03 Feb 2021
By Stuart Patrick, Chief Executive of Glasgow Chamber of Commerce
In the search for an economic road map out of the Covid-19 crisis, the Scottish Budget offered some initial jigsaw pieces, but we were always going to have to await the Chancellor’s statement in March for the fuller financial picture on business support.
The Prime Minister is due to give an update later this month on his wider gradual re-opening intentions and, of course, we will only know the Scottish road map’s outlines when the First Minister decides it is time to set that out. The sooner the better.
Cabinet Secretary Kate Forbes made some helpful commitments especially on business rates relief to the retail, hospitality, leisure and aviation industries. That will be continued for the first three months of the 2021/22 financial year and a further commitment was made to continue that relief if the Chancellor confirms his intentions to offer it for a longer period.
The inclusion of aviation is especially welcome as there are serious concerns about the long-term impact on our international trading capacity if our main airports cannot see a way through the extraordinary damage that is being done to their businesses.
However there was no other measure announced to help airports and we will be pressing for greater recognition of their plight. We desperately need a dedicated strategy for the recovery of our aviation industry.
Equally we have to await the Chancellor’s thoughts about the extension beyond April of the job retention scheme and the status beyond the end of March of the strategic framework business fund that provides small monthly cash grants to the most affected businesses. I agree with Kate Forbes that the JRS must be further extended. The principle adopted last year should be replicated – keep the scheme going not just until, but also during, the re-opening of the economy. My feedback from local shops, hotels and restaurants is that the working capital many businesses will need to get up and running again is almost non-existent, so both the JRS and the cash grants must keep going until demand has picked up enough for businesses to sustain themselves or we must fear the severe jump in unemployment which has been so far avoided.
I was also keeping an eye out for announced measures to help tackle the heavy impact on our city centres where even during the summer release of lockdown footfall was well short of pre-Covid levels, but I couldn’t find any specific mention in the Scottish Budget. It doesn’t appear to be politically popular to help our cities.
There are some modest moves that could be helpful. Doubling the discretionary fund for local authorities to £60m may be useful, but local authorities will have many calls on those funds. Whilst the amount may seem impressive at first glance it is unlikely to amount to much when you stretch it across Scotland and across the number of damaged businesses.
The decision to extend the business growth accelerator relief on business rates to properties being converted into new uses is at least a nod to the growing scale of vacant retail shop units, though whether it will help much is doubtful since it is restricted to providing relief only against any increase in rates that would have resulted from the new investment. It would be better if the Chancellor took another look at re-introducing some form of the old business premises renovation allowance targeted on city and town centres, which came to an end in 2017.
In summary, some small steps were taken but Ms Forbes’ Budget leaves us well short of the economic road map we so urgently need.
This article was first published in The Herald on Wednesday 3 February 2021
