Meeting date: Tuesday, June 2, 2020
Meeting of the Parliament (Hybrid) 02 June 2020
Agenda: Time for Reflection, Topical Question Time, Resuming National Health Services , Economic Recovery, Point of Order, Decision Time
- Time for Reflection
- Topical Question Time
- Resuming National Health Services
- Economic Recovery
- Point of Order
- Decision Time
We are very late in starting the next debate. Unless we are very disciplined, I do not think that we will be finished until 6.15 this evening. The next item of business is a debate on Covid-19 and next steps for the economy.16:28
Last Tuesday, I made a statement to Parliament about our approach to the restart and recovery of the economy and our route map out of lockdown. From the questions that followed, it was clear that, although it was right to set out the forward-looking plan for recovery, we are still dealing with significant economic effects from the initial and continuing Covid crisis.
The impact will not just be on our economy but on our communities and especially on our society’s most vulnerable people. It will be essential that we work together to develop responses that mitigate those impacts and to begin to build the foundations for a better future, and for a genuine wellbeing economy that reflects the principles of our national performance framework.
The best way to build our recovery will be by working collaboratively, across parties and with industry, unions and other partners, to build trust and confidence. We must build on the constructive and fruitful engagement that we have seen to date, with a clear vision of what we want to achieve.
The scale of the challenge ahead is significant. We could be looking at a 33 per cent fall in gross domestic product during the current period of physical distancing. A sharp rise in the number of claimants for jobseekers allowance and universal credit in March and April has taken the number of claims to 186,000—around 6.6 per cent of the workforce. We expect that to increase; the proportion could reach 10 per cent.
Some sectors—including manufacturing, construction, retail and wholesale, tourism, accommodation and food services, and arts, entertainment and recreation—are more at risk. Impacts will differ regionally, and exposure to the impacts of Covid-19 will vary according to the composition of industrial, workforce and population structures. Many of the most exposed sectors are more likely to be in rural areas.
I understand the challenges for businesses whose international markets have been lost or disrupted.
The cabinet secretary rightly addresses the various issues that affect different sectors. In a report today, the Scottish Council for Voluntary Organisations points out that 50 per cent of charities think that they will run out of money in the next six months. Does she agree that the issues affect the charitable sector as well as the private sector?
I am aware of the issues that face the charitable and social enterprise sectors, which is one of the reasons why we expanded the grants system to give charities access. That was about dealing with the crisis; we also need to help parts of the economy to develop, and charities have a role as part of our societal response.
Businesses whose international markets have been lost or disrupted must reconnect with their supply chains and create new markets, and they must do so in an environment in which consumer sentiment in the United Kingdom has fallen to its lowest level since the financial crisis, with personal finances deteriorating sharply since March. Business optimism, too, has fallen sharply amid significant uncertainty around the pandemic and its wider economic implications.
We still have the impending impact of Brexit to contend with. The real risk of a no-deal outcome will compound and exacerbate the crisis.
It is important to set out that context and to be realistic about the scale of the challenge ahead. The economic situation that we face is unprecedented and will require an unprecedented response.
When the crisis hit, we moved quickly to support businesses to deal with cash-flow challenges through our £2.3 billion business support package, but we are aware that many businesses have had to take on debt to survive. Where we can do more, we will. Where the current funds are not oversubscribed, we are committed to taking any available funding and targeting it back into the economy where it is needed most.
The most recent figures, which are from last week, show that £790 million has been awarded to more than 69,000 ratepayers through the two business grant schemes.
Last week, I announced that we would extend the small business grant fund to applications from small businesses that occupy shared office spaces, business incubators and shared industrial units and lease the space, where the landlord is the registered ratepayer.
We will also extend the upper threshold for retail, hospitality or leisure properties with individual rateable values of up to £18,000 each. From 8 June, the cumulative threshold, which is currently £51,000, will be increased to a cumulative value of £500,000. That almost tenfold increase will benefit more than 2,500 premises.
On 30 April, we launched a £100 million package across three business support funds, offering targeted support to the creative, tourism and hospitality sector, small and medium-sized enterprises that are vital to their local economies, and the newly self-employed.
One month on, we have awarded more than £104 million in grants to those businesses and enterprises. We have supported around 2,500 businesses and 4,160 self-employed people, topping up those funding streams, given the volume of applications received. The additional funds that have been announced will enable us to reach more businesses in need.
Today, I announce that £3 million of the newly self-employed hardship fund allocation will be repurposed to support bed and breakfasts that were ineligible for other support, due to their not having a business bank account. We expect applications to open for that fund, which will be administered by local authorities, on 15 June.
In the short to medium term, businesses will need further resources to aid recovery as they rebuild their working capital. In the longer term, the unprecedented level of borrowing that we are seeing may affect the resources that are available to invest in growth and innovation to improve productivity.
We know that the economy will not rebound to 100 per cent immediately; a gradual return and reduced demand will impact business and employment beyond the end of the current support schemes. Our support for businesses must go beyond the financial. We will listen to businesses and support them to learn lessons from other countries, and to innovate and institute new practices and processes.
Our enterprise agencies have been working tirelessly to support their local economies with non-financial support and advice. Scottish Enterprise has been safeguarding jobs and supply chains through its work with company administrators and using its networks to identify and secure buyers. Highlands and Islands Enterprise has redesigned many of its services to be delivered digitally. South of Scotland Enterprise has continued to build its capacity, engaging with stakeholders since its launch in April to provide targeted support for businesses.
In addition to that, access to affordable upskilling opportunities was identified as an early priority, and Skills Development Scotland launched free online learning opportunities in April, with more than 80,000 visits to those resources in a month. At the end of this month, the enterprise and skills strategic board sub-group on unemployment will report its initial findings and recommendations for action to the Scottish ministers. The group is working at pace to agree a short list of practical actions that Government can take quickly to mitigate the rising levels of unemployment, with a particular focus on young people.
During times of recession, it can be a challenge to continue to invest in the skills base. However, now more than ever, there needs to be support to ensure that we can draw on all our talent in the recovery phase. We cannot lose our focus on promoting fair work and ensuring that those who have traditionally faced greater barriers in entering the labour market are not left behind. We must continue to support young people, disabled people, those from ethnic minority backgrounds, care-experienced young people and people with convictions.
We know that the impacts of this crisis will not fall evenly. The majority of our key workers are women, but they are more likely to be lower paid and in precarious or temporary employment. Our recovery must ensure that we are closing the gender pay gap and the disability employment gap.
Lockdown has demonstrated that a significant proportion of work can be done at home, keeping many parts of the economy and society moving during lockdown while keeping people out of harm’s way. We know that it can work, and it can be improved by investing in new technology and approaches that can be a catalyst for more flexible working, reducing travel and commuting, and more balanced lifestyles. Those are all critical aspects of an inclusive, wellbeing economy.
If we are to change the way we think about work, models such as community wealth building, which require government at all levels, businesses, and communities to work together to invest in and grow local and regional economies from the asset base that they possess, must be central to our recovery. Interest in the community wealth building model is growing rapidly across Scotland. The Scottish Government has committed to £3 million of investment as part of the Ayrshire growth deal to accelerate progress on that.
This is an international crisis that needs a national recovery, but our response must be based on local and regional solutions. In recent years, our focus on inclusive growth has seen us work with local authorities to better understand the drivers of poverty and inequality and how those link to economic sustainability and the ability to create better jobs with their roots in local communities.
Over the past few weeks, we have had emptier roads and we have embraced our relationship with nature through our daily exercise. We must build on that, ensuring that our economic recovery is a green recovery. We have an ambitious climate change target of ending Scotland’s contribution to climate change by 2045. We also have a strong track record in supporting decarbonisation projects through low-carbon heat, hydrogen, carbon capture, utilisation and storage, on and offshore wind and the electrification of transport, which must surely be part of that restart and recovery.
Our end goal has not changed but, as a result of this crisis, the path that we take may have to. It may be more challenging, but we should look on the process of restarting the economy as an opportunity to fully embed the principles that we have all signed up to, which are those of a green economy for Scotland.
I absolutely understand and sympathise with the sacrifices that are being made by businesses and individuals, and the hardship that this is causing. I think that members from all sides of the chamber recognise that the restrictions that are in place are vital to suppressing the virus. The transition out of lockdown must not risk undoing what we have achieved so far, but we must also not lose the opportunity to learn from the crisis. Indeed, we must recognise that some measures will—and should—remain part of daily life for the foreseeable future.
As I said earlier, this is an unprecedented situation for our economy. Recovery will require everybody in the Parliament to work together to be part of the solution. The Parliament has an opportunity, and a duty, to lead and to demonstrate that we can work together to shape a new economic future—one with a better balance of work and wellbeing.
We must mobilise all the significant talent, experience and thinking that exists throughout Scotland and beyond to help Scotland’s cause. I want the Parliament to be a key part of that, starting with this debate, and to begin to set out some of the ideas and thinking that will drive our recovery over the coming weeks and months. I look forward to hearing members’ contributions.16:40
Coronavirus is perhaps the biggest economic challenge that we have ever faced. Our plan must revolve around inclusive growth and ensuring that no person is left behind. Workers must be put to the fore in all our considerations. The public sector, businesses and the third sector all have a role to play in securing future prosperity for Scotland.
