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Chamber and committees

Meeting date: Thursday, July 16, 2020

Meeting of the Parliament (Virtual) 16 July 2020

Agenda: Labour Market Trends, Care Promise, Transport


Contents


Labour Market Trends

Good afternoon, everyone. The first item of business today is a statement by Fiona Hyslop on the response to labour market statistics. The cabinet secretary will take questions at the end of her statement, and there should be no questions or interruptions.

Covid-19 is the biggest challenge that we have faced in our lifetime. It is first and foremost a public health crisis, and this Government makes no apologies for focusing squarely on the health challenges. It is only by suppressing the virus that we will enable the economy to recover and thrive.

We know that many economic indicators, such as Scotland’s gross domestic product and available job vacancies, have deteriorated since lockdown measures were introduced. The latest official labour market statistics, released this morning, show that in the period from March to May this year, Scotland’s unemployment rate rose to 4.3 per cent, which represents 120,000 people out of work, and Scotland’s employment rate fell to 74.1 per cent, which represents a total of 2,642,000 people in work. The claimant count rate has risen slightly over the past month, to 7.7 per cent in June, after a steeper increase over the past few months. The rate has roughly doubled since March, with a rise of more than 100,000 claimants.

However, those statistics do not reflect the full picture of our labour market, because the furlough scheme has protected many jobs. The latest information from HM Revenue and Customs shows that 736,500 workers in Scotland have been furloughed and 155,000 eligible self-employed people in Scotland made claims to the self-employed income support scheme. The support schemes have been vital in keeping people in work. We estimate that, without them, unemployment could have risen to around 14 per cent.

Take-up rates for the job retention scheme have been highest for accommodation and food services, with 74 per cent of jobs furloughed; construction, with 72 per cent furloughed; and arts, entertainment and recreation, with 66 per cent furloughed. Those numbers make it even more disappointing that the Chancellor of the Exchequer did not announce an extension to the job retention scheme, particularly for the hardest-hit sectors.

We know that many people have already lost their jobs and that household incomes have fallen. People are understandably anxious about what the future holds. Scottish Government analysis shows that unemployment could rise to around 10 per cent, which is approximately 275,000 people.

I welcome the announcement that the chancellor made last week on support for the economy and jobs, including the job retention bonus and the kick-start scheme. The chancellor’s jobs plan might have a headline value of up to £30 billion, although I note that the Office for Budget Responsibility has since provisionally estimated it at around £20 billion. In any case, we should be clear that those estimates are highly uncertain and contingent on demand, and some measures might prove to be poorly targeted.

The reality of last week’s announcement is just £21 million of consequentials for the Scottish Government, for the economy and skills area. Let me be clear: those measures will not be sufficient to meet the scale of the challenge that remains and they offer very little room for flexibility.

In Scotland, we have already acted quickly to put in place a business support package worth more than £2.3 billion, but we know that more needs to be done. That is why we took the decision last week to make an extra £100 million available in 2020-21, on top of the £33 million that has already been committed for employability support this year and the millions that are already in the skills system. We did that in order to help more people get the support that they need to move back into work or retrain.

Today, I want to outline how we will use that funding to help thousands of people back into work and boost the Scottish economy, focusing on three areas.

First, I recognise the impact that this crisis is already having on our young people. I also understand the potential long-lasting impacts for those who suffer periods of unemployment early in their working life. That is why I have asked Sandy Begbie, who has a wealth of experience in supporting youth employment through the Edinburgh guarantee and the developing the young workforce group, to offer industry leadership to develop an implementation plan for a job guarantee. That was one of the key recommendations of the advisory group on economic recovery, and we will set out more detail on the implementation plan in early August.

We know that we have to act quickly to protect the future of our young people and, to that end, I have decided to invest at least £50 million to support youth employment. That includes delivery of the job guarantee, and we will work with the United Kingdom Government, local authorities, the third sector, trade unions, Skills Development Scotland and other partners to ensure that no young person is left behind during this crisis.

That initial commitment will not create any new structures or bodies but will build on the successful structures and partnerships that we already have in place, using the principles of “No One Left Behind: Next Steps for the Integration and Alignment of Employability Support in Scotland”. It will also include additional investment in developing the young workforce, our internationally recognised youth employment strategy.

