10 Jun 2020
By Stuart Patrick, Chief Executive Glasgow Chamber of Commerce
Today is the last day an employee can be newly furloughed under the Job Retention Scheme. Only those who have been furloughed for at least three weeks by 30th June will be eligible for support in the scheme’s remaining four months.
The gradual unwinding of the most successful component of Chancellor Rishi Sunak’s system for keeping businesses afloat has now begun amid concern that some sectors simply won’t be able to recover trade quickly enough to keep staff in work.
In Scotland businesses are that bit more anxious because easing of lockdown measures is a few weeks behind England. They will have less time to rebuild trade between receiving Scottish Government permission to reopen and the end of the desperately needed financial support.
I don’t believe the Chancellor is willfully designing the scheme’s unwinding to maximise damage to the Scottish economy as some politicians would have us think. Maintaining the scheme indefinitely is both expensive and potentially counterproductive given the impetus to encourage the economy back to life before an historic slump becomes inevitable - hence the Chancellor’s flexibility in allowing part-time working for furloughed workers.
He has also asked employers to begin contributing to the costs of maintaining furloughed staff wages at a slower pace than expected.
But there is no doubt a deadline date for the ending of the scheme was always going to disadvantage any part of the UK that decided to lift lockdown more cautiously. Businesses that depend on consumers returning in hospitality, tourism, culture, personal services or retail are especially vulnerable.
Nor do I believe First Minister Nicola Sturgeon is blindly ignorant of the economic consequences of a slower lock down release. I doubt she is deliberately manufacturing a dispute with the UK Government over JRS, even though that could be an attractive option for lesser politicians. Her caution is entirely understandable and a wholly legitimate choice.
But it is also true that when businesses ask for more explicit appreciation of their dilemma, they are not careless of the public health concerns. They are not taking one side in a political argument. Mark Smith suggested in these pages that the COVID-19 debate was crystallising into a familiar political divide. The more anxious you were to see the economy reopen the more right-wing you would be considered.
For owners and managers of small businesses they have devoted their lives to building, the political argument is irrelevant. Having been told to shut their businesses they simply want solutions to allow their livelihoods and those of their staff to survive.
They want to see Scottish and UK governments working together to find ways of either allowing their businesses to open up safely and sustainably or maintaining the financial support until they can.
Opening up both safely and sustainably is not straightforward. Is the two metre rule for social distancing really necessary or is the World Health Organisation’s one metre option feasible?
Many restaurants, bars, theatres, cinemas, cafes, hotels and shops are not sustainable under the two metre rule. They simply don’t have the space to house enough customers to cover operating costs.
If there can be no flexibility how are these businesses to survive? And what of businesses that cannot operate under any form of social distancing – how do you socially distance in a night club?
If social distancing is to be an established feature of our lives for many months to come, then the closure of the Job Retention Scheme cannot be the last word in financial support. For the sectors under the greatest pressure, we need both governments to remain open to a new funding system.
Stuart Patrick is chief executive of Glasgow Chamber of Commerce
