Fiona Hyslop – 2020 Statement on Covid-19

Below is the text of the speech made by Fiona Hyslop, the Cabinet Secretary for Economy, Fair Work and Culture, in the Scottish Parliament on 21 April 2020.

The Covid-19 public health crisis has led extremely quickly to an economic crisis that is global in nature but also local, impacting on many people and businesses in Scotland. To combat the spread of the virus, many businesses have already closed and we face an enormous challenge in helping other businesses to survive, to provide jobs and to service the economy.

I thank all businesses and their workers for following the social distancing guidance, the essential sectors and supply chains for continuing to keep the country running and those companies that have repurposed to manufacture supplies for the health sector.

We estimate that up to 70 per cent of the workforce is still working, with many people delivering health, care and welfare services, and many others working from home, often combining that with childcare and home schooling. By staying home, they are playing their part in tackling the virus. They are helping to protect the health service and to save lives.

As Covid-19 continues to have a significant impact across the world, there is major uncertainty in financial markets, supply chains and the functioning of the global economy as many countries, including Scotland, have had to reduce economic activity to stop the spread of the virus. The latest surveys for Scotland show a similar pattern to other countries, with falls in business activity in March that are even sharper than during the financial crisis. The chief economist’s “State of the Economy” report, which was published today, projects that Scotland’s gross domestic product will fall by a third during the period of social distancing.

It is important, however, to put the economic impacts in context. This is no normal downturn and we need to view economic data and projections in that light, recognising that productive and profitable businesses across Scotland have been required to pause activity to support the public health effort.

We have pursued three main aims for the economic response to date: to keep companies in business and with productive capacity so that they can recover; to keep staff in employment with appropriate income protection and support; and, most important, to provide support to staff so that they can self-isolate and care for loved ones.

It is in everyone’s interest to help companies through this turbulent period. The United Kingdom Government has the immediate fiscal and macroeconomic powers to respond to the economic crisis and it has made substantial and welcome commitments to support businesses and employees. However, those commitments do not fully meet the needs of Scottish businesses. There are still significant gaps in both the job retention scheme and the support for the self-employed. Last week, along with the Cabinet Secretary for Finance, I wrote to the chancellor, outlining the changes that need to be made. I am also pressing the UK Government to urgently share data on the implementation of support schemes so that we are better able to tailor our support to businesses.

To address Scotland’s specific needs, we announced additional funding to fill some gaps in the UK Government’s schemes. There is no doubt that we will be dealing with the uncertainty of the impacts and duration of the virus for some time. I engage regularly with businesses, business organisations and the unions and I have been building consensus in recent weeks in support of our four-step economic plan: response, reset, restart and recover.

Initially, we have focused the majority of our efforts on the response stage. Our package of business support is now worth more than £2.2 billion: it is delivering almost £900 million-worth of rates relief and we continue to work with local authorities to progress our £1.3 billion business grants scheme. Support for the fishing industry of up to £22.5 million was announced by the Cabinet Secretary for Rural Economy and Tourism, and the Cabinet Secretary for Transport, Infrastructure and Connectivity has agreed further measures of support for the bus industry of £92 million, for ferry operators of £45.7 million and for rail franchisees of £254 million. We continue to work closely with the UK Government and Oil & Gas UK to assess what more can be done to support the oil and gas sector during its immediate and longer-term challenges.

The Minister for Trade, Investment and Innovation has been working on procuring international and domestic supplies for the health service. On Saturday, 10 million masks arrived at Prestwick airport, and during this week 100,000 litres of sanitiser will arrive at the national health service’s central distribution warehouse. Our enterprise organisations have provided advice and support to over 178,000 companies.

The additional £100 million that we allocated last week will be a vital lifeline for Scottish individuals and businesses to relieve hardship and protect the newly self-employed, who are ineligible for other support, and viable micro, small and medium-sized enterprises that are in distress and might be ineligible for UK Government sources of funding or not yet in receipt of the funds that they need to survive. The grant funding will be channelled through local authorities and enterprise agencies. The scheme will open for applications by the end of April and recipients will receive funds in early May. The provisional allocation will see £34 million for the newly self-employed, £20 million for creative, tourism and hospitality companies that are not in receipt of business rates relief and £45 million for firms that are vulnerable but vital to Scotland’s local and national economic foundations.

