Scottish Parliament’s Economy Committee publishes a wide-ranging report on the impact of COVID-19 on Scotland’s economy

13.11.2020

The Economy, Energy and Fair Work Committee has today published its interim report on the impact that COVID-19 has had on the economy in Scotland.

Over the summer, the Committee sought written evidence on four key strands of their inquiry:

• Impact on businesses and workers
• Role of the enterprise agencies and SNIB
• Plans for economic recovery (including scrutiny of the Advisory Group on Economic Recovery (AGER) report)
• Impact on young people.

The report published today is the result of focus groups and evidence sessions where the Committee heard about struggles that are being faced due to COVID-19.

Commenting, Committee Convener Gordon Lindhurst MSP said:

“This is an extremely difficult time for many businesses and workers. They play a central role to life in Scotland, providing vital services and the revenue to fund public services.

The Committee would like to thank Scotland’s businesses and workers for their resilience and hard work throughout the pandemic and to acknowledge the trying times that many are facing.”

“More than ever our economy needs to be understood and given a helping hand and the work the Committee has been doing has had the aim of reaching out to those that need help and provide them a voice.”

While the Committee has published its report today, it is still welcoming evidence from stakeholders who have been affected by COVID-19.

Gordon Lindhurst MSP added:

“The Committee is particularly concerned about the impact on the pandemic on young people; for example, there has been a severe drop in the number of young people starting Modern Apprenticeships for the period April to June 2020 (which fell by 80% over the year). ”

“Every effort must be made to support young people at this time; the Scottish Government must invite young people to participate in developing policies to help them at this critical time in their lives”

Background

The published report can be found here

This is an interim report as the Committee’s inquiry is ongoing. This report covers the Committee’s work from March to early October 2020; the report is a snapshot in time and does not cover the period after early October.

The recommendations include:

Impact on businesses

• working together is key to supporting businesses and workers through the crisis; it is vital that both governments work with businesses, trade unions and individuals to identify and address any delays or gaps in financial support;
• given the regional and sectoral divergence across Scotland, business support should be from the ground up and tailored to the local economy; the Committee recommends that this approach is taken to the provision of business support going forward; 
• debt levels are rising as a result of the crisis; this will impact on economic recovery; the Committee asks the Scottish and UK Governments to set out how their future response to the crisis will address higher levels of indebtedness by businesses.
Enterprise agencies and local economic development
• a more regional approach must be pursued by the enterprise agencies with urgency; given that Scotland’s economy is in crisis, place-based interventions are needed across the whole country, including an enhanced role for local authorities in supporting businesses;
• the Committee asks the Scottish Government and its agencies to consider how to ensure a more even spread of Regional Selective Assistance to make sure that funds are awarded to businesses most in need of support across Scotland;
• the Committee recommends that local authority delivery of COVID-19 business support is reviewed so that lessons can be learned for future funding programmes, including a review of digital systems and looking at how they can be aligned across the economic development agencies;
• whilst the Committee agrees that support for growth companies is important, the lack of flexibility in Scottish Enterprise’s budget is a cause for concern; the Committee recommends that more flexibility and contingency is built into Scottish Enterprise’s budget to allow them to respond to unforeseen circumstances;
• the process of awarding funds on a multi-annual basis has led to a lack of funds for Scottish Enterprise new projects; it is important that there is transparency in this multi-annual allocation of Scottish Enterprise’s resources and that these commitments are published for scrutiny.

Impact on young people

• the Committee notes the evidence welcoming the Young Person’s Guarantee. There was general agreement that work placements must:

o be of sufficient length
o be paid at the Living Wage, and
o take the specific circumstances of sectors and local economies into account;

• the Committee also highlights evidence that the young person’s guarantee could be used to create ‘green jobs’;
• the Committee notes that the young person’s guarantee builds on existing initiatives and aims to provide a guarantee to young people of employment, education or training and asks the Scottish Government to set out what additional value the scheme will add to existing provision and how this will be monitored and reported on;
• The Committee notes the cost estimates provided by the Fraser of Allander Institute and asks the Scottish Government to set out detailed planned expenditure on the scheme, including plans for wage incentives;
• The Committee notes the evidence of the positive impact of the Community Jobs Scotland scheme and asks the Scottish Government to provide an update on plans for the scheme in the context of the current crisis;
• The Committee is concerned about the severe impact of the pandemic on apprenticeships. The Committee urges SDS and the Scottish Government to examine options to incentivise employers take on and retain apprentices. Options for online work placements should also be explored, where this is feasible;

Media information

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Public information

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