UK Chancellor’s Winter Economy Plan ‘does not go far enough’, says finance secretary

Chancellor Rishi Sunak

Scotland’s finance secretary Kate Forbes has said that the chancellor’s Winter Economy Plan announced yesterday does not go far enough to protect jobs.

While Ms Forbes welcomed some of the measures announced by the UK Government, she said that the details of the economic plan would not provide the support to jobs which the Scottish Government had hoped for.

Yesterday, chancellor Rishi Sunak announced a new jobs support scheme which would replace furlough, which will see the UK Government support the wages of the British people by covering at least a third of their normal hours.

The UK Government will top up a third of the worker’s salary which would have otherwise been lost as a result of working reduced hours.

This ‘direct support’ is capped at £697.92 a month, meaning a third of hours will go unpaid.  The scheme will start in November and run for six months with all small and medium-sized businesses eligible for the scheme.

The chancellor stated that larger companies must prove their profits have been negatively affected by the COVID-19 pandemic in order to access the scheme.

The Winter Economy Plan will also see VAT remain at 5% for hospitality and tourism until 31 March 2021 - rather than returning back to 20% in January. At the same time, the deadline for taking out a coronavirus business interruption loan will be extended until November 30. The Government has also announced a guarantee on CBILS loans for up to ten years.

Ms Forbes said that Scottish Government analysis has suggested 61,000 jobs would be saved if the furlough scheme was extended, however, she added that the details of this new scheme have indicated it will “not provide the support that was hoped for.”

The finance secretary said: “We also need more clarity on what this will mean for those businesses and people who are not working at present as over 217,000 people are still on furlough in Scotland.

“It is disappointing that these changes don’t take into account our current reality of local lockdowns, with no apparent flexibility to support local or national restrictions, or those sectors, like the events sector, that have not yet been able to reopen.”

On the VAT cut, she added: “News of the VAT deferral and extension to the VAT cut for hospitality and tourism are positive steps, however, these are two of the sectors hit hardest by this pandemic, and today’s announcement doesn’t give enough support for those sectors.

“It’s also important to highlight that this is not a budget – devolved governments need clarity on funding so we can tailor our support to meet Scotland’s needs.”

Ms Forbes concluded: “As I have stressed before, we have responded to COVID-19 without the fiscal levers we require. Not only is the UK Government denying us the appropriate financial powers needed to fully respond to the pandemic, it has also removed any clarity about how much funding we will receive by deciding to scrap this autumn’s UK Budget.”

Citizens Advice Scotland (CAS) said the Job Support Scheme will directly support the wages of people in work, giving businesses who face depressed winter demand the option of keeping employees in a job on shorter hours.

Social justice spokesperson, Mhoraig Green, said: “The furlough scheme has been crucial over the past six months, but even with that protection recent polling for CAS revealed 1 in 3 workers are worried about their job security over the next year.

“That’s why CAS called for furlough to be extended with the flexibility to account for increased reliance on some sectors and industries, such as hospitality, in different parts of the UK.

“So the Chancellor’s announcement of a Job Support Scheme is welcome.  But the scheme will have to be targeted effectively to prevent a tidal wave of redundancies this winter.

“We are particularly concerned about which jobs will be considered viable because many businesses which are difficult to operate under social distancing were buoyant before the lockdown, and could be again after social distancing is removed.  We await the details with interest.

“The Citizens Advice network in Scotland has seen a marked increase in people seeking help with employment issues, particularly around redundancy, people who need help with concerns around employment can always get free, confidential and impartial advice from their local Citizens Advice Bureau.”