As we shape the guarantee, we will listen to young people and, in particular, to those groups whom we know are more likely to suffer disproportionately from a more challenging labour market. Our approach will be based on a set of ambitious principles that will support the aspirations of our young people. Those principles will make it clear that the job guarantee will be inclusive, with a clear focus on tackling inequalities and supporting young people into fair and sustainable jobs.

Secondly, I know that this is a hugely difficult and worrying time for thousands of people who have already been made redundant or who face the threat of redundancy as the furlough scheme unwinds. It is vital that we provide people with the support that they need to retrain and move into new jobs and, potentially, new sectors. We cannot ignore the need for additional support for people of all ages who are currently in precarious employment, or the need to skill up sectors of our economy as they restart. We need to develop a new retraining offer that can build on the existing skills, experience and expertise of our current workforce and help them to move quickly towards new jobs.

Ensuring that training is relevant, reflects regional and sectoral demands and supports effective transitions in our labour market is important, but so, too, is the opportunity to reinforce our ambitions for a greener, smarter and more digitally enabled economic recovery. I will therefore bring forward proposals for a new retraining offer focused on helping those in sectors where there is the greatest risk of job losses. That new offer will help people to gain the skills that they need to move into new jobs in key growth sectors. That work builds on recent recommendations from the advisory group on economic recovery and the Enterprise and Skills Strategic Board, and we will respond to both reports fully by the end of this month.

As I have already highlighted, I know that this is a hugely worrying time for many people who face the threat of redundancy as the furlough scheme unwinds, so, thirdly, I am committed to supporting people who find themselves in that situation and ensuring that they can access timely and effective support. Partnership action for continuing employment is the Scottish Government’s initiative for responding to redundancy situations. Through the provision of skills development and employability support, PACE aims to minimise the time that people who are affected by redundancy are out of work, with support tailored to meet their needs and local circumstances. Through a true partnership approach involving the public, trade unions and the third and private sectors, we will look to maximise resources to provide tailored support for those facing redundancy.

We know that the most vulnerable in society and those furthest from the labour market suffer most in times of recession, and we must do all that we can to support them to progress towards and into work. To that end, the Minister for Business, Fair Work and Skills has today announced the extension of Fair Start Scotland services for a further two years, to March 2023. That will provide support for unemployed people who have disabilities or health conditions or who face other barriers to moving into fair and sustained work. That extension period is an opportunity to provide stability and continuity as we respond to the current Covid-19 crisis and move into our economic restart and recovery phases.

We are facing unemployment on a scale not seen since the 1980s, and we are ready to rise to the challenge through initiatives such as a youth guarantee and a new national retraining scheme and through the provision of more funding so that we can provide immediate support and advice if someone loses their job. Of course, that significant package of employment and training support can be effective only if it is aligned with a renewed commitment to fair work and is embedded in a co-ordinated plan to support jobs growth and help businesses retain jobs through the period of on-going uncertainty.

We have already introduced significant measures such as the £230 million economic restart stimulus package that was announced last month. We are working closely through a range of sectoral forums, including those in hospitality and tourism and aerospace, to retain and protect jobs, where possible. Our response to the report of the advisory group on economic recovery will expand further on our approach for boosting employment, as will this year’s programme for government.

The relationships between Government, business, unions and agencies that have been forged or strengthened during this crisis will help to underpin a new national effort to grow jobs and embed fair work.

Today’s statistics confirm the scale of the impact that the pandemic has had on Scotland’s workers, businesses and communities. There is no doubt that meeting that challenge will require a national effort. The Scottish Government will rise to the challenge, but there is no monopoly on good ideas. I want to work constructively with parties from across the chamber to protect our constituents.

We are passionately committed to building a wellbeing economy for Scotland—one that is environmentally sustainable, supports local communities, enables businesses to thrive and innovate, provides good jobs and fair work, and delivers inclusive growth that meets the needs of people across all of Scotland’s communities.

Even alongside the chancellor’s youth employment scheme, that is unlikely to be all that we will need to do to support employment and skills over the next year, but it is a first step.

The cabinet secretary will now take questions on the issues that were raised in her statement, for which I will allow around 45 minutes. It would be extra helpful if members who wish to ask questions would press “R” in the chat function now.

