Scottish Government calls for extension of the Coronavirus Job Retention Scheme for hardest-hit sectors

Blueprint for post-coronavirus economic recovery also includes welfare reform proposals, a jobs guarantee for young people, and measures to tackle household debt

The Scottish Government has called for an extension of the Coronavirus Job Retention Scheme (CJRS) for the hardest-hit sectors as part of a stimulus package to regenerate the economy and reduce inequalities following the coronavirus (COVID-19) pandemic.

Introducing COVID-19: UK Fiscal Path – A New Approach, Finance Secretary Kate Forbes said today -

'We are emerging from the biggest economic shock of our lifetimes. It has hit the most vulnerable in our society disproportionately and presents challenges that the Scottish Government does not currently have the powers to meet. 

The UK Government’s fiscal policies are still key in determining our budget, so today we set out the principles we believe it should follow to ensure we emerge with a fairer, greener economy that values wellbeing alongside growth.' 

While acknowledging that the UK Government's emergency support schemes have provided an important lifeline, and that regional data shows that around 27 per cent of the Scottish workforce had been furloughed under the CJRS as of 31 May 2020, the Scottish Government says that phasing the withdrawal of support will be crucial to minimise unemployment as the economy transitions.

To this end, the Scottish Government calls for the continuation of the CJRS to provide support for sectors that may find it impossible to resume economic activity in a way that is economically viable before the current employment support schemes are due to expire in October 2020, including tourism and hospitality, arts and culture, oil and gas, childcare, and retail -

'Other countries have already signalled a more gradual removal of their comparable schemes. For example, France has already committed to extending its employment support scheme for up to two years for those unable to return to full-time employment, Germany has confirmed that its scheme will continue into 2021, and Spain and Italy are also considering sector-specific extensions.

The Job Retention Schemes represents one of the most costly elements of the emergency support package ... However, the costs of the scheme are likely to fall as more sectors of the economy are opening up and demand returns. Limiting the support to those sectors most in need would also reduce the costs substantially.

Overall, it will still be more cost-effective in the longer term to protect jobs and livelihoods through support schemes than through paying out for unemployment benefits. If the Job Retention Scheme is not extended until economic activity can safely resume, these jobs have not been saved but the British taxpayer has simply paid the wages of furloughed staff.'

The Scottish Government says however that there will be some business models which may no longer be viable due to changes in consumer behaviour and spending patterns and that, rather than providing further employment support to these businesses, appropriate support should be provided to help individuals retrain and adapt their skills to find new employment.

NB - elsewhere in the 'New Approach', the Scottish Government also calls for -

• continued support for those who are unable to work, either because they are shielding or because they are self-isolating as a result of the test and protect approach;
• a jobs guarantee for young people, who tend to work in sectors hardest hit by coronavirus, and for graduates who will find it harder to find a job in a recession;
• a one-off cash grant for low and middle-income households based on Germany’s stimulus package that offers a one-off €300 cash grant per child to each family, with the payment being recouped through the tax system for better-off families;
• action to tackle known problems with the benefit system, including removing the benefit cap, scrapping the two-child limit and replacing 'debt inducing' advance payments for universal credit with non-repayable hardship grants;
• acceleration of the introduction of a No-Interest Loan Scheme to target lower-income earners who can't afford to repay interest on loans, and the continuation of payment holidays for mortgages and unsecured loan products, as part of a 'national debt plan'.

For more information, see Blueprint for economic recovery from gov.scot