The task at hand is to keep businesses afloat and, therefore, to protect and safeguard jobs. Only a third of Scottish businesses are currently trading, with more than half having had to close. Of the businesses that are closed, a third fear that they might never reopen. Businesses of all sizes and across all sectors have been affected, with thousands of jobs at risk.
The United Kingdom Government quickly launched a massive rescue effort to save Scotland’s economy from collapsing. It has already pumped £3.5 billion into Scotland to help fight coronavirus. The figure is even higher when we add in the job retention scheme, which has saved more than 300,000 Scottish jobs. That comes on top of all the other action that the UK Government is taking, such as paying the wages of the self-employed; ensuring sick pay from day 1 and letting companies claim it back; mortgage holidays; helping people who are struggling to pay their energy bills; and offering interest-free loans to small and medium-sized companies.
In total, those measures equate to a £10 billion investment into the Scottish economy. The effectiveness of the measures can be seen in new research from the Institute for Government, which shows that the UK has been more successful at saving jobs than the USA, Canada or Ireland. However, despite the Cabinet Secretary for Finance and the Cabinet Secretary for Economy, Fair Work and Culture praising the UK Government’s approach, they have used a less generous system for Scotland. English businesses receive £25,000 per additional property, while the Scottish National Party gives Scottish businesses just £18,500.
Does the member think that it is less generous to put in place a pivotal enterprise resilience fund and a hardship fund, and to ensure that more small businesses get the £10,000 grant?
I urge the finance secretary to consider all the businesses that are not receiving grants and to look at using any savings from the Scottish budget to pay for such support.
The Scottish Conservatives managed to secure a partial U-turn so that multiple properties are included—initially, the SNP had refused to include them. However, more than 16,000 firms are still waiting to get their money. The outcome is that the SNP is being taken to court by Scottish businesses for what they regard as a failure to provide adequate support. The approach has put jobs at risk. Moreover, the SNP has steadfastly refused to utilise savings from the Scottish budget to support Scotland at this time; in fact, it has made decisions that will increase costs, which will not aid our recovery.
To make matters worse, Scotland was already in a poor state to deal with the crisis, after years of economic mismanagement. More than half Scotland’s borrowing capacity has already been spent, and the SNP has put Scotland into last place for business and job growth. Our economic priority must be to ensure a safe and lasting recovery.
Is Maurice Golden aware of the Ernst & Young report that was published in the past few days? It showed that Scotland has again outperformed every part of the UK apart from London with regard to inward investment and that the impact on jobs is extensive.
Can Maurice Golden please raise his game in the debate? Let us hear about his ideas, prospectus and vision, which I invite him to contribute as we restart Scotland’s economy.
I will come on to ideas shortly. I appreciate that the cabinet secretary was not in post at the time, but the previous incumbent left her with the major problem of addressing the deficiencies in the Scottish economy due to a failing growth rate and problems with retaining jobs.
Businesses need support if track and trace measures force them to reclose. The Federation of Small Businesses has already called for a new financial assistance package for such situations.
We must also look at modifying our high streets to accommodate social distancing—I said that I would come on to ideas. The Scottish Conservatives want fair funding for councils, communities and business, and we want prompt action to be taken, for example through the FSB’s suggestion of local places task forces that can adapt town centres and co-ordinate queues.
We also need the SNP to better co-ordinate with the rest of the UK to avoid damage to Scottish businesses and jobs. For example, Scottish manufacturers have proven that they can work safely when producing goods for NHS orders, but the SNP refuses to let them reopen, thereby handing English firms a free run at contracts. In England, the construction industry is safely working again, but the SNP will not name a restart date for Scotland; meanwhile, desperate homeowners are losing thousands of pounds. As David Lonsdale of the Scottish Retail Consortium noted, in the retail sector, Scottish firms operate across the UK and vice versa. Diverging timescales and regulations add confusion to a sector that is already losing £130 million per week in non-food sales. As a matter of urgency, we must hear when businesses can reopen, and, if there is divergence from the rest of the country, we must hear an explanation of why that is the case.
Beyond those immediate concerns, we must look to the long term. In the oil and gas sector, coronavirus and low oil prices are putting highly skilled jobs at risk. Once they go, it is hard to get them back. The First Minister promised support weeks ago, but we have heard nothing since. We need the detail if we are to secure future energy and decommissioning projects as we make a fair transition to a more green economy.
Small businesses also need help, such as with expanding online services. The past weeks have seen online services surge, and they will only grow. Providing e-commerce support now gives those businesses the best chance to take advantage of growth.
Procurement reform is a must, too. Microbusinesses win just 7 per cent of public contracts despite making up 93 per cent of small businesses, and, since 2008, councils have dropped more than 20,000 local firms as suppliers. Even a modest increase in public contract spending with small local firms could have a big impact on businesses and local communities.
Training and upskilling are important, especially for our young people. The Economy, Energy and Fair Work Committee heard how the 16 to 24 age group will be hardest hit by job losses. The Scottish Conservatives already want to see everyone in school or training until at least 18, along with better access to apprenticeships and college places.
The task ahead is daunting, but we have seen what can be accomplished when differences are put aside. Scotland benefits enormously when the UK and Scottish Governments work together for a common purpose. That must be the approach that we take to rebuilding our economy. For the sake every Scottish worker, I hope that the Scottish Government agrees.16:49
In every community, on every street and in almost every home in Scotland, people are facing difficult questions, living from day to day and losing sleep at night. They are anxious, not knowing when or whether they can return to work and whether they will have a job or a business to return to. Those are the serious questions and pressures that people are struggling with, and they are looking to this Parliament to help them find the answers. That is why I want to be crystal clear from the start that this debate goes beyond party politics and that we will work with the Government to get every one of Scotland’s people through this process to ensure that they do not pay the price for an economic crisis that they did not create.
The evidence is all around us that, just as we were unprepared for the public health crisis, so we are unprepared for the crisis in our economy. The underlying weaknesses of the Scottish economy have not been tackled—all those years when the Scottish Government could have been taking action to diversify and strengthen the Scottish economy, but it failed to do so. That is why, despite the measures that have been introduced by the UK and Scottish Governments to help businesses stay afloat, many are already going under.
I am not sure whether the Scottish Government even knows how many businesses in Scotland are under stress or how many will go bust when state aid stops. Last week, I spoke to a representative of the Federation of Small Businesses who told me that one third of FSB members whose businesses are closed said that they did not think that they would reopen. That applies across all sectors of the Scottish economy and in all parts of Scotland. For them, there will be no going back; for them, this is not an opportunity but a very real threat.
Everything that we already know points to a slow and painful recovery, with fewer businesses taking on new workers, consumers unsure about spending, culture and tourism restricted for months ahead, and entire industries at breaking point. We are facing a massive collapse in our service sector, which is uncertain about future demand and therefore reluctant to invest. We know that our manufacturing base, which has been allowed to decline over the past decade, is also in deep trouble.
That is why Scotland needs a national plan to deliver green jobs and ensure that we meet climate change targets, instead of too much of that work going abroad. It is why Scotland needs the UK and Scottish Governments to work together to deliver the scale of the investment that is needed. It is why we must come together to defeat the arguments for austerity, because there can be no going back to austerity. We ask the Scottish Government to support the Scottish Trades Union Congress’s call for a two-year emergency stimulus of £13 billion of investment in an economic recovery plan—a jobs plan.
The new approach must target our young people. They must be on our route map and part of the next steps, because tackling unemployment, including youth unemployment, must be our number 1 economic priority, and it must be our social and moral priority, too. We want the talents of our young people to flourish, not least when there is so much unmet urgent community need and so much useful work to be done.
We have called before, and I call again, for the Government to work with us, employers, trade unions and local government to introduce a job guarantee scheme as part of a plan for jobs and an industrial strategy.
The next steps in the route map must include democracy in our economy. We know that community wealth building by local government could be an engine for sustainable economic development; we know that co-operative and employee ownership has a part to play; and we know that the pandemic has shown the importance of strong trade unions. It has also shown that people want to have a better balance between work and life, and that, when people are at work, they want to take more decisions for themselves and have more control over their lives and their work. Merely tinkering with those problems will not do. We must harness the hard work, creativity, resolve, dedication and selflessness of the people to build a better economy—a good economy.
If we want full employment, decent pay, training for all, security of employment, decent homes and dignity in retirement, the Government, and the Parliament, will have to take the lead.
I began by talking about the need for unity. Scottish Labour Party members will unite with other parties in the Parliament, and with the Government as long as we are travelling in the right direction, and for as long as the boldness in words by Government is matched by boldness in deeds by Government.
In so doing, and in taking that unified approach, we will appeal to all people of good will to work together, not to divide but to unite and to join together in common endeavour to build a better future—a better future than the past that we left behind 10 weeks ago.16:55
As has been noted by many people, this is an economic crisis as well as a health crisis. However, unlike the last financial crisis, which we faced in 2008, this one has led to a prolonged period of closure for many businesses, and recovery depends on the speed and efficacy of a vaccine which may never arrive. In the words of the cabinet secretary, from last week’s debate, it is indeed a time for
“a revolution in economic thinking”.—[Official Report, 26 May 2020; c 32.]
We are concerned with the fate of Scotland’s businesses, and they will remain an important focus in the months ahead. However, the economy is not solely about the interests of businesses. It is about workers, infrastructure, care, housing, and the environment.
