The latest statistics published by Scottish Enterprise reveal that in 2020, there were 361,875 SMEs providing 1.2 million jobs. Their Economic Trends report covering November 2020 to January 2021 revealed that 40% of businesses (survey total 171 businesses) think that the Scottish economy will weaken over the next 6 months and 44% are uncertain about the prospects of the Scottish economy.
The Scottish Government estimate of ONS Survey data stated that from 11th – 24th January, 28% of Scottish businesses had no, or less than, 3 months of cash reserves.
On the 24th of February, Audit Scotland published a report tracking the implications of Covid-19 on Scotland’s public finances. For anyone who is unaware, the Auditor General is an independent crown appointment, made on the recommendation of the Scottish Parliament, to audit the Scottish Government, NHS and other bodies and report to Parliament on their financial health and performance.
In an article also published on 24th February, Stephen Boyle, the Auditor General highlighted some interesting points. The extracts below are taken directly from the article.
Most of the Covid-19 spending in Scotland has been covered by huge levels of UK government borrowing to fund the health, social care and business response. That’s meant an extra £9.7 billion added on to a Scottish budget of over £40 billion for 2020/21.
Not all the pandemic pound has been allocated so far, but that’s not surprising. Some spend, like business grants, is demand-led and other pots, like the £100m for school attainment, are spread over more than one year.
But it’s getting harder to identify what is, and isn’t, Covid-19 spending, as our latest analysis found. That’s because of the volume of announcements (over 170 to date) and, increasingly, how the spending naturally links with wider economic development and government goals. That increases the need for transparency around spending.
The issues that we are seeing now – the impact on business, on young people because of disruption to education, on households and relationships because of economic disruption, and the broad mental health impact on the country – are all interconnected.
That makes directing public money more complex. And it’s why we need leaders working together. All the main players in the coronavirus response – the UK Government, Scottish Government, councils, health boards, enterprise boards – must keep collaborating and sharing knowledge to achieve the best outcomes and value for money.
Meanwhile, difficult decisions lie ahead to keep the country’s finances on a sustainable footing.
The longer the pandemic continues the more the financial consequences of disruptions to services, such as the courts backlog increase. Furlough is also set to end at the end of April and unemployment forecast to rise.
The Scottish Fiscal Commission expects the economy to contract by 11 per cent, with a return to pre-pandemic levels by 2024. But the only thing we can be truly certain of is that forecasts will change.
That makes medium-term planning, that links spending to outcomes, vital. The Scottish Government must be clear about its priorities, about which services are essential to maintain, and where it can quickly alter spending to deal with budget fluctuations.
“For our part, I will continue to report on the need for the Scottish Government to produce a consolidated public sector account to allow more transparency and scrutiny of spending decisions. And of course, the impact of Covid-19 spending will be a key focus of our financial and performance audit work for the foreseeable future.”Stephen Doyle
On 28th February, Gillian Bowditch wrote an article in The Sunday Times observing how the face of Scottish business has changed out of all recognition. As an entrepreneur herself, Gillian is the Creative Director and Founder of Wow Scotland Ltd incorporating Lily Blanche and Tartan Twist, she is therefore well-placed to comment. Add to that, her role as Chair of the British Association of Women Entrepreneurs Scotland and Founder/Director of the Institute of Ecommerce in Scotland, along with other roles she undertakes, her view is surely one which merits consideration.
“Business owners, entrepreneurs and corporate managers have spent the past year agonising on how best to protect their staff, families and communities while preserving jobs. Entire industries have all but disappeared. Business owners have welcomed schemes that have allowed them to furlough staff, take out government-backed loans or suspend interest payments. They have done everything in their power to keep hope alive and wages paid, while wave after wave of the pandemic has washed over them. They have had to beg the Scottish government to match the funding coming out of Westminster. Concerns remain that funds that could be saving jobs now are being held back for political reasons until after the Holyrood election.”
“This is why it is more important than ever that the views of employers, business owners and all those interested in rebooting the Scottish economy as quickly as possible in the wake of the vaccine programme are heard. Livelihoods and lives are not in opposition to each other, despite the rhetoric of ministers; they are inexorably intwined and equally vital to the wellbeing of nation.”
Our question is this … should we, the Scottish business community, be accepting the status quo? Or should we be sticking our heads above the parapet and endeavouring to have our voices heard?
We launched a survey last week to garner opinion and feedback on how the UK and Scottish Governments have supported businesses during the pandemic. From our perspective, it’s about giving not only our members, but the Scottish business community as a whole, a voice. Bearing in mind the points made above by both the Auditor General and Gillian Bowditch, it seems we’re not alone in feeling strongly that there needs to be more engagement between businesses and the Scottish Government.
To participate in our survey, please click HERE.
Please note that the survey can be completed anonymously if preferred.