Scottish Government U-turn on business support for firms in Scotland

The Scottish Finance Secretary has pledged a range of new support measures to help struggling businesses north of the border.

By Sam Shedden Wednesday, 15th April 2020, 9:47 am Updated Wednesday, 15th April 2020, 10:51 am

On Wednesday morning Kate Forbes said the Scottish Government would create a new £100m fund for SME firns that are currently ineligible for Covid-19 support.

The move comes after repeated calls for lifeline grants for Scots firms forced to lockdown during the pandemic.

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Chancellor Rishi Sunack unveiled a £2.8 billion support package at the start of the lockdown which would provide £25,000 for small and medium sized enterprises for every business property which they have. It means a restaurant owner with four establishments south of the border would be entitled to £100,000.

However, it soon emerged that the scheme is being applied less extensively in Scotland. Instead of firms getting the money for each property, it will instead be allocated to each individual business. So that same restaurateur in Scotland will only get a one-off flat payment of £25,000.

Ms Forbes previously insisted the distribution of business support is geared towards ensuring that more businesses benefit in line with the "unique needs and circumstances of Scotland’s economy" which is different from the rest of the UK - which prompted widespread anger from business leaders.

Kate Forbes MSP Minister (Photo by Andrew Cowan/Scottish Parliament via Getty Images)

Today, the Finance Secretary said she had “listened carefully” as she offered £120m to extend the business grant scheme on a per property basis at 75 per cent as well as widening eligibility for the original grant scheme.

Writing on Twitter she said: “Our support for business now exceeds the £2.2 billion passed on from the UK Government and actively works to fill the gaps in the UK schemes. We are doing everything we can to support business at this difficult time, and will continue to listen and engage.

“Just as we ask the public only to buy what they need in the supermarkets, we are asking businesses who do not need this vital help to refrain from claiming additional support unless absolutely necessary so we can direct as much help as possible to those who need it most.”

On Twitter, former Scottish Tory leader Ruth Davidson dubbed the move a "partial U-turn" as current leader Jackson Carlaw claimed his party was responsible for the change.

He said: "The SNP Government has spent weeks defending its approach in the face of severe criticism from Scotland's business community."Now, after pressure from the Scottish Conservatives, it has finally accepted its failings."Mr Carlaw said the changes should have been made earlier, arguing the Scottish Government would need to show the benefits of diverging from UK Government policy.

He added: "Nicola Sturgeon wasn't able to do so in this case and I'm glad she's finally realised her mistakes in this critical issue."

The Federation of Small Businesses (FSB) welcomed the move saying it would “plug the gaps” in support for small firms.

Colin Borland, FSB’s director of devolved nations, said: “This new Scottish Government package should plug some of the most obvious and dangerous gaps in coronavirus support for smaller firms and the self-employed.

“For those that were due to receive nothing – like the new self-employed and some home-based and vehicle firms – this new help could be a lifeline. For others – like smaller chains – it could provide a critical top up to the money already in the pipeline.”

He added: “We’ll need to see the swift deployment of this cash. And this looks unlikely to be the end of the story. If we want as many firms as possible to make it through this crisis, then governments north and south of the border may be required to provide additional rounds of help.”