I thank the cabinet secretary for advance sight of her statement.

Scottish Conservatives welcome the extension of existing schemes that has been announced today, but we are concerned that those schemes are not tailored towards protecting jobs in the sectors that have been hit hardest. That is undoubtedly a result of the Scottish National Party’s lack of business understanding. Today’s job figures show that 120,000 Scots are out of work, which takes the unemployment rate to 4.3 per cent. It would be even worse still if it were not for the United Kingdom Government’s intervening to save almost 900,000 Scottish jobs—including those in the worst-affected sectors such as hospitality and tourism, which will also benefit from the VAT reduction.

However, today’s press reports show that English tourists are cancelling bookings due to fears over Nicola Sturgeon’s comments on quarantine, which represent a material risk to Scottish jobs. Will the cabinet secretary outline what specific support will be provided to those sectors, and will she assure English tourists that they are welcome in Scotland?

I was going to thank Maurice Golden for his comments and his support in our national endeavour, but if he wanted to spread doom and gloom he has done so. We need people to have confidence in our tourism sector. As of yesterday, our hotels, restaurant and pubs reopened fully, including indoor spaces, which is good news.

The most important thing for tourists in Scotland, whether they come from the rest of the United Kingdom or from within Scotland, is that they can be confident that they are coming to a place that has managed to suppress the virus to the extent that is safe. We must remain vigilant, which is why we have mitigation measures in place and are asking everyone who comes to Scotland to respect the public health rules here. It is also important to give tourists the message that if they are staying somewhere that is not their home and they start to show symptoms of the virus, they must immediately contact the test and protect authorities and should not wait until they go home or wait to see whether they get better.

That plan has provided a level of vigilance that will give people confidence. It will also mean that communities that are looking to welcome people can do so in a safe way. I urge those who have not already done so to watch the wonderful Orkney promotional video, which makes it clear that tourists are very welcome to go and stay there. The local people want to show the best of Orkney, but they also want the people who go there to show the best of themselves and to respect the communities that they visit. That shows the spirit that has led to Scotland being so attractive to so many people

I add that the Scottish Government has provided more support to tourism than have Administrations in the rest of the United Kingdom, through the creative, tourism and hospitality hardship fund and the pivotal enterprise resilience fund, which have benefited major companies in that area. Such funds were not available elsewhere. I also welcome the furlough scheme and thank the UK Government for using its powers to establish it, as other countries with similar powers have done—I note that France and Spain have also extended their schemes.

I agree with Maurice Golden on the need for targeted support. That is why judicious extension of the furlough scheme is necessary in those sectors that will suffer most as a result of the Covid crisis, such as tourism and hospitality, so that they can get continuing support. I will continue to argue that case, along with my colleagues in Wales and Northern Ireland, when we speak to the UK Government.

We know that 30 per cent of all workers in Scotland are on the coronavirus job retention scheme life support and that young workers are twice as likely as older workers to be on that life support. The challenge that we face is big, but it is also urgent, because the job retention life support will be removed step by step over the coming months, before being switched off completely at the end of October.

A week ago, I asked the First Minister whether she would commit to introduce a quality jobs guarantee scheme in Scotland that was not based on low-paid and part-time employment, and which would not run for only six months, which is the model that is being pursued by the Tory Government at a UK level. She told me:

“We are on the same side here.”—[Official Report, 9 July 2020; c 18.]

I think that I am accurate in quoting her as also saying that the Scottish scheme will be “more comprehensive”. However, she did not answer my questions.

I want to come back to one of those questions. Today, the Joseph Rowntree Foundation said:

“The Scottish Government should work with employers to create good jobs ... Employment and training ... should be conditional on paying the real living wage”.

So, will the cabinet secretary give a commitment that any Scottish jobs guarantee scheme will be conditional on employers paying the real living wage?

I welcome Richard Leonard’s question. The placements and jobs that are provided must be quality placements and jobs. With regard to the basis of the UK Government’s proposed kick-start scheme, we should have been consulted on it first. We might have been able to improve its quality because of our previous experience here in Scotland.

I encourage Richard Leonard to look at the example of the Edinburgh guarantee. That programme was about working with employers to make sure that proper, good-quality jobs were provided, and not just on a part-time basis. Richard Leonard is absolutely right—wraparound additional support and training must be provided. The activity must be purposeful and useful for the future prospects of the young people concerned.

