Update on COVID-19 business support: letter from the Cabinet Secretary for Finance and Economy - 8 July 2021

Update on COVID-19 business support

Following the First Minister’s announcement that we aim to lift all major COVID-19 restrictions from 9 August, I am writing to provide an update on the Scottish Government’s support for businesses.

Since the start of the pandemic, businesses have directly benefitted from more than £3.7 billion in support – more than a third of total COVID-19 funding.

As you know, following feedback from businesses, we closed the Strategic Framework Business Fund (SFBF) in March and front-loaded support to help businesses re-start.

More than £344 million was paid to more than 47,600 business premises from the SFBF with 89% of funds paid to small and medium sized business premises with rateable value less than £51,000.

On 19 April, all businesses in receipt of the SFBF automatically received a combined payment of a final two-week SFBF supplement and a one-off restart grant to help them prepare for reopening.

More than £444 million has been paid out through the restart grants which aimed to support businesses with the expense of restocking and reopening, with a smaller retailer receiving more than three months’ grant and a larger hospitality business receiving more than six months’ grant in April. 

In the first 100 days of government, we have confirmed a further £25 million for the culture sector, targeting those who previously received support from the Performing Arts Venue Relief Fund and the Culture Organisations and Venues Recovery Fund and those who were eligible but did not get support.

We have also allocated a further £62 million for taxi drivers and operators, bringing the total support for the taxi sector during the pandemic to more than £90 million. Taxi drivers have automatically received a second payment of £1,500 and operators will receive between £1,000 and £15,000.

Since moving back to local authority protection levels in April, we have provided additional financial support to businesses in areas which have remained subject to higher levels of restrictions.

We acknowledged the unique challenges businesses in Moray and Glasgow faced as they were subject to Level 3 restrictions for an additional period of time. While we recognise business support cannot, and is not intended to, make up for all losses, the Scottish Government provided additional funding to allow grants of £250 to £750 per week for eligible hospitality and leisure businesses depending on their rateable value for the duration of the restrictions.

We have worked closely with councils to ensure businesses subject to restrictions for a longer period of time remain supported and on 2 June I announced up to £12 million additional funding for the 14 local authorities that have remained in Level 2 restrictions. This includes:

• £100,000 for soft play centres which remain closed – providing up to £750 per week
• up to £3.8 million for the events and wedding sectors which will be paid via Scottish Enterprise and Events Scotland as it is a more efficient delivery mechanism than using the Local Authority Discretionary Fund as originally announced – wedding and events businesses in the 15 local authorities in Level 1 will also receive support
• up to £8.1 million to support hospitality businesses – grants of between £350-£525 per week for businesses required to modify their operations

We have confirmed we will continue to support specific sectors that are affected by the extension of restrictions beyond 28 June. This additional funding is not available to businesses in England that are also subject to restrictions longer than initially planned.

At 25 June, more than £9.3 million has been paid to more than 9,000 business premises through the Local Restrictions Support Fund.

The phasing out of the furlough scheme is expected to increase unemployment in the short term and the Scottish Government has consistently called for the UK Government to keep the scheme in place for as long as it is needed. We have also called on the UK Government to review the rules that will require contributions to the costs of the scheme from July, and that currently exclude people who have started a new job since 2 March from being furloughed. It must also be clear to businesses and workers, well in advance of the furlough scheme ending, what further assistance will be in place – to support jobs and necessary labour market transitions in sectors that are most deeply impacted by Covid.

The Scottish Government was the first UK nation to extend 100% non-domestic rates relief for retail, leisure and hospitality premises for 2021-22. 

Taken together, the rates relief and restart payments allocate more funding to business support than the consequentials currently available from the UK Government for these activities. 

Many businesses will require additional financial support to enable them to adapt to the changed economy and society that they find themselves in. Without this additional support it is inevitable that businesses that were able to remain solvent during the period of restrictions with financial support from both the UK and Scottish Governments, will be forced to close. Having already spent more than the consequentials we have received on business support, our budget is fully allocated and without the ability to borrow, the Scottish Government is not in a position to provide that funding. I would therefore once again urge the UK Government to make further funding available to ensure that we can put businesses on the right footing to support our economic recovery.

Kate Forbes