A new UK Government initiative to top-up some workers’ wages during the Covid-19 pandemic does not go far enough, Scottish Finance Secretary Kate Forbes has said.
Ms Forbes welcomed the job support scheme unveiled by Chancellor Rishi Sunak, but said it “appears that from the detail this scheme will not provide the support that was hoped for”.
Meanwhile Liz Cameron, chief executive of the Scottish Chambers of Commerce, said schemes topping up wages “can only ever be a sticking plaster”.
And Marc Crothall, chief executive of the Scottish Tourism Alliance, said: “The measures announced by the Chancellor today fall some way short of what is urgently needed to rescue Scotland’s tourism industry from a perilous situation.”
Their comments came after Mr Sunak told MPs the resurgence of coronavirus poses a threat to the UK’s “fragile” economic recovery.
Rather than continuing the furlough scheme – a move which the Scottish Government said would protect 61,000 jobs north of the border – he outlined plans to protect “viable” roles.
The job support scheme will see the Government top-up the wages of people working at least a third of their normal hours, with companies which did not take part in the furlough scheme also allowed to apply.
Staff will be paid for that work as normal, with the state and employers then increasing those wages to cover two-thirds of the pay they have lost by working reduced hours.
It will cost the Treasury an estimated £300 million a month for every million workers covered by the scheme, with Government contributions per worker capped at £697.92 per month.
By comparison, the furlough scheme has cost the Government £39.3 billion – about £6 billion a month.
The Institute for Fiscal Studies (IFS) think tank has already warned the new scheme is “significantly less generous” and will translate into “sharply rising unemployment”.
The Chancellor’s package of measures will also see the self-employment income support scheme and business loans extended, while for the struggling hospitality and tourism sector, the VAT reduction from 20% to 5% for food, non-alcoholic drinks and accommodation has been pushed on beyond the original January 12 deadline.
Scottish Secretary Alister Jack said: “The package announced by the Chancellor today is great news for people and businesses in Scotland. It will help keep people in jobs, extend crucial support to businesses and giving them the certainty they need.
“It will give businesses and self-employed people the support they need to get through this difficult situation.
“It comes on top of an extensive package of UK Government support throughout the pandemic, and is very welcome.”
But Ms Forbes said: “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.
“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.”
Ms Cameron said the job support scheme “should help save many from losing their jobs completely and lessen the immediate pressure on cash flow for businesses, particularly during what will continue to be difficult trading conditions this coming winter”.
But she added: “Topping up wages can only ever be a sticking plaster. In Scotland we need a comprehensive plan focused on retraining and upskilling our workforce and investment in the creation of new jobs.”
Andrew McRae, the Federation of Small Businesses Scotland policy chair, said: “Today’s measures go some way to filling the most obvious support gaps, but ministers must be prepared to go further.”