Traditionally in developed economies—particularly since the onset of neo-liberalism—economic success by the measure of GDP has come at the cost of growing inequality, continuing poverty and a continued assault on the natural world. Green economics has always concerned itself with reversing that trend and ensuring that economies are built around people, not profit. Indeed it is evident that one significant failure in western capitalism has been the focus on shareholder value and profit, which has driven short-term thinking and has left the wider community paying the costs of job insecurity, and with significant financial risks.
That is why Scottish Green Party members welcome an economic recovery that is to be built around wellbeing—that focuses on ensuring an end to inequality and insecurity. For the purposes of an economic debate, that means security of housing; affordable transport; reliable infrastructure, energy and food security; and a clean and sustainable environment.
The long-term health of any economy, including the health of private businesses, cannot be achieved without addressing those fundamentals, yet a slew of reports over recent weeks, some of which have already been mentioned, has found that the impacts of the Covid crisis have fallen disproportionately on women, younger people, and the minority ethnic population.
Sadly, that should not be surprising. Those groups—in particular, younger people—have suffered flat wages, job insecurity and high housing costs since the financial crash of more than 10 years ago.
For example, a third of 18 to 24 year olds have lost their jobs or been furloughed; and a third of lower-paid employees have lost their jobs or been furloughed, compared with only one in 10 top earners.
An important report from the Institute for Public Policy Research, “Who Wins and Who Pays? Rentier Power and the Covid Crisis”, which was published a couple of weeks ago, lays bare the fact that the crisis has exacerbated inequalities for the working poor, who are reliant on wages and have high fixed costs for rent, food and energy. The measures that have been proposed to tackle that include higher taxes on wealth, land ownership and excess profits; rent freezes and controls; and writing off debt.
The report also highlights the important point that supporting people’s income is only one side of the coin. Reducing their costs is just as important—in particular, for rents and energy, which is why it was so disappointing that Parliament voted two weeks ago against measures to increase tenant security.
A week ago, the cabinet secretary said that we need
“a revolution in economic thinking that stimulates and values co-operative sharing of risk and reward”.—[Official Report, 26 May 2020; c 32.]
That is a bold vision, and I hope that it will be realised, but the tide remains very much in the opposite direction. Sharing of risk and reward cannot be achieved without fundamental reform of company law and the duties and roles of directors and shareholders.
The cabinet secretary went on to say that such a revolution has to involve the replacing of
“old thinking of battling over wealth distribution that is never properly delivered”
“collective endeavour.”—[Official Report, 26 May; c 32.]
However, wealth inequality has grown over past 10 years. The battle has barely commenced and should certainly not be abandoned. Moreover, we still have the scandalous situation in which the lowest 20 per cent of earners continue to pay more in tax as a percentage of their income than the top 20 per cent.
The Parliament faces significant challenges in recovering from the crisis. It can do more on wealth taxes, as local taxes on property and land. It can do more on giving more power to local communities and councils. It can do more on tackling health inequalities, pollution, access to affordable transport and, of course, to reducing the costs of housing through rent reductions, freezes and tax reform. However, I do not believe that the Parliament has the requisite powers on fiscal policy, employment, business policies and immigration.
Regardless of our position on the constitutional question, we need to pay attention to that. Co-operation with the UK Government has evidently been strong, but the Greens do not believe that that will continue, given the very different political and economic priorities of Edinburgh and London. One example is the extent to which current expenditure is being met through borrowing—and that is not just borrowing from the private sector.
The Bank of England is injecting £200 billion into the economy through the purchase of gilts. The finance to fund that has been created out of thin air—the polite term for that is “quantitative easing”. Given that the money is borrowed by the UK Government from a central bank that it owns, the money need never be paid back. Indeed, the initial loans that created the Bank of England in 1694 have never been paid off. The powerful tool of a central bank is not available to Scotland and it is reasonable, therefore, to ask that a population share of that quantitative easing is made available to the Scottish Administration to tackle economic recovery.
The next months will, as others have said, test the devolution settlement like nothing since 1999. It will challenge us all. The Greens will redouble our efforts to ensure a safe and green recovery.17:01
Throughout the pandemic, the Liberal Democrats have sought to be constructive. We have offered solutions, rather than hunted to apportion blame. Of course, there have been big mistakes, and there will be time to look back at that, but in the middle of a global pandemic people expect us to put our shoulder to the wheel right now.
I have been very impressed by the dedication of the workers in councils, the enterprise agencies, Her Majesty’s Revenue and Customs, the Department for Work and Pensions, Government agencies and central Government. They have engineered and executed new financial support schemes in weeks—in the past, those would have taken years to construct. They deserve all our appreciation.
We have supported the Scottish Government’s more cautious approach to the restrictions, although we have questioned the clarity of the message, with differences between the law, the guidance and the rhetoric on non-essential businesses causing unnecessary tension in the workplace.
What does that mean for now? Some weeks ago, Carolyn Fairbairn from the Confederation of British Industry said that the economy cannot afford a damaging second peak. Customers will not return unless they have the confidence to do so. That is why businesses need good guidance to keep their workers and their customers safe so that, as the virus fades, confidence can grow and so can the economy.
The lockdown has been possible only with the financial support of our Governments, and it can be extended only if the support is extended, too. That is why the Chancellor of the Exchequer is right to extend and taper the furlough and self-employment schemes. If there is a second wave of the virus, the chancellor needs to stand ready with a second phase of the financial support.
The gaps in the schemes are, however, leaving people in great difficulty, including those self-employed who are paid by dividends, freelancers, those who are not eligible for universal credit, those with premises with rateable values above £51,000 and those self-employed who are earning just above the £50,000 limit. We also need to consider extending support for students and for tourism businesses that will lose out on all their peak-season income if the lockdown continues.
Ministers have responded positively to our previous suggestions on bank accounts, fishermen, renters, self-catering and the self-employed, and I hope that they will do so again when I meet them on Thursday.
I also want the Scottish ministers to lobby UK ministers on implementing a universal basic income. That is needed right now, to ensure that no one is left behind. I have been disappointed that they have not already had direct discussions with the chancellor about such a scheme for now. It is not some lofty dream for a distant future, but a measure that is urgently needed to help people today. Spain is doing it, and even Donald Trump has sent everyone in the United States a $1,200 cheque. Let us get on with such a scheme right now.
Murdo Fraser (Mid Scotland and Fife) (Con) rose—
I will let Murdo Fraser in, in defence of Donald Trump.
I thank Mr Rennie—
I am sorry, Mr Fraser. Your microphone was not on because I had not yet called you. I am just getting back in the saddle.
Thank you, Presiding Officer—and welcome back, too.
Mr Rennie mentioned Spain. Does he realise that the scheme that is being implemented there is more akin to the universal credit scheme than to one that provides what most people would recognise as a universal basic income?
The principle is that there is a guaranteed threshold below which no one should fall. Such universalism is what is required, instead of the schemes that we have, which have so many gaps in them. It is through no fault of either the UK or the Scottish Government that that has happened with their schemes, because they have had to set them up in a hurry, but they must accept that they contain many gaps that need to be filled. I hope that Murdo Fraser would perhaps lend his support to achieving a universal basic income, because I believe it to be essential.
I, too, welcome the Presiding Officer back to her seat following her long period of exile in the Borders. It is good to see her back today. [Applause.]
Finally, I want to consider what is next. It took this country decades to pay off its debt from the second world war. Clearing our virus debt too soon would be not only an intolerable burden on the people of today, but would crush any fledgling economic recovery and further deprive young people of the opportunities in life that they deserve. We have a responsibility to future generations to get this right. We would never be forgiven if we were to leave them with a massive debt without taking the opportunity to reshape our economy and society into a more sustainable, fair and just model.
What does that mean? I think that it means investing in people and their skills, talents, ingenuity and dedication to this country that we have seen all too evidently over the past few weeks. We must change the way that we work, cut unnecessary travel and use the technologies that we have become accustomed to. We must embed flexible working so that we can maintain the better quality of life and work-life balance that we have seen. We must accelerate the conversion of electricity and heat to decentralised and sustainable sources so that we can continue to benefit from the reduced pollution that we have experienced recently. There must be fairness and equity in people’s incomes. The very people who have been out there on the front line during the pandemic have often been the people who are paid the least, such as care workers, refuse collectors, posties, delivery drivers and workers at food-processing facilities.
That has to change. We must invest in people so that we can catch up. People will need to be retrained for the new jobs—
We also need educational catch-up funds to make a difference. Out of this darkness we need to do something new and better—something that we can achieve for this country—to create a sustainable future of which we can all be proud.
We move to the open debate. Speeches should be no longer than six minutes, please.17:08
Welcome back, Presiding Officer.
The pandemic has forced upon us an immediate goal—that of saving lives—which overshadows all else. As the virus retreats, our economic focus must grow. Right now, entire sectors of our economy are paralysed. Our response must be determined and flexible.