I believe in the real living wage, and I think that it is important that that is a bedrock of any package that we put together. I do not want to pre-empt what Sandy Begbie proposes in the implementation plan, but I can reassure Richard Leonard that, as the First Minister said, we are on the right page. If everybody pulls together and companies think about what they can do to help with the jobs guarantee, I think that we can come through a very difficult and challenging time in a way that gives our young people some prospects.

We move to open questions. I would like everyone to have the opportunity to ask their question, so I ask members to bear in mind that they should be asking a question rather than making a statement.

In her remarks, the cabinet secretary referred to the Office for Budget Responsibility’s assessment to the effect that the UK Chancellor of the Exchequer’s recently trumpeted £30 billion package of support is actually worth less than £20 billion.

Does the cabinet secretary agree that that falls very far short of what is required to protect people’s jobs and livelihoods? Surely what we need from the UK Government is urgent and proportionate action, not more smoke and mirrors.

In answer to that question, I state that we should consider the scale of the challenge. Other countries have had much higher levels of economic stimulus. For example, the German economic stimulus package was of the order of 4 per cent of GDP, and the UK’s package is less than 2 per cent. In terms of the scale that is needed, the UK Government should look again at capital and provide a new capital stimulus package. The package that was promoted recently by the Prime Minister was recycled capital, so Scotland did not get consequentials and no new money was brought into the system.

The scale of the challenge is enormous, and other countries are tackling it based on a recognition of the scale of the response that is required. However, even if the numbers are disputed—whether it is £30 billion or £20 billion; I appreciate that the challenge is a big one for everybody—the point is that the package is untargeted. As I said to Maurice Golden, it is open-ended and demand-led, which he might not even realise. If companies that are struggling have to wait until January to get the £1,000 support, that might mean that they choose to not return people from furlough, which might bring a first cliff edge in October and another in January next year.

Last week, the much-loved Digby Chick restaurant in Stornoway announced its closure, which comes on the back of news of other hotel and restaurant closures across the Highlands and Islands. Does the cabinet secretary acknowledge the importance of the hospitality sector to my region and accept that the Government’s mixed messaging about quarantine is having a direct effect on the sector’s viability, which could lead to further job losses?

There are not mixed messages; the guidance that is set out is quite clear. The hospitality sector is crucial to all of Scotland and I recognise that it is particularly vital in the Highlands and Islands and supports many businesses in every part of Donald Cameron’s region.

The differential position with regard to unemployment is understandable, because tourism is more important to the Scottish economy, relatively, than to the UK as a whole. That is why the sector needs additional continuing support and why the Scottish Government has put in such additional support. The sector will return resilient, but that will be a challenge. We have called for a VAT cut for some time; VAT on tourism in Scotland is the second-highest rate among European Union countries, and it is important that the level is comparable to help businesses.

We want our visitors to have confidence and to know that they have come to a place that is suppressing the virus. We are doing so—although we still need to be vigilant—which should give confidence to people that Scotland is a good place to travel to, with wonderful scenery. We should start talking up the industry and supporting it, such as by getting out to our local restaurants as part of the economic recovery.

The UK Government plans to replace the furlough scheme with a one-off £1,000 payment to businesses for each employee who is brought back to work. There appears to be no mechanism to target the scheme on jobs that are under threat. Many companies will be able to claim the payment, even if they plan to retain staff anyway. Does the cabinet secretary agree that the UK Government should re-examine its plans and ensure that the funding is better targeted to prevent job losses?

Job retention is far better than having to fund massive levels of unemployment. Keeping people in jobs that are already there is critical. I welcome the additional support, but it will only be realised in January and, if it is going to everyone—it is a blanket measure and it is very blunt—it may go to companies that were already planning to bring people back, where it would be a bonus. At this stage of economic recovery, we need a far more targeted response. There is a danger that, by being so blanket and blunt, the scheme might not help those companies that cannot wait until January because they are struggling now and could do with support. I think that it should be targeted better. We will get fuller details of the scheme from the UK Government toward the end of July, and that is the feedback that I will give.

