businesses in their constituency, to ensure that we provide as much support as possible to get them through these extremely challenging times.

Photo of Jackie Baillie Jackie Baillie Labour

Let me get right to the nub of the debate. The Scottish Government has received £8.2 billion in Barnett consequentials since the start of the pandemic, and according to the Scottish Parliament information centre, which is independent of any Government and political party, £2.2 billion remains to be formally allocated.

Let us take the cabinet secretary at face value. By my reckoning, more than half of that figure is currently unallocated and unspent, while businesses are going to the wall and jobs are being lost. There does not appear to be, on the part of the Government, any sense of urgency about getting the money out to where it can make the most difference. Let me repeat that businesses are going to the wall now. Jobs are being lost now—not next month or next year, but now.

Small business Saturday is this weekend, as members said. It is an initiative that Labour encouraged when it was in Government and it is embraced by us all. It encourages us to support local small businesses in our communities, not just now but all year round. In a spirit of consensus, I also commend the Scotland loves local campaign, because all efforts to protect our high streets and small businesses are welcome.

However, there will be no shopping in my area on Saturday. There will be no going out to restaurants, no looking for Christmas presents at my local shops and no retail on offer, other than supermarkets and takeaways. My high street is a ghost town, as is the case in the 11 local authority areas that are in level 4 of the framework. In other words, we are in lockdown.

I recognise that there is a public health crisis, but we need to minimise the economic crisis, which is having a huge impact on jobs and livelihoods. That means putting support in place now and over the next few months, to sustain businesses until the vaccine is in play and restrictions can be properly lifted.

I made those points in the debate a few weeks ago and I make no apology for repeating them. The hotel support fund, for example, which had £14 million in it, was oversubscribed. Only 30 per cent of applicants got an award. Small, family-run hotels—some are in my area—have received no support at all and are on the brink of closing. Many have furloughed staff and some have had to lay off staff completely. Many are struggling to stay afloat and see no future, despite news about the vaccine.

The coronavirus restrictions fund and hardship fund were allocated some £48 million between them. How much has been spent? I deal with more and more companies in my area that have been rejected. Some were not eligible, because the criteria were too tight. Hotels were rejected. Small businesses in the local supply chain were rejected. People without business bank accounts were rejected. Bed and breakfasts were rejected. The list goes on. Despite our questions, we have still not been told how much was spent and how much is left over. The coronavirus restrictions fund closed on 3 November, four weeks ago, so there should be no excuse for not providing the information.

I will give a couple of examples. A small business that supplies local hotels and restaurants with hygiene supplies did not get a grant and was told that it was not eligible for hardship funds because it does not trade in perishable goods. However, there is a local craft brewer that will need to get rid of its cask ales because the pubs are shut. That business’s product is perishable, but it is clearly not perishable enough, because it did not get help. It will have to throw its beer away—many of my colleagues will regard that action as criminal—but we are talking about people’s livelihoods.

Now we have the strategic framework business fund, but the criteria have not substantially changed. How many businesses will be eligible to apply? How many have already applied and been rejected, and how much has been set aside? I have asked the Scottish Government time after time, but no figure has been provided. Grants in those categories are paid four weeks in arrears when the need is immediate. What about the discretionary fund? £30 million for supply-chain companies and people such as taxi drivers is incredibly welcome, but the fund is not yet open and there seems to be no date in sight.

There are more than 350,000 small businesses in Scotland that employ 1.2 million people. They account for 99.3 per cent of all private sector businesses. They need our help not next month or next year—they need it now.

I will finish where I started. The Scottish Government has £2.2 billion that has not been formally allocated and more than half of that is not spent, while businesses are going to the wall. It needs to get the money out.