Arran’s Auchrannie resort is run by an employee ownership trust on behalf of its 171 employees, all but six of whom are currently furloughed. Its staff represent a huge chunk of the workforce on an island of 4,600 inhabitants. They turned a 16-bedroom guest house into a world-class resort. Auchrannie is a major provider of indoor leisure facilities to island residents and visitors, with 90 per cent occupancy and an annual turnover of £8.5 million in normal times. Its recovery from Covid-19 could be swift. However, last week, the Cabinet Secretary for Transport, Infrastructure and Connectivity suggested that, on lifting the lockdown restrictions, ferry capacity could be limited to a shockingly low 17 or 18 per cent. Island hotels are already at a competitive disadvantage, because visitors have to pay ferry fares to get there. It is worth it, for what is on offer, but how can island businesses survive if visitors cannot even get there?
If it is unable to reopen soon, Auchrannie will be forced to make the majority of staff redundant from the end of July, unless it receives assistance. Direct Scottish Government support is essential to ensure its survival. Unless progress is made by mid-June, there will be no alternative to starting a redundancy process. Payroll and national insurance costs in August and furlough top-up costs in September, plus accrued holidays, will lead to it going into administration.
I warmly welcome the cabinet secretary’s announcement that the £51,000 rateable value limit for grants, which risked the future of major hospitality businesses, has been lifted to £500,000. That will help Auchrannie and many of the 2,380 businesses in Scotland that employ 250 or more people. Clearly, this is a listening Government, which will, I know, do more.
We must back innovative start-ups and our productive, export-led sectors, such as aerospace, data, and food and drink, and access growing global markets for sustainable goods and services.
Although funds are not unlimited, supermarkets, which have paid out colossal funds in dividends while seeing profits soar, are being provided with millions of pounds in rates relief. Surely it would be better to redirect some relief to our struggling hotel and hospitality sectors, which face a bleak future without on-going assistance, leading to rising unemployment, particularly in rural and island Scotland and among young workers.
We know that the UK has already reneged on £60 million of consequentials allocated for business support. Any money that Scottish ministers allocated for anticipated grant applications but has not yet been claimed should be redirected to where it is most desperately needed, which will save businesses and jobs. As other speakers have already said, we must lead the development of clean energy and new technologies, such as hydrogen, and increase job-creating home insulation measures, which will be key to future success.
Our economic restart must be safe and as we emerge slowly from lockdown, we begin to see some light ahead of us—a return to normality. At least, that is what I hope for, not a society where social distancing becomes an accepted part of daily life but the pre-Covid world we lived in less than three short months ago—a world of everyday human social interaction, of theatres, cinemas, football, pubs, restaurants and bunching up at parties or on trains, not the wearing of bandanas like a latter-day Jesse James or masks like a character from a dystopian sci-fi film while sitting on a bus. One hopes that such measures will be very temporary.
The economic response will be defined by four phases, as pointed out by the Cabinet Secretary for Economy, Fair Work and Culture last week: response, reset, restart and recover. I would mingle in reality, resources, and redirection. We are a sub-state legislature with minimal room for economic manoeuvre and resources are a major issue. The impact on our care sector and on the NHS and the need to provide additional funds amidst rising debt and unemployment and a resultant decline in our tax base must be faced. We cannot levy duty on alcohol, tobacco or fuel. Corporation tax, VAT, national insurance and pension contributions are not under our control. Lockdown, in reality, will end when UK furlough, pension and national insurance payments end.
Borrowing powers are limited so we must focus on the achievable. The crisis will see UK national debt soar beyond £2 trillion, pushing it above 100 per cent of income for the first time since world war two, which is described by the Institute of Economic Affairs as staggering. Three quarters of businesses report damage to their supply chain—we must work with them to fix what is broken; we cannot return to austerity.
Scottish ministers have already acted positively to support the productive economy of the future, putting innovation and technology at the heart of a new futures industrial plan, for example, with an additional £20 million for the National Manufacturing Institute Scotland, which aims to make us a world leader in advanced manufacturing, and £15.8 million of investment via the advanced manufacturing challenge fund to help small and medium-sized enterprises develop their manufacturing capabilities.
The oddly named internet of things is a game changer, which has already been embraced by the Scottish Government. It will allow companies to create new products and services or implement cost and time-saving efficiencies. The IOT’s environmental, health and social care applications will also impact positively on society.
We need much more creative thinking if we are to haul ourselves out of this post-pandemic recession and remain internationally competitive. We must grow our indigenous companies and attract inward investment. It is heartening that the Ernst & Young Scotland attractiveness survey of international investment showed only last week that in 2019, Scotland was the top destination outside London among the UK’s 12 nations and regions for foreign direct investment for the seventh consecutive year—good news that somewhat derailed Maurice Golden’s Tory narrative.
Of course, Brexit and the damage that it will cause looms and I urge the UK Government to seek a two-year extension of the transition period this month before it is too late and our economic recovery from the pandemic is derailed. Only today, CBI director Carolyn Fairbairn said:
“For businesses, jobs and economic confidence in this”
most challenging of years, that
“would be a shocking outcome.”
Scotland deserves a better future.17:14
I will start by referencing some comments that I made in a debate in the Parliament just three weeks ago, when we discussed the easing of lockdown restrictions. At that time, I made the point that lockdown was not a trade-off between lives and jobs, as it is sometimes portrayed. We now know that 1,200 people in Scotland have died, over and above normally expected numbers, from illnesses that are non-Covid-19 related, and that many more will die in the future as a result of lockdown.
We also know that lockdown is having a hugely detrimental economic impact that we will have to live with for many years to come. We are likely to see unemployment soar and a raft of business failures, which in the long run will mean fewer job opportunities, a poorer country and less tax revenue to spend on all the public services that are important to us. Therefore, getting the economy back working as quickly as possible is absolutely essential to our future wellbeing as a country.
I have a particular interest in the future of Scottish tourism, as it is vital to communities throughout Mid Scotland and Fife, so I will spend the rest of my speech talking a bit about what can be done to help the tourist industry. In rural Fife, Stirlingshire and Perthshire, tourism is the lifeblood of local communities. Normally at this time of year, local hotels, bed and breakfasts, lodges and campsites would be filling up with visitors from the rest of the UK and all over the world. The enormous knock-on impact of not having that essential source of income is already being felt, and the latest business support schemes using Treasury money, either directly or channelled through the Scottish Government, have been absolutely essential in keeping Scottish business afloat.
However, a range of issues still need to be addressed. The first, which is an issue that I have raised before, is that there is a real question as to why self-catering holiday accommodation has been lumped into phase 3 of the lockdown route map along with hotel and other types of holiday accommodation. To me, it is self-evident that self-catering accommodation, whether in caravans, holiday lodges or cottages, can be run with socially distanced family groups, providing that there is deep cleaning at the time of changeovers, in a way that is simply not possible in hotels, guest houses and B and Bs, which have common areas.
The member raises a genuine point. If he looks at the overall route map, he will find that the underlying issue in deciding whether self-catering accommodation could be opened in advance of hotels for the reasons that he has just set out is not necessarily about cleaning and distancing in self-catering premises; it is about people travelling there. If people travel from one part of the country to another, that might have an impact on the infection rate. The issue that the member raises is genuinely an issue and, obviously, we will keep a close eye on it, but that is the rationale for our approach.
I am grateful to the cabinet secretary for that response, although I trust that all my points are genuine. I welcome the cabinet secretary’s point and, to be fair, the Scottish Government has already said that it is prepared to consider the issue further. I strongly urge it to do so.
For many businesses in that category, the lack of certainty is their greatest concern. At present, they are unable to take bookings even for later in the year, whereas competitors elsewhere in the United Kingdom can now plan ahead. We hear a lot about people not being able to travel abroad and considering staycations instead, so there is an opportunity for the Scottish tourist industry that we should not lose. I entirely recognise the health risks that are attached, but I strongly urge the Scottish Government to consider the issue seriously and to try to give some certainty and support to businesses in that vital sector.
Willie Rennie talked about businesses that have fallen through the gaps in direct support. We continue to see issues with a lack of direct grant support for businesses that have a single rateable value of over £51,000. Many of those businesses are middle-sized or large hotels in towns such as Pitlochry, Crieff or St Andrews and are the absolute lifeblood of the local tourist economy, yet so far they have been getting no direct grant support.
The Scottish Government says that it is passing on all the Barnett consequentials from the UK Government, but it has made choices to disburse the money in different ways, as it is perfectly entitled to do. As Maurice Golden reminded us earlier, there has already been £3.5 billion in Barnett consequentials from the UK Government, and when the additional support from other funds such as the furlough scheme is added together, we find that the total UK Government support to Scotland is now in excess of £10.5 billion.
In contrast, as far as I can work out, the Scottish Government appears to have allocated a mere £255 million from its budget to Covid-19 support. I cannot believe that every penny that was set in the budget that this Parliament passed back in February is accounted for and that there is no scope for reallocation. For example, we now know that the 1,140 hours of free nursery care for three and four-year olds will not be delivered in the current financial year and that the devolution of social security that was planned for April has been postponed. [Interruption.]
The member is coming to his last minute. I am giving him extra time for the intervention from the cabinet secretary.
Thank you. We know that a range of infrastructure projects that would otherwise be proceeding are now likely to be delayed. There may be other areas of spending where it would be possible to divert resources into supporting our vital business sectors. I fear that, if we do not do so and do not take this opportunity now, we will see a greater economic impact on Scotland compared to the rest of the UK and, in the long run, we will have lower tax revenues, as I mentioned earlier. I urge the Scottish Government to delve deep into its budget and find the money now if it can to support our businesses so that we will have the tax revenues in future to support the public services that we all rely on.
