01 May 2020
By Stuart Patrick, Chief Executive Glasgow Chamber of Commerce
Now that the initial weeks of crisis response are evolving into longer term thinking, we need a fresh perspective on how we plan to help businesses and jobs survive.
With both UK and Scottish senior medical officers making it clear that social distancing will be needed for months not weeks, it is now much clearer that a new balance is going to have to be found between the current lockdown measures and the reopening of the economy. The Scottish Government’s framework invites us to open up discussion.
Whenever there has been a suggestion that Scotland, or other parts of the UK, might operate different approaches to the gradual lifting of lockdown restrictions I have always asked what the corresponding economic support measures will be.
The British Chambers of Commerce weekly Business Impact Tracker showed that throughout the UK on average over 70% of survey respondents are furloughing staff showing just how important this scheme is for keeping people in jobs that might otherwise have gone. Meanwhile in Scotland Addleshaw Goddard and the Fraser of Allander reported over 90% were using the scheme which suggests that there are proportionately more jobs at risk.
That isn’t especially surprising since the Scottish Government has taken a notably firmer stance against non-essential businesses attempting to stay open. Scottish jobs may now depend more on the Job Retention Scheme (JRS) than elsewhere in the UK.
In mid-March we argued hard for such a scheme to be introduced and more recently for its extension for as long as the lockdown lasts. Indeed, we are now making the case that for as long as any businesses are told to stay closed the JRS will need to be operating for those businesses or unemployment will simply be delayed until the moment it stops.
If Scotland chooses to stay in lockdown for longer or in a different manner than in the rest of the UK, we will ask how the Scottish Government will arrange with the UK Government to extend the JRS as well. Otherwise more businesses and more jobs will disappear.
One of the most common issues raised with us by members has been the Scottish Government’s greater hostility to businesses attempting to operate, notably in construction and manufacturing. The publication of the framework is a good time to reset the relationship.
The framework suggests the Scottish Government will issue updated guidance on the measures businesses will need to introduce to operate safely. I would suggest that guidance can only be the first step. There must be a much closer engagement between government and business, mutually developing the measures and actively learning what works and what does not.
Smaller businesses are especially vulnerable, often lacking the resources and expertise to apply the guidance. Some of the budgets allocated to Scotland’s economic development agencies should for the time being be redirected to a programme of direct support to SMEs to help implement effective social distancing.
It would be helpful if a similar programme is introduced to help SMEs improve the effectiveness of their digital strategies given that so many businesses have managed to keep operating to some degree on digital platforms.
I have also been asked if there might be a second round of small business grants. Those grants of £10,000 and £25,000 have been a saviour for thousands of businesses covering overheads that the JRS doesn’t touch. The impact of those grants though can last only for so long.
With a ‘new normal’ stretching out for months ahead the UK and Scottish Governments should be working together to consider how the financial support programme is redesigned to match those circumstances.
This article first appeared in Glasgow Chamber’s weekly column in the Herald newspaper on April 29