Labour market statistics show that women’s unemployment has increased by 51.3 per cent since last year, which is three times higher than the increase for men. That is due to the number of women working in the hospitality sector, but it is also due to a lack of childcare and uncertainty about school education. The effect of that is to push back women’s equality by decades. Will the cabinet secretary include women of all ages in her job guarantee scheme and will she ensure that childcare is available to all participants and prevail upon the education secretary to provide women with a degree of certainty about education and childcare?

The member’s point about supporting women is absolutely right; the impact on women is more severe. I understand that there is a degree of uncertainty about what will happen. However, it is dependent on our suppressing the virus. One of the best things for the economy will be if we suppress the virus sufficiently so that our schools can go back full-time in August.

The Cabinet Secretary for Education and Skills will give a statement to the chamber shortly, and the member might have an opportunity to address her question to him then.

I say, unashamedly, that the job guarantee scheme is focused on young people. If it is successful, there might be a prospect of widening it. However, the speed and swiftness with which we will have to establish it means that it is correct to focus it on young people.

However, many young people up to the age of 24 or 25 will be parents, and I recognise that access to childcare is a game changer. Good-quality early learning and childcare is important for young people’s development, but it is also vital for parents, in particular for women who are coming back into the labour market. I believe that childcare is fundamental to gaining skills, training and job support, and I will champion the case for that.

I cannot give the member the firm guarantee that she is looking for now, but I am more than happy to engage with her and continue the discussion about it.

What engagement has the Scottish Government had with the UK Government on the importance of fair work in the light of the statement that the Chancellor of the Exchequer gave last week?

The Scottish Government believes in fair work and, as I said in response to other questions, employers’ commitment to tackling the gender pay gap is part and parcel of this Government’s approach and will be part of the fair work principles that underline all our programmes.

Unfortunately, the UK Government did not speak to us before it announced the kick-start programme. That was unfortunate, because we have good experience in that area following the financial crash that happened more than 10 years ago.

I have written to the Secretary of State at the Department for Work and Pensions, to engage with her. It makes sense for us to work on the UK Government’s kick-start programme, which Richard Leonard described as a “very minimum” package. The more engagement, the better. It does not cost much to pick up the phone There are ideas everywhere that I am more than happy to share.

According to figures that were released this morning, almost 20,000 applications for financial support by firms across Scotland remain outstanding. According to the Confederation of British Industry,

“Prevention is ... better than cure”,

in that many of those firms need urgent support before they collapse. If they collapse, it will result in further unemployment in Scotland. What urgent actions is the Scottish Government taking to ensure that those outstanding applications are processed as soon as possible?

It is not enough to expect local authorities to process those applications alone. As the cabinet secretary said, this is a nationwide economic crisis and it is time that we see leadership from the Scottish Government on this front.

We provided leadership by moving very swiftly to set up not only the basic small business grant but the creative, tourism and hospitality enterprises hardship fund and the pivotal enterprise resilience fund, which were unique additional funds. Dean Lockhart is incorrect to say that there are 20,000 outstanding applications; I know that the Conservatives keep banging on about that and thinking that somehow there is a queue of people still to get support, but that is not the case. That figure includes those who may have made multiple applications, those who did not provide sufficient information and those who have been refused because they are ineligible. Obviously, in looking after the public purse, we cannot allow fraudulent claims, for example. It is churlish and unappreciative of Dean Lockhart to dismiss local government workers the length and breadth of the country who processed those grants promptly and made sure that more than 100,000 companies received support; they deserve recognition rather than attack from Dean Lockhart.

We know that some sectors of the economy will perhaps take longer to restart to prevent the spread of the virus. Does the cabinet secretary agree that consideration should be given to extending the scheme for sectors of the economy that will be unable to resume economic activity at the same pace as other sectors, particularly for work sectors that have not previously been covered by the UK Government and in fact have been let down by the UK Government?

The key areas of concern are tourism and hospitality and culture—for example, many theatres are not open, which is why we have used Scottish Government resources to support theatre venues. We also need to consider the oil and gas sector, not necessarily just because of the Covid crisis but for other reasons as well. Aviation and aerospace have clearly been impacted because of the collapse in tourism on a global level. That is also one of the reasons why, together with my counterpart economy ministers from Wales and Northern Ireland, I have written to the UK Government calling on it to establish a UK task force on aerospace. That is important because the supply chain skills in that sector—for example, the engineering skills—can be used and preserved for the aerospace sector when it returns, which will take some time due to the global collapse, and can be transitioned into other industries, in particular renewable energy, I hope.