I call Maureen Watt.17:21
Thank you, Presiding Officer, and welcome back.
I am pleased that we are having today’s debate, which I hope and am sure will be the first of many as we try to take the first tentative steps on the road to economic recovery—but not at the expense of health recovery. It is important to stress and stress again that reimposing lockdown is a possibility, as we have seen in China and South Korea. It is very important that the steps to reopen businesses are tentative, in line with the science and the evidence. I am pleased to note that the vast majority of our citizens are in agreement with the First Minister’s cautious approach.
Many members in today’s debate have rightly focused on opening up the different sectors of our economy, but it is timeous to air the important issues that will have to be taken into account as we rebuild our economy for the future and take the opportunity to build an economy that must be very different from the one that we have and be built on sustainability, wellbeing and social justice. The opportunity was missed at the time of the banking crisis, and we have seen that the most vulnerable and younger people were hit the hardest and inequality has grown. The younger generations will not forgive us if we do not change radically this time round. We must build back better—that must be the headline of all that we do as we emerge from this major health and economic shock.
It is incumbent on business, finance and the state to reinvent and reimagine. The economy must be job rich and recognise the value of health and social care workers and of all those who continue to supply our food and other vital goods and services. For example, if the UK Government realises that we need migrant workers to come to do that vital work and, at the same time, expects them to earn more than £25,000, is it prepared to move more quickly to a real living wage of about £15 per hour? That would be more likely to give that £25,000 income and also more likely to take more families out of poverty. That is the joined-up thinking that must take place.
I managed to listen briefly to a virtual meeting of MPs, health experts, economists and others who are interested in the wellbeing economy. It was said that we need the opposite of what happened after the banking crash, when wealth went into capitalist policies to an even greater extent. I learned that the financial sector finances itself, with 80 per cent of its finance going back into the sector, such as to finance, insurance and real estate businesses, which focus on shareholder maximisation rather than stakeholder maximisation, as other members have said.
Even more than ever, it is important that we take our experiences from our constituencies during this pandemic into our role as lawmakers. The pandemic has made even starker the inequalities in our society, with higher mortality in our poorer areas and in our black, Asian and minority ethnic communities. We must build back better—it is possible.
We have seen how necessity is the mother of invention: the furlough scheme was introduced rapidly; help has been provided for the self-employed; and the Cabinet Secretary for Finance has made sure that she has helped as many businesses as possible in a very short space of time and, thankfully, has not given more to those who shout the loudest at the expense of the more vital organisations.
I was pleased that, when Rishi Sunak announced the provision of assistance to the self-employed, he said that, in future, they might not enjoy the same tax breaks that they have previously enjoyed. We know from our mailbags how many such people work across our economy in the legal, property and service sectors; it is not just in the oil and gas sector that so-called consultancy workers, who are not really self-employed, are overused.
I have been trying to help a constituent who rents a very small unit in one of Aberdeen’s shopping centres to get a rent break; I eventually traced the owner’s address to a tax haven. I am pleased that the Danish Government is not bailing out companies that use their tax haven status, and I hope that, in the future, the UK Government will follow that example.
If our Governments are to aid, for example, our aviation sector, they must do so only on the basis of helping it to move to a greener, more sustainable future. I thank the Scottish Government for the many discussions that it has had with the oil and gas sector on how it can help the sector to move more quickly to diversify to greener technology and keep Aberdeen and the north-east as the all-energy capital of Europe.
If vast amounts of taxpayers’ money are to be used to help key sectors in our new economy, that must be done on the basis of taxpayers having a stake in those companies. Many innovative companies have rapidly changed and reinvented themselves to be sustainable in the future, while other companies have seen new business opportunities. We must help to support them, but business angels should do so, too.
We need more powers to make our own decisions. At the same time, we need global co-operation. This morning, Gordon Brown said that there is $7 trillion in tax havens worldwide. That must be harnessed to build back better.17:27
Coronavirus is not just a public health crisis; it is also an economic crisis. Poverty and the impact of austerity can be just as deadly a killer as Covid-19—it is simply that the effect might be less immediate.
There have already been job losses. At the start of the pandemic, people on zero-hours, temporary and insecure contracts—whether they worked in hospitality or retail, or as lecturers at universities—lost their jobs almost instantly. They were the first economic casualties of Covid-19. Some employers went to the wall before the job furlough scheme kicked in, so people lost their jobs. Now, not a day passes without there being a roll call of companies that are downsizing or closing altogether.
We are talking not just about small companies, important as those are, but about household names such as Debenhams, Shearings Holidays, Rolls-Royce, British Airways and OVO Energy. The job losses are in their thousands and, unfortunately, it looks as though there will be more to come.
I know that many in the tourism industry are concerned about their survival, as it is unlikely that they will have any business to speak of this season, and most are trying to survive until March in the hope that the market picks up then. It is true that the UK Government’s job furlough scheme has been a life-saver, but many tourism businesses cannot afford to keep staff on until March 2021, which means that we face the prospect of more job losses, potentially before October. In Loch Lomond national park, as many as 1,200 jobs could be lost. Such losses will have a devastating impact on local communities. We are not talking only about jobs in hotels or on cruise boats; the supply chain, too, will be affected.
The impact on every part of our economy will be devastating. We face a recession on a hitherto unseen scale. I do not want a generation of young people to grow up with no hope, few opportunities and the prospect of a bleak future. Therefore, it is important that we kick-start the economy for all the reasons that I have mentioned, but also for the sake of the country’s finances.
The fiscal framework that was agreed by John Swinney might cause us problems. If Scotland underperforms relative to the rest of the UK, that will have a negative effect on our block grant. If our take from income tax drops at the same rate as that of the rest of the UK, the effect is neutral, but if it drops by more, we will have the block grant reduced, which means less money for public services. There is reason to worry that that might happen. We have been in lockdown for longer than the rest of the UK, more companies in Scotland have ceased to operate than in the rest of the UK, and we have a greater reliance than the rest of the UK has on industries such as tourism and hospitality and oil and gas. Those are all reasons that should make us concerned.
However, the oil and gas industry does not just have Covid-19 to cope with, because the price of a barrel of oil has crashed. I recall that, a mere six years ago, a certain white paper had oil at $113 a barrel. At the start of last month, the price was down to $27 a barrel. It is extraordinary. None of us could have foreseen that drop, but the North Sea industry is now predicting the loss of 30,000 jobs on the rigs and in the supply chain.
Following a survey of 800 smaller firms, the FSB tells us that a third of them think that they will not reopen and a quarter think that there will be staff redundancies. The scale of the problem that we face is huge and so, too, must be the scale of our response.
I will make a few suggestions to the cabinet secretary—I know that she likes suggestions as well as criticisms. First, in the immediate term, I ask that the Scottish Government spends the money that is remaining in the business grants scheme. There are 16,000 applications pending. Let us get them dealt with. There is still more than £450 million that has not been committed. Let us get that out of the door.
I agree that we should repurpose funds that are not being spent. We have already used some of that money in the pivotal enterprise resilience fund and other funds. We want to have transparency about that. However, we would require to close that scheme, which Wales is looking to do. Does the member believe that we should close phase 1 in order that we can liberate some funds that can be used elsewhere?
The Government needs to deal with the 16,000 outstanding applications first, in order to provide the confidence to do that.
Secondly, I believe that the Government needs to reach sector-specific deals for tourism and oil and gas.
Thirdly, I would like it to bring forward capital spending to kick-start construction. Given that some spending will inevitably have to be reprofiled, can we use that money elsewhere? For example, could the Scottish National Investment Bank use it for grants and loans to businesses?
Fourthly, can we do something with the supply chain? Supply chains are now shorter and less global. The time to encourage local supply chains is now, because we know that the money is more likely to be spent locally and be reinvested in the local community.
The approach of both Governments needs to be about collaboration and not conflict. We cannot afford to have the Scottish Government or the UK Government picking fights with the other, because everything else must come second to the wellbeing of the country and getting the economy back to work. We need to provide hope, vision and leadership. We need to give young people who are leaving school, college or university a guarantee that they have a future.
We have the opportunity to reimagine work, with more home working and four-day weeks, and make people’s work-life balance better. We should have no more precarious work or zero-hours contracts. Let us value people for their labour and ensure that we incorporate analysis of gender and disability into our labour market and economic policy making. I hope that I do not need to say to the cabinet secretary that we need a gendered approach to resolving the crisis.
Before the coronavirus arrived, the Scottish economy was sluggish and was underperforming compared with that of the rest of the UK. It has been like that for much of the past decade. The challenge now is how we do better, because we really must do better. I am happy to offer constructive criticism.
I call Tom Arthur, to be followed by Alexander Burnett.17:33
Thank you, Presiding Officer, and welcome back.
I think that we have all been struck by how quickly the public health crisis has morphed into an economic crisis. That is explained by just how connected the world has become over the past century, but particularly over the past 20 years. That has left us uniquely exposed, and it has left many businesses and individuals exposed to hardship. It is difficult to comprehend the scale of that, but I will focus on two examples; one example is constituency related and the other is sectoral.