The recently self-employed, who are excluded from the UK’s scheme but still suffering hardship, will be able to receive £2,000 grants. For creative, tourism and hospitality companies that have up to 50 employees, there will be easy access to £3,000 hardship grants or larger grants of up to £25,000 where it can be demonstrated that that amount is needed. Support and grants for pivotal SME enterprises will depend on the specific need of each enterprise, and will be developed by the relevant enterprise agency with wraparound support.

I also recognise the challenges that are faced by the cultural sector, which is so reliant on social interaction in theatres, music venues, galleries and festivals. For artists who are facing hardship, I was pleased to announce, yesterday, that an additional £1 million will be given to Creative Scotland’s bridging bursary fund.

Because of our decisions, thousands more businesses, including some that are in vital sectors of the economy, will benefit from support that is not available elsewhere in the UK. However, there will still be gaps, so we continue to engage with businesses on a regular basis to understand their needs and press the UK Government to deliver for them.

The reset phase that we are now entering involves preparation to know what a safe restart will look like sector-by-sector across the economy and what needs to be done to help businesses deliver that. Together with industry sector leads and trade unions, we are developing sector-by-sector guidance to give assurance and confidence as closed businesses—at some point—reopen and restart economic activity. However, that will happen only when scientific and health advice supports it. As an example of the work that is being done, the Minister for Local Government, Housing and Planning and the construction leadership forum have formed a cross-industry group to address the wider issues that are needed to get the industry started again following lockdown. During the coming months, our plan for economic restart and recovery will need to be managed in a safe and orderly way.

Public sector spending on infrastructure accounts for around 50 per cent of all construction activity across Scotland. Therefore, our infrastructure investment will play a vital role in how we reset, restart and recover the economy. So far, only essential construction activity continues in the sectors that are delivering critical national infrastructure—such as primary healthcare, energy, telecommunications, transport and water. Those networks and systems are vital to our ability to keep our country moving and sustain as much economic activity as possible in the current crisis. As we all know, our digital infrastructure has proved to be an essential lifeline for people, businesses and services across Scotland.

The restart might be phased. A slower but more effective restart will reduce the danger of a second wave of the virus, and will avoid a false restart for the economy, which would require further closures. Recovery will not be quick and the post-crisis world will be very different, with different business practices, markets and behaviours.

Last week, I announced the establishment of an advisory group on economic recovery. I am sure that members will agree that independent expert advice is more important than ever. The group will be steered by Benny Higgins and will include Professor Sir Anton Muscatelli. The challenge that I have set for the group is to engage, analyse and listen to those who are affected by the crisis, and to bring forward solutions to enable our economy to recover quicker and better.

Mr Higgins will lead engagement with the business community alongside the enterprise organisations. I am pleased that Lord Smith of Kelvin, who is the chair of Scottish Enterprise, has agreed to be part of the process of gathering the views on the business aspects of the economic response.

We will go wider, with active engagement with trades unions, local government, third sector and environmental representatives, because how the economy recovers is relevant to everyone.

I am setting a demanding timetable: proposals to Government are due by the end of June. The proposals will be taken forward alongside a range of other sources of expert policy advice as we implement the Government’s agenda to build a wellbeing economy and ensure a green recovery. The advisory group will also draw on input from the Council of Economic Advisers.

I can announce further members of the advisory group: Dame Sue Bruce, Professor Anna Vignoles, Professor Dieter Helm, Grahame Smith and Professor John Kay.

The Scottish Government recognises the significant impact that the response to Covid-19 is having on Scotland’s economy, businesses and people. We are doing everything that we can to mitigate that impact, respond to the crisis and reset as much economic activity as we can. At the same time, we are planning ahead to restart the economy and, in due course, to support economic recovery.