Investing in energy efficiency is the cheapest and most effective way of creating jobs in the construction sector while also tackling the climate crisis and making homes cheaper to run. In June, the First Minister said that energy efficiency schemes should be upscaled this year, and since then the UK Chancellor has announced that he will do that in England by reprioritising expenditure. Can the cabinet secretary confirm that the Scottish Government will reprioritise expenditure on energy efficiency and does she agree that it could make a major contribution to the job guarantee scheme?

Yes. I completely agree with that and in fact I have already had active discussions on the issue with other ministers, such as the Minister for Local Government, Housing and Planning, Kevin Stewart. In relation to Mark Ruskell’s point about energy efficiency in buildings, the greenest building is one that is already built. It is important that, when it comes to the retrofit programme and moving to alternative energies, we use the powers that we have to develop jobs for young people, and develop skills and training, in sectors such as renewable energy, in particular in the retrofitting side of that industry. I would like to move rapidly on that. We will need the agreement of different employers, too, and that will be one of the Government’s early priorities.

In Shetland, a significant number of jobs have already been lost in the oil and gas and hospitality sectors, and I am still regularly contacted by people who have fallen through the gaps in the available business support. As we deal with the pandemic’s impact, the islands growth deal is more important than ever. When does the Scottish Government expect to make progress with the UK Government in introducing a deal?

I have regular discussions—I have another one tomorrow—with Nadhim Zahawi and Alok Sharma, who are ministers in the UK Department for Business, Energy and Industrial Strategy, and our Welsh and Northern Irish colleagues. One issue that we have been discussing with them is the need for new capital stimulus for green energy; another issue is how we ensure that the cities and regional growth deals that have been developed but not yet signed off can be signed off. We are starting to get extremely impatient. Such deals could be used as part of the stimulus package. Indeed, one of the recommendations in the report of the advisory group on economic recovery is that there should be a more regional approach.

The member it is quite right to identify two of the industries in her constituency that have been particularly impacted in recent times in an area that is small geographically but hugely important. We need to press ahead not just with the islands growth deal but with other growth deals.

The message has been received and is understood. I will ensure that I bring up the topic tomorrow, when I speak to UK Government ministers.

Although times are tough, we must ensure that we do not take any backward steps when it comes to tackling inequalities in employment. Can the cabinet secretary provide assurance that steps continue to be taken to close the gender pay gap?

I agree with the member on that issue, which Rhoda Grant also picked up on in her question. As we know, women have been at the front line of our response to the coronavirus. At this time, they are the majority of the workforce. They are more exposed, because of the jobs that they do, including in the tourism, hospitality and retail sectors, which may be impacted as the furlough scheme unwinds and that support is no longer available.

We need to look at the analysis of the implications and impact of Covid-19 on gender in restarting the economy. I have already mentioned issues around childcare support.

If we are to progress our flagship fair work first policy and be a fair work nation, we must ask employers to commit to tackling the gender pay gap. One of our immediate actions is to provide £89,000 in funding to Flexibility Works, which supports employers to develop flexible practices, enabling women with caring responsibilities to access good-quality flexible jobs.

Caring should not be and is not solely a female responsibility, but, as we know, the reality during the Covid crisis—the research seems to show this—is that women are taking on more of the caring burden. We have a responsibility to those women, and I want to make sure that the Government develops policies that support women. That will be a challenge. Again, it is one of the issues on which I am more than happy to work with members from all parties, to identify ways that we can—[Inaudible.]

In the past, constituents have in particular contacted me about the transition training programme to complain that, despite their being overqualified elsewhere for a job, they were failing in their applications because they did not possess a particular Scottish qualification. Does the cabinet secretary recognise the importance of the UK single market? Will she expedite the equivalence of qualifications across the United Kingdom, to ensure that there is a flexible employment pool?

The biggest single market is the European single market, and the biggest challenge to jobs after Covid will be Brexit. Our leaving the biggest single market in which we could operate will have a real impact on jobs and training.

