Chancellor’s statement welcomed by Scottish Secretary but Scottish Government says the package is a huge opportunity missed.
The Chancellor yesterday set out the next steps in the UK Government’s strategy to secure Scotland’s economic recovery from coronavirus – announcing a “Plan for Jobs” to level up, spread opportunity and unite the UK.
Rishi Sunak outlined how he would focus on protecting, supporting and creating jobs as the UK enters the next phase in its recovery following the outbreak.
Delivering his Summer Economic Update, he said: “Our plan has a clear goal: to protect, support and create jobs. It will give businesses the confidence to retain and hire. To create jobs in every part of our country. To give young people a better start. To give people everywhere the opportunity of a fresh start.”
As part of a series of landmark measures the Chancellor announced that the government will:
- support jobs with the Job Retention Bonus to help businesses keep furloughed workers. UK Employers will receive a one-off bonus of £1,000 for each furloughed employee who is still employed as of 31 January 2021.
- expand Worksearch Support including a Flexible Support Fund and a £2 billion Kickstart scheme to subsidise jobs for young people
- create jobs in the construction and housing sectors through funding to decarbonise public sector buildings, a demonstrator project to decarbonise social housing and funding to support research and development for Direct Air Capture (as announced by the PM on 30 June)
- protect jobs with VAT cuts for hospitality and tourism, as well as a Eat Out to Help Out discount scheme.
The Summer Economic Update confirms an additional £800 million of Covid-19 funding for the Scottish Government through the Barnett formula.
The UK Government is now providing £4.6 billion through the Barnett formula to help the Scottish Government support individuals, businesses and public services through Covid-19.
Rishi Sunak said the plan for jobs was the second phase of a three-phase plan to secure the UK’s economic recovery from coronavirus.
The first phase, beginning in March, focused on protection with a £160 billion package of support – one of the largest and most comprehensive economic responses in the world. In Scotland this package has so far protected more than 620,000 jobs, helped thousands of businesses and paid £425 million to 146,000 self-employed people.
The Chancellor outlined that following the second phase focusing on jobs, there would come a third phase focusing on rebuilding, with a Budget and Spending Review in the autumn.
Speaking about the impact for Scotland, Chancellor Rishi Sunak said: “Since this crisis started, our wide-ranging package of support for Scotland has protected more than 620,000 jobs, thousands of businesses and paid £425 million to self-employed people.
“Today I’ve set out our plan to protect, create and support jobs across Scotland – to level up opportunity, safely reopen our economy and strengthen the Union.
“With a massive funding boost for Jobcentre Plus, doubling the number of work coaches, more people will now benefit from personalised and tailored job support. We’re investing £800m through the Barnett formula, giving Scotland the funds to create green news jobs. And we’re protecting the thousands of existing jobs in the hospitality sector with a cut to VAT and the Eat Out to Help Out scheme.”
Scottish Secretary Alister Jack said: “The measures announced by the Chancellor to support the country’s post-coronavirus economic recovery delivers for all parts of the UK.
“The UK Government’s ambitious plan for jobs, with its strong emphasis on our young people, is great news for young Scots.
“The VAT cut for tourism and hospitality will be a huge boost for Scotland. It is now absolutely essential that Scotland’s world-class tourism and hospitality industry can properly open for business.
“The stamp duty cut gives a helping hand to the housing market and building trades in England. I urge the devolved administration to use their powers to do the same in Scotland.
“And, thanks to UK Government spending decisions in the rest of the UK, Holyrood will get a £800 million cash boost, bringing their total additional coronavirus support funding to £4.6 billion.”
“The Chancellor has set out a fantastic package of support. The devolved administration now need to play its part and show they are serious about Scotland’s economic recovery.”
Responding the UK Chancellor’s Summer Statement, Scottish Finance Secretary Kate Forbes said: “We called for an £80bn stimulus package to build a strong, green and inclusive economic recovery and while there are elements in this announcement to be welcomed, in particular the measures on VAT for tourism and hospitality, overall this
“It falls well short of delivering what is needed to boost the economy and protect jobs.
“There is no new capital spend, no extension to the furlough scheme for hard-hit sectors and no further support for households in financial difficulty. A half price meal out does not help those struggling to put food on the table.
“Many of the initiatives are short-lived and do not provide long term certainty for business or households. Instead they will simply push the problems back to the end of the year when we will also have to deal with the end of the transition period with the EU.
“Despite announcing new funding measures worth up to £30bn today, most of it bypasses devolution and does not provide the Scottish Government with the funding we need to enable us to tailor an economic response that meets Scotland’s needs.
“Like all governments, we are facing huge spending pressures but we do not have the tools that others have to meet them. Along with the Governments of Wales and Northern Ireland, we set out a reasonable, proportionate set of new financial powers that would enable the Scottish Government to respond effectively.
“Regrettably, the UK Government has turned a deaf ear to those needs.”
Andrew McRae, Federation of Small Business’s (FSBx) Scotland policy chair said: “Good news has been in short supply for nearly four months. We needed action to help protect jobs and stimulate local economies across Scotland and that is exactly what the Chancellor has set out to do.
“However, it should be noted that there are many small businesses that were not supported by the Chancellor’s package – with company directors once again overlooked. Given these businesses have had little to no support in over 100 days, FSB is hoping that support can be provided in the near future.”
On the “kickstart” jobs scheme, Andrew said: “The jobs scheme will hopefully prevent a lost generation of young people, but for it to work in local economies, it must focus on the small employers who employ around one million people in Scotland. We can’t have a situation where local businesses are behind a queue of big corporates because of a target-driven approach.”
On the temporary VAT cut for hospitality and tourism sectors, he added: “Reducing VAT in sectors hit especially hard by the pandemic is an astute move. It will make everyday activities like grabbing a coffee and cake more affordable for budget conscious consumers – while making the country a more attractive destination for tourists home and abroad.”
On the discount to encourage people to eat out, Andrew said: “Scotland is fortunate to have an array of fantastic food offerings in restaurants, cafes and pubs across the country. We need to encourage more people to get back out into the community and spending money, so any moves to do this are welcome.”
The Poverty Alliance has also responded to the Chancellor’s Summer Statement. Peter Kelly, Director of the Poverty Alliance, said:“Young workers have been hard hit by Covid-19 job disruption, so the Chancellor’s announcement of a kickstart jobs scheme is welcome.
“But as the pandemic has highlighted, for too long people have been locked into poverty by low pay and insecure work. So these jobs should pay at least the real Living Wage and should have been accompanied by measures to tackle the precarious work that too many young people have to rely on.
“Part-time jobs that pay only the minimum wage cannot be a long-term solution to the problems in our labour market.
“Our recovery should be based on principles of fair work; that means redesigning jobs not reinforcing current problems.
“With the confirmation that the Job Retention Scheme is to end in October, the statement was an opportunity to fix our social security system before an expected surge in applications in autumn.
“Increasing the numbers of Work Coaches is welcome, but if we want our economic recovery to be a recovery for all, we need a social security system that loosens – not tightens – the grip of poverty on people’s lives. That means ending the benefit cap, making advance Universal Credit payments non-repayable, and ensuring that benefits actually meet people’s needs. “There is still time to make these changes before October and we urge the government to make them.
“The announcement of vouchers to support the hospitality sector falls short of expectations. At a time when more people than ever before are relying on emergency help from food banks, it is action to put cash in people’s pockets that is required, not the offer of a £10 discount on eating out.“
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