Covid lockdown: Scotland must avoid 'false re-start' of economy – Fiona Hyslop MSP

Scotland must begin to relax restrictions on economic activity only when the scientific advice says it is safe to do so and we must try to avoid a dangerous second wave of infection that could require further closures, writes Fiona Hyslop.
Former Tesco Bank boss Benny Higgins is to chair the new Economic Recovery Advisory Group (Picture: Lisa Ferguson)Former Tesco Bank boss Benny Higgins is to chair the new Economic Recovery Advisory Group (Picture: Lisa Ferguson)
Former Tesco Bank boss Benny Higgins is to chair the new Economic Recovery Advisory Group (Picture: Lisa Ferguson)

There is no doubt that we are in the midst of one of the most serious public health emergencies of our lifetime. With more than two million confirmed cases of coronavirus (Covid-19) worldwide, the focus of governments across the globe is – rightly – to protect health, and the Scottish Government is no different. Our number one priority is to save lives and to make sure our health and social care system has the support and resources it needs to cope with this terrible pandemic.

But we are facing another emergency, one affecting jobs, business and the wider economy.

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This week’s State of the Economy report, published by the Chief Economist, projected that Scottish GDP could fall by a third during this period of physical distancing. We have also seen publication of the most challenging retail sales figures ever recorded in Scotland, clear evidence of the impact on our high street.

These alarm bells are understandably deeply worrying for businesses and their employees but it’s important to put the economic impacts in context and recognise this is no normal downturn. Productive and profitable businesses across Scotland have been required to pause activity to support the public health effort.

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The Scottish Government estimates that up to 70 per cent of the workforce is still working, many delivering health, care and welfare – but many others are working from home, which is often combined with childcare and home learning.

We need to view economic data and projections in that light.

I would like to thank all businesses and their workers following the physical distancing guidance, the essential sectors and supply chains for continuing to keep the country running and those companies who have repurposed to manufacture supplies for the health sector.

Keeping companies in business, people in jobs

There is no doubt that we will be dealing with the uncertainty of the impacts and duration of this virus for some time. Planning ahead, our strategy is based around a four-step economic plan: response, reset, restart and recover.

We have so far been focussing our actions responding to the immediate consequences of dealing with the pandemic. During this period, the Scottish Government has had three aims: to keep companies in business and with productive capacity so that they can recover; keep staff in employment with appropriate income protection; and, most importantly, to provide support to staff so that they can self-isolate and provide care to loved ones.

Direct business support from the Scottish Government is now almost £2.3 billion. This includes almost £900 million of rates relief, and a £1.3 billion business grants scheme being delivered in conjunction with local authorities. We have agreed up to £22.5 million support for the fishing industry, and nearly £400 million support for the transport sector.

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This week I announced details of a £100 million package for the newly self-employed and viable micro, small and medium-sized enterprises. The provisional allocation will see £34 million for the newly self-employed, £20 million hardship funds for those in the creative, tourism and hospitality sectors not in receipt of business rates relief, and £45 million for firms that are vulnerable and also vital to Scotland’s economic foundations.

Gaps in UK Government support scheme

Applications will be open by the end of April, with recipients receiving funds in early May. Funds will be channelled through local authorities and Scotland’s enterprise agencies, and I’d like to thank them for their work to get this funding to the those who need it as quickly as possible.

Because of our decisions, thousands more businesses, including some vital sectors of the economy, benefit from support not available elsewhere in the UK.

The UK Government has made substantial, welcome commitments to support businesses and employees. However, there are still some gaps that need to be filled – particularly in the Job Retention Scheme and support for the self-employed. Finance Secretary Kate Forbes and I have written to the Chancellor to set out our concerns, and to ask for that support to be extended.

The future move into the re-start phase of our strategy and beyond will need to be managed in a safe, and orderly way. Beyond that recovery, we will be in a very different world where well-being must be central. To support this I have announced an Economic Recovery Advisory Group, chaired by Benny Higgins.

The group will consult with the business community and wider, with active engagement with trades unions, local government, third sector and environmental representatives. Because how the economy recovers is relevant to everyone.

The aim is to bring forward solutions by the end of June to build a strong, green, well-being economy that recovers quickly. The Scottish Government will take forward the group’s recommendations alongside a range of other sources of expert policy.

A very different post-crisis world

Ultimately we must restart economic activity only when the health and scientific advice says it is safe to do so. It may be phased, but a more effective restart will reduce the danger of a virus second wave and avoid a false re-start for the economy requiring further closures.

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Recovery will not be quick and the post-crisis world will be very different, but we need to be as prepared as possible for the challenges to come.

While this is a period of intense uncertainty, we are also seeing the best of Scottish business come to the fore.

I have been deeply impressed by the many firms that are diversifying in order to help the national response – such as those producing PPE or hand sanitiser.

It is this spirit of togetherness and innovation that can give us all cause for hope, even in these darkest of times.

Fiona Hyslop is Cabinet Secretary for Economy, Fair Work and Culture

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