We can certainly look at retraining funds as part of the £100 million package that I announced today. Transition training by upskilling and reskilling individuals facing redundancy is important. I know that colleges are looking at the possibility of supporting people while they are still on furlough, and the economic advisory group’s report is clear that we should have an education-led recovery. I have said clearly that colleges that can move rapidly and swiftly to present upskilling and reskilling opportunities are well placed, as are other such training providers.

As I think the member referred to, we have some experience of such retraining from the oil and gas transition fund that was used to address the crisis in the oil and gas industry a few years ago. We will learn from its many successes. However, we want to ensure that we have a good support mechanism to develop skills in the supply chains of both existing industries and those that we want to develop, particularly in the digital and renewable energy areas.

As the member might be aware, we have already developed in the north-east a £62 million energy transition fund to help support opportunities for the very talented and experienced oil and gas industry supply chain to move into new areas. That is also a challenge, because we need to do more in terms of having a serious hydrogen strategy, for example. Again, we discussed with the UK Government some of the issues that it can help with, which are not necessarily always financial. Yes, we need an economic stimulus in that area, but we also need help on the areas of transmission and regulations to ensure jobs there. The member made a practical point about ensuring that the scheme is wide enough to look at qualifications in the round, which I will take back to those developing the fund.

The Covid health crisis has hit the west of Scotland harder than any other region, with Inverclyde recording the highest death rate in the country. North Ayrshire and West Dunbartonshire already report the highest unemployment rates in Scotland and we are losing thousands of aerospace and airport jobs in Renfrewshire. The Scottish Government used to have a national performance framework target for tackling regional inequality that aimed to reduce the employment gap in Scotland, but it was abandoned at the end of 2017. Given the disproportionate effect that the virus is having on areas such as the west, will the Scottish Government agree to introduce new targets for tackling employment-based regional inequality? Does the cabinet secretary agree that areas that have the highest levels of unemployment and redundancies should get additional resources and support?

The member made a serious point about the disproportionate impact that Covid has had on not only health but the economy in different parts of the country. I will certainly consider his suggestion, but I am not necessarily committing to it at this stage. However, we need to find ways of becoming more regional in our support, whether that means the skills retraining being more focused on regional needs and being brave in moving from traditional sectors in those areas to new ones.

That might bring challenges. As the member might be aware, we have particular challenges in local government in terms of the distribution of funds being based on an existing formula to which local authorities have agreed. We therefore might need to resolve some issues with local government if there was to be far more targeted support for different parts of the country. We are starting to see different experiences of the furlough in different areas. Indeed, a member made the interesting point earlier that the Highlands and Islands has among the highest numbers of those on furlough.

There are therefore different impacts in different areas, so instead of rushing to indicate what support certain parts of the country should get now, we must look at the different experiences in terms of furlough and labour statistics, and the disproportionate impact that they have in different areas. The Inverclyde and west of Scotland area already has targeted support because of depopulation, and we must think about how we can encourage more jobs into that area.

We have to think differently about how the world will be. We could quite easily see a situation in which the flexibility of homeworking can continue. People do not necessarily need to be in their home five days a week and never go to the office. There will be an opportunity for people to think about having lower cost bases and ensuring that people can work and live in areas that have faced depopulation—in the west of Scotland, for example—rather than necessarily expecting everybody to be in or close to our cities and commuting on a daily basis. We have to think differently about how we might work in the future.

I take the point that we have quite serious unemployment figures today and that they may get worse. We have been very dependent on international workers coming into Scotland, and we have needed them in the agriculture, health and social care sectors. Does the cabinet secretary think that we still need those workers? Is the UK doing enough to allow them to come here?

I feel strongly that we need migrant workers supporting our health and social care systems. We have relied on people coming to this country to work in our health and care systems to help to suppress the virus and deal with the real challenges for our hospitals and our care homes in recent months. The UK is now turning round to them and saying, “You’re not welcome.” The Conservatives who challenged me about how welcoming Scotland is at the moment should seriously think about what the UK Government is doing in telling people who want to come here and can help us with their much-needed skills in our health and care departments that they are unwelcome. That is among the most shocking things that I have seen from the current UK Government in relation to what it is doing with Brexit.

