Coronavirus (COVID-19) update: Economy Secretary speech - 30 October 2020

The impacts of COVID-19 continue to be felt across all areas of our society and this month’s brief from the Chief Economist, which is published today, lays bare the challenges for the economy as we move forward with our response.

The report demonstrates that the path of recovery continues to differ by sectors and we know that local restrictions are influencing the level of economic activity in some areas.

In addition, the latest monthly GDP data shows that while the Scottish economy grew for the fourth consecutive month in August and has recovered around 60 per cent of the output lost during March and April, the pace of growth has slowed in August as it did in the UK as a whole.

The Scottish Government is responding to these challenges in a targeted way and striving find a balance between protecting public health and supporting the economy to protect businesses and livelihoods.

I know the difficulty and frustration that can inevitably come with further restrictions – but those short-term sacrifices will ensure we will be in a better position in the long-term.

We also value the efforts that businesses and other stakeholders are making both to improve compliance and to work with us to develop our plans, and we will continue to engage with them. I want to thank all businesses that have engaged with us in the recent weeks and months – their input has been invaluable.

Next week will see the introduction of the new Strategic Framework to help suppress the virus. This is accompanied by a refreshed programme of support for businesses, from 2 November, with grants of £2,000 or £3,000 - depending on the business’s rateable value - where they are required to close by law. That’s payable every four weeks in arrears, for the duration of the restrictions.

We recognise that it is not only businesses that are required to close that will be impacted by the new restrictions. There is also a hardship grant of £1,400 or £2,100 for businesses that remain open but are required by the regulations, to limit the hours they can open or specify limitations on their operations.

I’d like to thank local authorities for administering these grant schemes. I know they are working hard to transition to these arrangements and make preparations for online applications. I want to stress that if restrictions apply for more than four weeks eligible businesses will not need to re-apply.

Earlier this month, we announced a £40 million Fund to support businesses currently facing closure or hardship. Some sporting businesses and clubs have asked for explicit confirmation that they are eligible and today I am pleased to confirm that we will be paying hardship grants in the central belt to sports clubs, gyms and swimming pools that operate from their own non-domestic premises and are no longer able to run or charge for group exercise classes - that is a key test.
I can also confirm that hardship grants (outside the central belt) and closure grants (inside the central belt) will be paid to bowling and other sports clubhouses which are licensed to serve alcohol, and are therefore equivalent to bars that must close or modify their operations.

In addition, we are extending the eligibility criteria for the support for nightclubs announced earlier this week to provide all nightclubs, within the agreed definition, with full funding - regardless of whether they adapted their premises and opened in a limited way for any period.

It is also essential to protect people’s incomes during this period and today I am calling on the UK Government to ensure the lowest paid furloughed workers are properly supported through the new Job Support Scheme.

This new scheme, which we welcome, comes into effect on 1 November, is better than furlough ending entirely, but I am concerned that it does not go far enough, especially for those workers in tourism, hospitality and the arts. In fact, it could cut the income of many of those affected to below the living wage.

The reality this winter is that many furloughed workers will fall below the real living wage – and face increasing hardship. While top ups may be available through Universal Credit, the five-week waiting period for new claimants often leads to financial and psychological distress.

The UK Government must ensure that the lowest-paid workers are properly supported – including looking again at the rate of furlough pay for these workers. This could reflect the approach taken by other countries such France - where those on the minimum wage already receive 100 per cent salary protection.

As we move into the new Framework next week, I want to again recognise the sacrifices that businesses have made during this period. By continuing to work together to suppress this virus we can come through this to the other side with a fair, sustainable and wellbeing economy that will benefit all of us.