04 Nov 2020
By Stuart Patrick, Chief Executive of Glasgow Chamber of Commerce
Whether Scotland heads into a national lockdown or not, the economic consequences of a disrupted Christmas are grim.
The consumption economy, including shopping, hospitality, tourism, arts and events, was already bearing the brunt of the economic havoc this crisis is wreaking.
Both high street retail and our battered hospitality industries depend on Christmas for a disproportionate share of their annual sales, and once again, Amazon and the supermarkets will be the inevitable winners, with all that means for thousands of livelihoods in our town and city centres. No less than 30,000 jobs depend on retail and the night time economy in Glasgow’s city centre alone.
Much of the debate in Scotland following the Prime Minister’s announcement of an English lockdown has centred on the role of the Job Retention Scheme (JRS). Yes, the scheme will be available in Scotland and yes, it will be on the same terms as in England.
The political debate may well choose to focus on whether the JRS will be available should the Scottish Government decide to apply a national lockdown on timescales that are different to those in England but I would suggest that this is rather missing a fundamental point.
The economic packages that many felt in the spring were surprising in their generosity will lose their potency the more often they are deployed.
We must not forget the conclusions of the CityUK’s Recapitalisation report in July that up to 3 million jobs across the UK and 780,000 SMEs were already at risk after the first lockdown which left those SMEs carrying around £35bn of unsustainable debt from Covid-19 loans. The JRS, the small business grants, rates relief and VAT deferrals were not enough to prevent those many thousands of business owners having to stretch their finances beyond the limit. Rent payments may have been delayed but they are still due. Insurances, equipment leases, loan capital and interest payments and many other unavoidable overheads still need to be covered by those businesses that are closed and receiving no income.
We have already learned that the JRS scheme does not mean business will be in a position to save jobs and the more time restrictions that are applied, the less jobs which will be retained.
The Chancellor has continued the JRS for a further month but he has done so on the August terms, requiring businesses to cover employers’ national insurance contributions and pension payments. Exactly where does he think closed businesses are going to find that money? The British Chambers of Commerce will continue to argue that at the very least the JRS must operate as it was in July.
Nor has the Scottish Government added to the economic thinking. In the 69 pages of its Strategic Framework for tackling Covid-19, the three and half pages covering the economy broadly assume the same measures and is one of the most disappointing sections of the strategy. If we go into repeated lockdowns as we did in the spring, the CityUK’s figures can only grow.
Can we please learn more from countries like Singapore and South Korea that have shown how mass testing can play a role in controlling the virus without devastating the economy? Now we see Slovakia making one of the first serious attempts in Europe to test its entire population. We are told it is logistically too difficult to achieve in a large country and there are plenty of critics challenging what Slovakia is trying to do but I wonder how many of them truly understand the damage that is being done to livelihoods every time we enter into a fresh lockdown.
This article was first published in the Herald Scotland on 4 November 2020.