Like many MSPs in the west of Scotland, I have been contacted by constituents who are deeply concerned by developments at Rolls-Royce. The situation there is a direct consequence of the collapse in the civil aviation industry. There are grave concerns about the threat of the loss of 9,000 jobs globally and as many as 600 or 1,000 jobs at the Inchinnan plant. I have written to the minister, Jamie Hepburn, urging the Government to do all that it can to support employees at the site and engage constructively with Rolls-Royce.
It is vital that the jobs are retained, and not only for the sake of the site at Inchinnan. Those individuals are highly skilled, and we must retain their talent and skill sets, as they will be essential in meeting many of our key strategic objectives. Those individuals have the kind of skills that we will require if we are going to meet our climate change obligations. Ultimately, if engagement with Rolls-Royce proves to be fruitless, it is imperative that the Scottish and UK Governments engage with employees to ensure that they are redeployed and repurposed so that we retain their enormous talent and skill.
Another sector on which I wish to say a few words is one that is very close to me: the music sector. I declare an interest in that I am a member of the Musicians’ Union and I was previously active in music. As one individual in the sector put it to me, it is an extinction-level event. I am not talking about headline acts that play at the Hydro, Murrayfield or Hampden park. I am talking about the countless grass-roots music venues and musicians who operate across Scotland week in, week out.
It is an incredibly complex and fragile ecosystem. Grass-roots music venues are not profitable in strictly financial terms, but in cultural terms they make an enormous contribution. They are the incubators and the talent pipeline and, as things stand, they face very little prospect of recovery. Theirs will be among the last sectors that can reopen, and they will perhaps not be able to return to their previous capacities and output until we have a vaccine or effective treatment. There must be sector-specific support, because we cannot lose them.
An area that I was very much involved in is music for weddings and corporate entertainment. In the public imagination, there might be the idea of a wedding band being four middle-aged males with thinning hair, playing music poorly, but the majority of people who play in wedding bands are highly talented and skilled professional musicians. Playing weddings, corporate events and functions provides those musicians with the bread and butter income that allows them to engage in other projects, whether that is recording their own material and performing in the United States, performing as session musicians and playing in touring bands, or running community choirs that greatly enrich their local communities. Without that bread and butter income, they will not be able to do those other activities.
A recent Musicians’ Union survey shows that up to one in five musicians is now considering chucking music as a result of Covid-19, so they need specific support. Although some sectors might be able to return to normality, that will not be the case for musicians, as it will not be the case for many others operating in the leisure sector. There has to be continued support from the Scottish Government and the UK Government until such time as we are able to return to full capacity and those musicians can play at weddings, private parties, corporate functions and pubs. If we fail to provide that support, we will lose more than just a few jobs. We will lose a part of our cultural identity, and that is a consequence of the Covid crisis that none of us can tolerate.
There is much to be said, but a key theme that has emerged is that we must not repeat the mistakes of 2008. We cannot have an austerity-led response. We must have a level of stimulus that matches the challenge that we face, because although a public health crisis has led to an economic crisis, there is a real and genuine danger that that economic crisis could lead to a political and social crisis. Across western societies, existing tensions are simmering under the surface. The touchpaper could be lit not just by the experience of lockdown, but by the insecurity that comes from job losses.
If we want to understand the events that are taking place in the United States right now, we need to understand not only the history of racial inequality there, but that the events have been precipitated by the economic catastrophe that many individuals and communities face. We cannot risk that happening in Scotland or across the UK.
There is a direct link between the austerity-driven approach following 2008 and the Brexit vote and the rise of populism in 2016. We cannot repeat that mistake. We need a response on a scale that has not been seen since the years following the second world war.
I hate to stop you in full flow, but I have to.
If we have that response, we can build a better society, address climate change and create a better future for the next generation.17:40
I refer members to my entry in the register of members’ interests. I am an employer and a company director.
I thank every person in my constituency, the north-east, Scotland and the United Kingdom for their continued commitment to helping to get our country through the crisis. I have been truly heartened by seeing everyone in our communities coming together in this difficult time. Their resolve to help our Governments to beat the virus is working, and I have no doubt that they will continue to support efforts as we look to get the economy back up and running safely. However, there are still many areas in which the Scottish Government needs to do more. It was falling behind in many of those areas before the virus.
Over the years, I have met many organisations and businesses that have advocated improved energy efficiency. The Scottish Conservatives have continuously called for that. I call on the Scottish Government to use this time of lockdown and restricted movement to help to get the country back on track by focusing on the small rather than the large.
We all know that large infrastructure projects are often the easiest route for Governments to spend their way out of difficulties and, unfortunately, we all know about the Scottish National Party Government’s dismal track record on large infrastructure projects, from bridges to hospitals.
We have a problem in Scotland. The list of shovel-ready large projects dried up before the virus, and the reality of large sites being at risk of temporary shutdown because of localised outbreaks puts even more risks on those projects in respect of delivery times and subsequent cost management.
I want to say two things. First, the Scottish Government has a very good record on delivering big and major infrastructure projects, not least the Aberdeen peripheral road, which could have been developed decades before, but was not.
Secondly, Alexander Burnett has made a very important point. I agree that capital infrastructure projects will be part of how we can come through the crisis. I also agree on reallocating for small as well as large infrastructure projects. I look forward to hearing about what Alexander Burnett is looking forward to being developed in his constituency and his region in the pipeline that delivers the green, renewable, project-based approach that we have talked about.
I will give Mr Burnett his time back.
Thank you, Presiding Officer.
I am sure that history will judge the SNP on its record on large projects. However, I welcome the constructive approach to suggesting projects. I will certainly mention some things that will, I think, help in the future.
We should be encouraging investment in small, dispersed projects that will boost our green economy. That will happen if the Scottish Government leads by example, recognises housing as national infrastructure and kick-starts our home energy efficiency programme. We have been calling for that for some time in order to reduce carbon and boost the economy across the whole of Scotland. We can now add that that will be one of the few ways in which people can safely work on infrastructure in small teams to reduce the risk of spreading the virus.
Last week, there were discussions in the cross-party group on construction about how we should use this time to encourage a large-scale public sector programme of maintenance. We should grasp the opportunity to do conditions inspections and remedial works in schools, colleges, museums, libraries, police stations and on other local infrastructure, such as bridges, which have been woefully neglected by the SNP Government. That approach would not only ensure that maintenance works could continue; it would support jobs and apprenticeships across the whole supply chain. It would ensure—this is important—that we would retain our skilled workforce, which is willing and ready to get back to work. That would be a welcome relief to the 175,000 people who work directly in a sector that makes up 10 per cent of Scotland’s workforce.
It is not just the construction industry that can change and adapt to a new way of business. I have spoken recently with BP, Oil & Gas UK and the Oil and Gas Authority, and discussed issues around their targets towards achieving net zero emissions. There are innovative projects out there, from the electrification of platforms to hydrogen production and carbon capture. I applaud all our oil and gas workers throughout the supply chain for their hard work and resilience in tough times and, as always, their ability to innovate and adapt.
As the member of the Scottish Parliament for Aberdeenshire West, I will end with a call for our rural economy, which is another sector that has been on the cusp of great opportunity for too long under the Scottish Government. For too long we have heard about the benefits of rural life, and of how Scotland’s tourism and food and drink sectors are the way forward—I agree, but sadly that has all been given more spin than support over the past decade as infrastructure crumbles and relative connectivity worsens.
It will come as no surprise to any rural MSP to hear how the broadband issue became even more chronic during lockdown. The future looks no better as the reaching 100 per cent, or R100, project continues to be delayed. If ever there was a chance to jump-start the rural economy for the benefit of the whole of Scotland, it is now. Will the Scottish Government please invest more wisely? Will it prioritise the issues that matter most to people? The Scottish Government has an opportunity to start a fresh page. Please do not just cut and paste your previous mistakes.
I call Mr Stevenson, who is the last speaker in the open debate.17:46
Welcome back, Presiding Officer. I would like to join you soon.
I start with saying a single word on projects to all members on the Conservative Party’s benches: HS2.
The next steps required to rebuild our economy after the shutdown caused by the pandemic cannot all be known. Indeed, some of what will turn out to be the most important steps may only be identifiable some years after they are taken. The Government’s immediate concern is—
Mr Stevenson, will you pause just a moment? Your sound is quite quiet; could you please turn it up? I say to members that I cannot hear Mr Stevenson if they are mumbling. They will appreciate that it is difficult when someone is speaking from a remote location.
The Government’s immediate concern is to minimise harm to existing businesses; that is proper, because businesses that are already established will be the source of employment for the overwhelming majority of those who will be in work in six months, a year or a couple of years.
I will concentrate on where the real building of a new economy will take place. It will start with small businesses—just as almost all new businesses start as small businesses. Ten years ago, Brewdog was a small brewery in my constituency with a handful of employees. Today, it is an international company that is worth in excess of £1 billion. New ideas, new money and risk-taking and risk-managing owners, coupled with very good marketing, helped it to get there. Even with all that, the outcome, and certainly the scale of the outcome, was very far from predictable. The new businesses that will be the new Brewdogs in 10 years’ time simply cannot be known today. It is about removing barriers and about those of us in the public realm being prepared to be brave. Adversity creates difficulty, but it also spurs innovation.
