Calls for ‘targeted’ furlough plan specifically aimed at Scotland’s needs

Scotland needs its own “targeted” furlough scheme which takes into account the specific needs of the country’s battered economy, Scottish Labour leader Richard Leonard will tell the party’s UK conference today.

Chancellor of the Exchequer Rishi Sunak meets with local business people during a visit on the Isle of Bute on August 07, 2020

He warns that any prospect of the Job Retention Scheme ending in October as planned would have a damaging impact north of the Border and will say the country’s key sectors, like tourism and oil and gas, need specific support.

It comes amid growing pressure on Chancellor Rishi Sunak to rethink plans to end the scheme next month after it helped safeguard more than nine million jobs across the UK throughout the Coronavirus pandemic.

About 15 per cent of the workforce north of the Border remain on furlough, although this has halved in recent months as the economy has began to revive.

The Scottish Government has called on Mr Sunak to extend the scheme amid concerns that it cost thousands of jobs and the Chancellor has indicated he is ready to move on the issue.

Mr Leonard will make a virtual address today to the party conference, which has been renamed Labour Connected, after the scheduled UK conference in Liverpool was shelved as a result of Covid-19 rules.

He will demand that any extension to furlough will take into account the specific needs of Scotland’s economy.

“Clearly the Chancellor has hinted this week that he’s being forced into a U-turn and is looking to offer more economic support, possibly by way of targeted schemes,” Mr Leonard will say.

“The impact of the pandemic on our economy is serious and continuing. We will not be out of the pandemic or out of the recession by the end of October. That’s why continuing government support is needed to provide people and businesses with greater security and help them plan for the future.

“If support is to be targeted by the Chancellor, I am calling for a Scottish targeted scheme that properly takes into account the specific requirements of the Scottish economy.”

It comes amid the prospect of fresh lockdown measures being imposed across Scotland and the UK to stem the growing prospect of a second wave of the virus.

Although specific measures have yet to be announced it could mean businesses – such as those in the hospitality and tourism sector – being forced to close down again which would heap pressure on the UK Government to ensure jobs affected are safeguarded.

Mr Sunak hinted at a limited extension of the emergency measure last week.

When asked if he would provide specific sectoral support after the end of the furlough scheme next month, the Chancellor said he had “not hesitated to act in a creative and effective ways to support jobs and employment and will continue to do so”.

A total of 288,400 Scots workers were fully furloughed at the end of July, along with the 78.400 on the new part-time working furlough scheme, official figures last week revealed. This is down from 628,000 at the height of the pandemic when 146,000 self-employed jobs were also being supported.

Analysis produced by the Scottish Government shows that extending the scheme for eight months would save 61,000 jobs in Scotland and help secure a stronger economic recovery from the pandemic.

The Coronavirus Job Retention Scheme (CJRS), widely known as furlough, has been one of the biggest ever fiscal interventions by any UK Government to prop up the economy. It has seen £4 billion paid out in a in a single week at its peak. The costs were highest during the most stringent restrictions, and have since fallen, as staff get back to work and the share of support coming from government reduces. The Office for Budget Responsibility (OBR) estimates that scheme costs will fall to around £3.5 billion per month (after tax) in October, when government will be paying 60 per cent of wages.

More than 930,000 jobs in Scotland have been supported during lockdown through the furlough and self-employment schemes

The scheme’s pivotal role in protecting jobs was highlighted last week as official figures revealed that Scotland’s economy shrank by 19.4 per cent in the second quarter of 2020.

Every sector of the onshore economy contracted as workers were told to stay home and many non-essential businesses pulled down the shutters.

Scotland’s economy secretary, Fiona Hyslop, said last week the Job Retention Scheme should continue for as long as public health restrictions are in place that require some sectors of the economy to stay closed. She said extension would help “keep people in jobs” while sectors of the economy currently unable to fully open recover and will lead to sustained economic benefits at a “relatively small cost.”