Economic storm warning as Nicola Sturgeon urged to get support to businesses

Nicola Sturgeon is under increasing pressure to do more to prevent mass closures of Scottish businesses as she was accused of “failing to get money into people's pockets”, while being warned of worsening economic conditions as stricter Covid restrictions on a swathe of businesses was announced.

The First Minister on Wednesday announced a further tightening of lockdown in Scotland, with a major impact on takeaway businesses and click and collect services.

While the decision was greeted with some relief by businesses still able to trade, the government was urged to ensure financial support for companies was paid out quickly as the Scottish Chambers of Commerce (SCC) warned significant parts of the economy would face “worsening conditions” before coronavirus restrictions were eased.

The Scottish Government is under pressure to support businesses.

The six new restrictions announced by Ms Sturgeon will see takeaway food shops serving only from hatches or doorways, only retailers selling essential items able to offer click-and-collect, and trades workers only allowed in people's homes if it is essential for the upkeep, maintenance and functioning of a house.

At First Minister’s Questions, Scottish Conservative Holyrood group leader Ruth Davidson said businesses affected by the new regulations should receive extra compensation after they were “told by this government what to do to become Covid compliant, spent money making the changes required of them and now being told they have to adapt again”.

She also claimed businesses felt “like an after-thought” and that while new funding announcements were welcome, there was a failure to get money to people.

Ms Davidson added: “Leaked documents show that only seven in 30 business funds have launched. FSB Scotland says funding is trapped in an administrative logjam.

“Councils want to get it [the money] out the door, but they’re hearing nothing from the Scottish Government. Falkirk Council’s website lists 16 funds, but asks people not to contact them about them as they've had no guidance.

“The Scottish Government is great at making announcements, but not getting money delivered into people's pockets.”

Reading from a letter sent to her by a taxi driver called George, Ms Davidson said he wanted to know “when will the grant to taxi drivers be distributed?”

“I’m on my knees here – it's desperate stuff now,” read Ms Davidson. "We've been promised this since November, but we can't find out what's happening.”

She added: “In March, Kate Forbes [finance secretary] said the aim was to make payments within ten working days – right now there are sectors out there which would be delighted to see promised cash in ten weeks.”

However, Nicola Sturgeon said there was “significant money available”, with much already gone to businesses and “much more flowing to businesses over the course of this month”.

She added: “We will continue to look at an ongoing basis what we can do and where there are legitimate calls for more financial support.

“Local authorities are, in the main, administering this funding and if you take the £715 million allocated to business support since October, £600m of that is already live, the vast majority of the funds go live this month, payments are flowing to businesses and at the end of this month, businesses eligible for additional top-up payments will receive those payments.

“When we announce it [money], of course we have to put arrangements in place, usually through local authorities, and they ask for guidance, so it's an ongoing process. Additional administrative support has been given to councils to make sure the process is as quick as it can be.

“I appreciate the desire for as much consultation as possible, but no amount of consultation takes us away from the sharp point that we have a rapidly spreading virus, that's the harsh reality of the situation.”

Reacting to the new restrictions, the Federation of Small Businesses Scotland supported Ms Davidson's call for money to get to businesses quickly and condemned “worst-case scenario” speculation that had left business owners anxious.

Andrew McRae, the organisation's policy chair, said: “Given the intense speculation ahead of the restrictions announcement, many local businesses in sectors like retail and hospitality had feared the worst.

“While there will be some relief that they can continue to operate, albeit in a very restricted way, the approach of trailing worst-case scenarios in the days before any announcement causes unnecessary anxiety for business owners and disrupts business planning.

“For businesses that now do need to cease trading, their attention will quickly turn to where they can get financial help and support from government. In doing so, many will find that their business is ineligible or that a fund that could help them has yet to launch.

“We need all the stops pulled out to get more money out the door and into struggling firms, or run the risk of mass business closures”.

Meanwhile, the Scottish Chambers of Commerce said many firms had suffered the “most challenging year in living memory” in 2020, but that things could get worse.

SCC president Tim Allan also warned of a recession and jobs crisis caused by the pandemic, “which will likely takes years to recover from”.

The latest SCC quarterly economic indicator, which looked at the final three months of 2020, showed business confidence in many sectors was still negative.

Mr Allan said: “We fear that restrictions to prevent the spread of the new variant of the virus will continue to destroy more jobs and businesses, unless government support can ease the impact of closures and deliver an environment to enable economic recovery.”

The tourism sector, a key part of Scotland's economy, had “fragile levels of confidence”, the SCC report said, with a negative net balance of -62 per cent, with 89 per cent of firms reporting a fall in sales in the last quarter compared to the second quarter of 2020.