On 27 April 2007, a dispute over the moving of a Soviet-era memorial in Tallinn was the trigger for an electronic attack on every public institution in Estonia—a country of about 1.3 million residents. Today, Estonia has a hardened electronic infrastructure that converted the country into one of robust online commerce. One may become an e-resident of Estonia for a modest sum—currently 120 euros. The country has created infrastructure that allows people around the world to establish companies and open and operate bank accounts, and it has created secure and trusted electronic identities for its e-residents. A large cohort of foreign companies are now resident in Estonia, without the country having become a tax haven—its attraction as a place of residence is much more than that.
There are plenty of other opportunities that we might look to. I say to Government: let us crank up our support for our micro-businesses, small businesses and even medium businesses—the next big winner might be in there.
I will give some specifics suggestions for what we might do—they are deliberately a bit off the wall because I like to provoke thinking. Let us direct our help to new ideas, or to reinventions of old ones, with the expectation that, in doing so, 80 per cent of our interventions will fail. If we get it right, the 20 per cent will do far more than pay for the 80 per cent.
We should not analyse projects to death. If I could spot the winning projects, I would be a very rich man. Instead, we should look at the people who are trying to take something forward. There are those who have the knowledge, energy and self-belief that will take them somewhere useful for themselves and for our country. We should ignore their proposals—we should not pretend we can spot winners.
We should back small teams. It is amazing what one man can do leading a team of 12—that team can succeed even if one of them is a duffer or a Judas. Those who are failing are spotted very quickly in a small team. No management structure is needed to make a small team work.
Hundreds of years ago, Europe’s main centre for medical training was in Edinburgh. Why? Because the old town was desperately unsanitary and had a correspondingly high degree of morbidity, so it was an excellent place to study disease. What could we be doing today in the Covid world? Are there genetic differences that drive differences in outcomes? We know that that is the case for many other conditions. Covid is a virus about which we are still learning, but we have no broad-spectrum attacker of viruses in general, equivalent to what antibiotics once were in relation to bacteria.
Scotland has a particular advantage, in that the data in our national birth, marriage and death records is more comprehensive than is the case almost anywhere else. Thus, it is easier to identify connections of paternity, maternity and consanguinity than in many other countries. Could we use that information? It is worth trying.
In 1973, I fell out with my boss over a software development. I spent the weekend in the computer centre pursuing my idea, which I showed him on Monday. I met someone a couple of years ago who was still maintaining that software, which I had developed 45 years earlier. We might need a few more angry youngsters. Let us find them and support them—and I am not volunteering.
We move to closing speeches. I call Rhoda Grant.17:52
Thank you, Presiding Officer, and welcome back to the big chair.
Scotland’s economy was fragile for a long time before the pandemic. We in the Scottish Labour Party have continuously called for an industrial strategy to help grow the economy in a way that works for the many, not just the few. Had the Government paid heed, we would not have been in the place that we were in going into the pandemic.
The Scottish Government’s “State of the economy” report highlighted that Scotland’s economic output could decline by as much as 33 per cent in the social distancing period alone. It is clear that, to reduce the devastating impact of Covid-19, we need a targeted industrial strategy to help save jobs and retain skills.
As we start to think about the return to work, we all need to be reassured that the right health and safety measures are in place and are enforceable. For that, we need a health and safety executive that is fit for purpose and co-operates closely with Government agencies and local government. Much of the policing of workplaces during the pandemic has fallen to environmental health officers, and they need to be resourced.
Critically, we also need strong and continuing trade union involvement, to ensure that those who return to work are safe. Trade union health and safety representatives can work with employers to cut out much of the anxiety. They are well trained, and unions will support them in their role to ensure that workplaces are safe. Their work not only saves employers money but gives workers the confidence that they need to return to the workplace.
We know that many sectors will be affected by Covid-19. Richard Leonard mentioned the FSB, which said that it thought that one third of the companies that it represents—a huge number of businesses—would not reopen. We also know that tourism is badly affected—Jackie Baillie said that it would be March next year before some of the tourism sector could reopen. Culture and hospitality are also hugely affected because they require people to gather together. Along with those sectors are the businesses that depend on them, their workers and their supply chains.
Daniel Johnson talked about the need to support charities. A lot of the burden of the response to the Covid-19 pandemic has fallen on charities, but they cannot fundraise because of social distancing.
In rural areas, people work three or four different jobs just to make ends meet. I welcome the announcement about bed and breakfasts, which will make a big difference to the rural economy. In its briefing for today’s debate, Community Land Scotland talked about resilient communities, and it is true that we are hearing about such communities in rural areas. However, those communities need access to economic levers through the ownership of land if they are to make a difference. The alternative for rural areas is depopulation at an even greater pace than we have already seen.
All communities are dependent on oil and gas, as Jackie Baillie said, and every sector needs a tailored response because each sector’s experience is different.
We also know that some people have been affected worse than others. We have talked about young people, women and the low paid—those groups will be really badly affected. In his speech, Richard Leonard asked for a Scottish Government-funded job guarantee scheme. Such a scheme could bring together trade unions, businesses and local government in all parts of Scotland. We could look at apprenticeships for young people, and we could look at young people carrying on in education. We could also value the work that women do.
I remember that, back in the 80s, there was a community project where, for a living wage, people carried out a lot of work that benefited the environment. We need to look again at such approaches—and we must ensure an end to the gig economy that has failed everybody.
We should also make sure that assistance is given only to companies that practise fair work and look after their employees, and not to companies that offshore to avoid paying tax on profits that are made in the UK. I welcome the Scottish Government signing up to those principles, but I now ask it to implement them for procurement in the post-Covid economy. As Maureen Watt said, Gordon Brown talked about the trillions of pounds that are held in tax havens—we could use that money.
The Scottish Government could bring forward capital spending, as was suggested by Jackie Baillie, but if it did so using fair work principles and asking those involved to sign up to the Fair Tax Mark scheme, we could make sure that our spending in Scotland was kept in Scotland and worked to the benefit of our economy.
Out of this tragedy, some good must come. We cannot go back to the same economic answers that mean that wealth is amassed by the few; we must create an economy that works for all. Those who are undervalued and who work for poverty wages are the very people who bear the brunt of the responsibility for fighting Covid-19. The post-Covid world must be different. We have an opportunity to create a fair economy, and we need to start building it now.17:59
Thank you Presiding Officer. As other members have said, it is good to see you in person.
As we continue to ease gradually out of lockdown and get back to a semblance of normality, it is clear that we have seen from both Scotland’s Governments seismic interventions, at a simply unprecedented scale, to deal with the effects of the deadly virus. Jackie Baillie was right to say that we must take a constructive approach, as we have seen being taken so far by both the Scottish Government and the UK Government.
The UK Government has injected an estimated £10 billion into Scotland to support our workers, to prevent massive job losses and to support the efforts of our NHS. We have seen the creation of a number of schemes at UK and Scotland levels that have ensured that thousands of businesses have not gone to the wall.
We have seen the enactment of furloughing—the coronavirus job retention scheme, which has paid the wages of hundreds of thousands of workers in Scotland and which will, I hope, mean that people will have a job to return to when the crisis is over. We estimate that those workers have benefited to the tune of more than £4.8 billion.
There is also the support for self-employed people. I spent 11 years of my life as a self-employed advocate, so I know about the insecurities of that status—the gnawing doubt when one is not working and not earning, and the fear of turning down work in case it is the last job for a while. I am therefore particularly pleased to acknowledge the self-employment income support scheme, which was extended last week and has delivered support to hard-working self-employed people.
There has been an additional £3.5 billion in Barnett consequentials, which is supporting Scottish businesses and our vital public services through the crisis. I was pleased that the Scottish Government acknowledged that last week in its summer budget revision; we should acknowledge what the UK Government has done to protect people during the crisis.
Likewise, it would be churlish not to acknowledge and welcome what the Scottish Government has done, and how it, too, has in many ways stepped up to the plate to support the economy and protect people’s jobs. In principle, the route map and phased approach to easing lockdown make eminent sense.
We should also acknowledge that there have been failings. Every member here will have been approached by organisations or individuals who have told them about gaps in the support that the Scottish Government has offered. Members will have had queries to do with ensuring that businesses here can access support that is similar to what businesses receive south of the border, and about helping businesses that could not access any support whatever. Willie Rennie talked about that.
We cannot ignore the fact that political decisions in the health sphere have an impact on the economy. Failure to ramp up testing, for example, has a significant effect on when we can restart our economy—which I hope will be sooner rather than later.
It is important that we give a broad overview of the economic picture, as other members have done, from the point of view of organisations that represent business, including the Federation of Small Businesses, which wants the economy to reopen. As Maurice Golden, Richard Leonard and Jackie Baillie noted, the FSB has said—somewhat pessimistically—that a third of its members fear that they might close permanently as a result of the crisis. It has also said that one in five business owners has reported that they have sold assets or struggled to make commercial mortgage or rent payments, and that a quarter of firms are considering making some staff redundant over the next three months.
All that is of deep concern to members of whatever political stripe, and it is why we need to promote reopening of the economy as safely and as swiftly as is practicable. Maurice Golden quoted the director of the Scottish Retail Consortium, David Lonsdale, who wrote that non-food retailers are losing £130 million a week. David Lonsdale went on to say:
“It’s unclear therefore why Ministers have put larger stores to the back of the queue when it comes to the phased re-opening.”
