27 Jan 2021
By Stuart Patrick, Chief Executive of Glasgow Chamber of Commerce
There was a moment last week when I could sense that the resilience of many in the business community was faltering.
Announcements from government that there would be no early respite from pandemic lockdowns was not especially surprising given the appalling case and fatality statistics. The additional blow however was the reluctance of either government to even offer hope of relief.
Leaked comments by National Clinical Director Jason Leitch to health sector leaders that he wouldn’t advise any foreign trips this side of 2022 suggested that inside government there is a much bleaker view of our prospects this year than had hitherto been publicly discussed.
Week by week pressure on the owners, directors and managers of Scotland’s businesses just grows.
Business recovery specialist Begbies Traynor reported a 30% increase in the number of Scottish companies showing the initial signs of financial distress amounting to as many as 33,000 businesses under real pressure. The Federation of Small Businesses found that more than half of the small business owners they surveyed were concerned about the future for their organisations and two fifths were struggling with their mental health.
The existing business support is acknowledged by some senior ministers, at least in Scotland, to be clearly below what is needed to ensure businesses can survive. Additional support comes unpredictably and usually with eligibility issues attached.
The Scottish Hospitality Group estimates its members were spending on average £6,000 each week on fixed overheads with the regular support grants being around half that each month.
On Monday evening the governing Council of Glasgow Chamber of Commerce confirmed its support of the request for a road map explaining how our governments hope to navigate their way through the crisis in 2021.
Nobody was arguing that the road map had to be infallible, the uncertainties involved in resolving this crisis are clearly too numerous for that, but there is a yearning for some explanation of the model governments will use to decide when and how to reopen the economy as we go further into the vaccination rollout.
What might the criteria be for deciding when the balance of risk has shifted from public health to economic harm? How might the tiering hierarchy be used in reopening the economy? How confident can businesses be about the financial support available in the months ahead?
It may be too difficult right now to set out firm dates for when we might expect the rollout of vaccinations to allow for lockdowns to be lifted - too often governments have been pilloried for setting out a target and then struggling to reach it - but at the same time there are some clear dates stated for when existing business support comes to an end.
The existing rates relief for businesses in hospitality, retail and tourism is only for the current year to the end of March. The Job Retention Scheme (JRS) is confirmed to the end of April.
Both Chancellor Rishi Sunak and Finance Cabinet Secretary Kate Forbes are making statements in the next six weeks. At the very least those statements must help to avoid cliff edges in financial support.
Those cliff edges come at any point where grant support stops, rates bills must be paid or loans need to be settled. If our governments are genuinely as pessimistic as they currently sound then the Chancellor and the Cabinet Secretary have to stretch funding support to match the challenge.
Extending rates relief, maintaining the JRS and expanding the cash grant support to severely restricted businesses are the essential components.
Without that even the most resilient business leaders have their breaking point.
This article was first published in The Herald on Wednesday 27 January 2021
