Furlough scheme needs to be 'ready to deploy' if there are further restrictions, Scottish businesses warn

Charandeep Singh of the Scottish Chambers of Commerce told the Scottish Parliament's economy and fair work committee that companies were concerned about the risk of future restrictions and said a furlough scheme should be “ready to deploy” if restrictions are brought in.

Meanwhile, local supply chains need to be rebuilt to tackle shortages in supply in the medium term, the committee was told, while there is a need to fast track support for the construction industry to help build more accommodation in rural areas to attract workers would help plug gaps.

The UK government’s furlough scheme, which has helped to pay workers during the pandemic while their employers are hit by lockdowns and trading restrictions, is due to end this month. Covid cases have risen sharply in Scotland in recent days.

The economy committee was told that furlough needed to be available if there were more restrictions in future.

Mr Singh said: “We are concerned that that there may be a risk for restrictions in the future. And so I think it's important, that if there are local restrictions, that needs to be put into play. There must be a furlough option for businesses to tap into, particularly when restrictions are being applied last minute, and that should be actually be applying across the whole of the UK, not just in Scotland.

"Certainly in terms of a furlough scheme as a concept, we think it should be available and ready to deploy, now and in the future, should any restrictions be put into place.”

Federation of Small Businesses Scotland head of policy, Barry McCulloch, said that a Scottish supply chain needed to be developed to help prevent shortages in future.

In recent weeks, food suppliers have warned of shortages, while retail experts said that shoppers should buy Christmas presents early, amid expected shortages due to a combination of Brexit and the pandemic. There is current shortfall of around 90,000 HGV drivers which is placing increasingly unsustainable pressure on retailers and their supply chains, driven by an estimated 25,000 EU drivers returning to their home countries over the pandemic.

Mr McCullough said: “One of our recent reports shows that there is the potential in the medium term to look at how we develop our own local supply chain so I think the committee needs to have an eye on what needs to be done to mitigate the supply chain impacts of Covid, but also to look at some of the opportunities there are to strengthen our supply chains looking ahead.”

FSB Scotland also warned that businesses cannot operate “in survival mode” while transitioning to net zero. Mr McCulloch also told the committee that one in four small businesses are worried about being able to repay loans taken out to keep afloat during the pandemic.

"I don’t think that road map is anywhere near clear enough,” he said.

​​Carolyn Currie​ of​ Women’s Enterprise Scotland warned that there are "structural i​nequalitie​s"​ exacerbated by the pandemic which are​ preventing women from setting up and running businesses. She said that businesses run by women often do not align with the enterprise agency's appetite for financial support - such as tech or low-carbon firms.

She said there was a “pretty leaky pipeline of support”: “Particularly around growth businesses, gaining access services to Scottish Enterprise services, particularly for women owned businesses, is of great concern, there are structural inequalities in that system and the pandemic has simply highlighted and exacerbated those. Women often set up businesses in sectors that do not align with the enterprise agencies appetite for sectoral support. The agencies look at growth sectors such as technology, low carbon etc, but women are setting up businesses in areas such as the beauty sector which is a multi billion industry. We see businesses setting up which have huge growth opportunities.”

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