We are living with Covid, and we will live with it for some time to come, but the new immigration rules do not serve Scotland or our health and care system, and they will be very damaging. I want a Scotland that is safe, confident in itself, and welcomes those who want to work with us in building a new Scotland and ensuring that we have a health and care system that can look after our sick and our elderly. The UK Government thinking, at this time of all times, that it can press ahead with its migration system and Brexit when we should be concentrating and focusing on tackling and rebuilding our economy following the Covid crisis is among the most disheartening aspects of the developments in the past few weeks.

It is positive that the Scottish Government has welcomed the proposal for a job guarantee scheme that is focused on young people, which emerged from the independent advisory group on economic recovery. Given that the cabinet secretary referred to the need for swiftness on that, when is the scheme likely to become available and when are employers expected to be able to sign up to it? What progress has been made at this stage in involving universities, colleges, apprenticeship providers and employers?

Sandy Begbie will produce the implementation plan for the scheme for the beginning of August. He is already talking with those who can help to deliver that. As I have said, we need to move rapidly because, obviously, there will be leavers from education through the summer period, and we are seeing the unwinding of the furlough scheme. Moving to the new job guarantee scheme will be an important and swift development that will help the labour market in particular. I cannot give an absolute timescale for that, but I can say that the implementation plan will be published at the beginning of August, which is in a few weeks’ time.

On the point about universities and colleges, the Deputy First Minister, as well as Richard Lochhead, the Minister for Further Education, Higher Education and Science, Jamie Hepburn, the Minister for Business, Fair Work and Skills and I, collectively met the chairs and chief executives of Skills Development Scotland and the Scottish Funding Council to address the same point that the member is making about how universities and colleges can respond in relation to skills and training.

Colleges are already responding; they are not waiting to be given instructions. The best colleges are those that are already in tune with needs in their local area. For example, in my area of West Lothian, there are four east of Scotland colleges working together to provide a response, particularly in relation to short-term courses. That adaptability is important. If we think about what Glasgow college did, for example, in taking retail workers and giving them short courses to help them to move into financial services so that they could be recruited by Barclays, that is a good example of what can be done, and at relative speed. Those are the areas that we need to focus on. There is far more that universities can provide in terms of tackling the demand on the digital side and on energy and renewables. Graduate apprenticeships could be really helpful in that area.

The apprenticeship aspect will be part of the funding that I have announced today. After the financial crisis, we had a scheme that focused on a mechanism called adopt an apprentice, to make sure that apprentices who had been made redundant could be taken on by another employer with some financial support. It is also about looking at ways in which those apprentices who have been made redundant can carry on at least the skills aspect of their apprenticeships, even if they are not in employment.

The member raises an important point that has not been touched on in other questions today, about the exact package for retraining and how we can make sure, as part of the wider support for young people, that we are looking at not just the job guarantee but at universities and their provision.

Does the cabinet secretary share my view that for the UK Government to reimpose benefit sanctions at a time of such economic uncertainty is not only cruel but counterproductive, as it will push people further into financial hardship during the crisis?

Does the cabinet secretary believe that investing to keep people in fair work is a far better option than the social cost resulting from higher levels of unemployment, which would be devastating for people?

Yes, I agree with that. Keeping people in jobs is easier than having to create new jobs. With any recession, there is always disruption to the market and there will be new and emerging companies and the repositioning of many companies into different areas. That is part of the economic market response.

However, in looking at the cost of this, the UK Government should seriously look at continuing support for those sectors that are in effect still closed across the UK. Major events will be one of the last to return, for example, and other areas will not necessarily realise the levels of income that they had and will still be just surviving. Other companies might just get through until next year, until they have to repay their bounce-back loans or pay their deferred tax to HMRC. That is a real danger, so keeping people in jobs is essential.

The member’s point about sanctions is really important. There is a moral argument but there is also a very practical one. There is no place for sanctions in a system that needs to support people. Certainly, we would make sure that there were no aspects of that conditionality and mandation in anything that we did and we would encourage the UK Government to accept that sanctions should have no part to play in a system that is there to support people. If up to 10 per cent of people are unemployed, a sanctions system will just cause more misery and, at this time, it is our job and our responsibility—and the UK Government’s job and responsibility—to support people, not to punish them.

That concludes the ministerial statement in response to the labour market statistics.

14:59 Meeting suspended.  

15:07 On resuming—