The consortium believes—I have great sympathy with this view—that the focus should be on whether a business can reopen safely, not on the business’s size.
My response to that is similar to the one that I gave to Murdo Fraser. The issue is not just safety in the workplace but the position of the workers and shoppers who travel to the workplace if it is, for example, a large out-of-town retail outlet that is under cover. The safety issue has to be seen in the round.
I accept that, but I urge the cabinet secretary to hear the concerns, because there is a belief that many businesses can reopen and can operate safely, regardless of their size.
David Lonsdale noted that the Scottish Government’s route map is
“thin on ... timescales for moving between the differing phases, making it tricky for firms to plan ahead with confidence.”
I accept that the lack of set dates in the Government’s plan is deliberate, given that the various phases are subject to the progress that we make in combating the virus. However, retailers need clarity.
It is not just uncertainty about timing that is creating issues for our businesses as we move out of lockdown: there is confusion about other issues.
Many members have spoken about tourism. The cabinet secretary will know that last week I raised the issue of hotels closing in the Highlands and Islands. Many businesses have suffered because of uncertainty about grants during lockdown, and those businesses now want to know when they can reopen and how they can do so safely, with the financial security to get through some tough months ahead.
As Murdo Fraser mentioned, the self-catering industry has made very strong representations on its beginning to reopen safely in phase 2 as opposed to phase 3. Murdo Fraser also said that decisions about exiting lockdown are political decisions. They are choices that are made by the Scottish Government—as it is entitled to do—but they are nobody else’s. The Scottish Government must, in my view, be responsible for those decisions, because businesses might be faced with losing vital support earlier and will want to know whether the Government can provide financial support.
Murdo Fraser also asked whether the Scottish Government has, given that it has abandoned some policy initiatives, looked at further reallocating funds from within its budget. I wonder whether the Cabinet Secretary for Finance will address that in her remarks following my speech. It is not only a matter of Barnett consequentials; it is also a matter of the Scottish Government’s budget.
Will the member take an intervention?
I am sorry, but I do not have time.
You are in your last minute and should conclude shortly.
I note briefly that I was struck by the comments that Kenny Gibson made about the islands. I have great sympathy with what he said.
Alex Burnett spoke about the importance of broadband. If the crisis has shown us one thing, it is the need for reconsideration of how important broadband is.
Stewart Stevenson spoke about the importance of microbusinesses and small businesses.
Businesses require certainty and clarity. Our economy is in a fragile place, confidence is dented, and people will no doubt continue to be worried about their own jobs. It is right that we all play our part to support them. However, it is also right that the Scottish Government takes responsibility for its actions and choices during the crisis, that it listens to the voices of business and workers, that it restarts and rebuilds our economy and works tirelessly to ensure that Scotland recovers as quickly and as safely as possible.18:07
I will start with an area of consensus, which is that the health crisis has led to an economic crisis. I say very clearly at the outset that we know the harm that is being done to the economy, the enormous pressures that are on businesses and the stress and worry that workers and employers have faced over the past few weeks. Those worries have been unimaginable.
As Jackie Baillie said, the impact has been widespread and deep. Tom Arthur articulated the impact on certain sectors—in particular, the music industry—which has, at times, felt catastrophic. As others said, there are also age and gender dimensions to the impact of the economic crisis, which we need to take seriously.
Our initial response to those challenges—in collaboration with the UK Government—was to respond quickly with a financial package of support, reducing fixed costs through 100 per cent rates relief, helping with cash flow through grants and protecting the productive capacity of the economy with key financial interventions in anchor businesses through the pivotal resilience fund.
We took those actions—
Just a minute, cabinet secretary. Because you and the other member are sitting so far apart, I can hear your conversation, Mr Torrance. I am sure that you are not directing it at me.
We took those actions precisely because of the importance that we place on the many small and medium-sized businesses in every town, city and region in Scotland. Beyond the initial financial interventions that I mentioned, we have also listened at every step of the way to other parties and to businesses, and we have never been too scared or too entrenched to make changes to establish new schemes or to accept recommendations.
None of this has been easy. Designing financial schemes at pace without access to the tax system—like HMRC—and reaching some of the smallest businesses has tested all of our systems. Local authority staff, enterprise agencies and representative organisations such as the FSB and the chambers of commerce have all risen to the challenge of delivering for businesses in every corner of Scotland. It was good to hear Willie Rennie pay credit to those organisations.
Although the pandemic is far from over, our minds are turning to the recovery. I will make a brief comment about the budget, because Murdo Fraser and Donald Cameron referenced the need to find more funding to support businesses. The summer budget revision, which was laid last week, captures the impact of Covid-19 on the budget. Murdo Fraser mentioned early learning and childcare funding, for example, and local authorities now have full flexibility to use revenue and capital funding for other means.
Many members talked about capital projects that might not be able to go ahead, which would create some spare capital. Of course, right now, businesses do not need capital; they need revenue. However, we will use capital to invest in projects, as Fiona Hyslop said.
Some members have called on us to find money from elsewhere in the budget. I remind the chamber that the UK Government’s funding for the furlough scheme, the self-employed scheme and the grants is borrowed. The Office for Budget Responsibility assumes that the Chancellor of the Exchequer will need to borrow nearly £300 billion. The Scottish Government cannot borrow revenue in response to the coronavirus, and we do not want to see revenue cuts in areas that are critical to our recovery. We are fully committed to rejecting austerity, to investing in our economy and to moving forward together, but one of the challenges that has been identified by the Institute for Fiscal Studies, the Scottish Fiscal Commission and many others is the way in which our current fiscal powers restrict our ability to manage that uncertainty.
I do not often say this, but our relationship with the UK Government is constructive. Donald Cameron and Jackie Baillie called for that constructive relationship. The investment—the consequential funding—that has been given is critical, but consequentials are estimates. That is just a fact. They can be revised down; in a recent announcement, they were revised down by £60 million. All that we are asking for are the flexibilities, the minor powers and the funding guarantees in order to invest in the recovery, reject austerity and ensure that there is sufficient funding for our communities and businesses. I hope that all parties in the chamber will back that. I think that I heard Jackie Baillie indicating some form of support for a review of the fiscal framework.
Will the cabinet secretary take an intervention?
Yes, I will.
I call—[Interruption.] I have forgotten your name.
Members: Mr Wightman!
I am having a senior moment. Sorry, Mr Wightman—you see what happens when I am away for 12 weeks.
Welcome back, Presiding Officer.
Does the cabinet secretary agree that there might be some mileage in exploring with the UK Government the extent to which it might be better for a population share of the £200 million of magic money tree money that is being created by the Bank of England to be allocated to the Scottish Administration to spend as it sees fit, rather than the UK Government spending it partly in Scotland? Or am I barking up the wrong tree?
My apologies, Mr Wightman. It was all going too well until then.
We are keen to explore all options in relation to how we invest. We are working with the UK Government to look at further consequential funding, which we could use and adapt to the specific needs of the Scottish economy and in Scottish society, and at the powers to manage the uncertainty. So, the short answer to Andy Wightman’s question is yes.
In the next few weeks and months, we will face choices that, if made wisely, will change our economy and society for the better. All members have raised suggestions and recommendations, whether unlocking innovation, as Willie Rennie called for, backing start-ups, as Kenny Gibson mentioned, making work and living less fragile, as Andy Wightman said, making significant progress on some of the structural inequalities that Richard Leonard identified, moving to a greener, more sustainable and fairer future, as Maureen Watt suggested, or learning from the mistakes of the response in 2008 and doing things better, as Tom Arthur argued. I assume that all those suggestions are backed by members from across the chamber. They are worthy goals, but we need to do things differently.
Will the cabinet secretary take an intervention?
My time is running out, so I cannot take an intervention.
We also want to back our entrepreneurs, so that they are international success stories in the next 10 years, as Stewart Stevenson said. We have choices to make, and we will rise to that challenge as we have risen to the challenge of the economic crisis that has been created by the coronavirus health crisis.
As we look ahead over the next few weeks, we want to see businesses open and trading as safely as possible. As some members have said, businesses want certainty about when to open; however, I would argue that, equally, they want to know how to operate safely.
For tourism businesses, it will not be enough to reopen; we also need to see markets return. The route map that was published is designed to give a sense of the direction of travel, to give some certainty, but it needs to be backed by detailed guidance that is published in advance of certain sectors reopening. As members will know, there are about 14 working groups representing different sectors building the guidance, and they are heavily informed by representatives from those sectors.
There have been many good recommendations as to how we can support different sectors, use capital to invest with an economic stimulus and make sure that every penny is invested in businesses that have been hard hit. In the past few months, a great amount of work has been done in response to the crisis, and that work will continue. We want to do as much as possible to keep people safe and protect livelihoods.
The next stage of restarting the economy will require us to take action now that will have both an immediate effect and an impact far further down the line. We want to set the direction for the recovery of the economy and for the future. We want to make decisions now that, in 10 years’ time, we can look back on and see that they made a difference to future generations, but we will succeed in doing so only by taking a collaborative approach and working together across the chamber and across the nation.
That concludes the debate on Covid-19 and next steps for the economy. Before we move to the next item of business, I remind members that social distancing measures are in place and ask that they observe them when exiting the chamber.