Covid costs
Forbes hits out at UK virus funding
THE costs of tackling Covid-19 are significantly higher than the funding provided by the UK Government, Scotland’s Finance Secretary claims.
Kate Forbes stressed that extra funding announced for Scotland, which is based on spending to tackle the virus south of the Border, is just an estimate – creating massive uncertainty for Holyrood’s budgets – which has ignited a row with Westminster.
She also warned £60 million in business support “never materialised”.
SCOTLAND’S Finance Secretary has claimed that the costs of tackling Covid19 are significantly higher than the funding provided by the UK Government – igniting a row with Westminster.
Kate Forbes stressed that extra funding announced for Scotland, which is based on spending to tackle the virus south of the Border, is just estimated – which she said creates massive uncertainty for Holyrood’s budgets.
The UK Treasury has denied the claims, pointing to the £3.7 billion of financial support it has given the Scottish Government.
Ms Forbes also warned that a previous commitment of £60 million in business support “never materialised”. But official figures have revealed that business support paid out to struggling Scottish firms during the Covid-19 lockdown fell to its lowest level last week.
The Finance Secretary was speaking after it emerged spending to deal with the coronavirus crisis in Scotland has reached more than £4 billion.
Budget revisions set out the financial details of ministers’ response to the emergency, with the bulk of the money coming from a £3.5 billion rise in Holyrood’s block grant as a consequence of the UK Government’s increased Covid-19 spending.
The increase is offset by the decision to reduce business rates, so the Scottish Government’s overall budget for the 2020-21 financial year will rise from £49.25 billion to £52.03 billion.
But Ms Forbes told BBC Radio Scotland’s Good Morning Scotland programme that the figures show how the “costs associated with coronavirus are significantly higher than the consequential funding we have received from the Treasury”.
She added: “My greatest headache is that the money we get from Treasury is still estimates, so we make our funding commitments, we promise to support local government, the health service, businesses, but all of that is based on estimates from the UK Government.
“We’ve already seen this week that an announcement of around £60 million of business support that was made a few weeks ago has not materialised, and we’ve been told that actually that money won’t come.”
The Scottish Government has pledged £2.3 billion to support businesses north of the Border through the crisis. The Finance Secretary warned that if any of that funding “doesn’t materialise, that leaves me with a massive headache”.
She added: “My budget is fixed, I cannot automatically create headroom. I can’t borrow, which the UK Government can do.
“I’m very grateful for the money that comes through, but the point is it introduces huge uncertainty into our budget, and uncertainty is normal, but we do need the tools to be able to manage that uncertainty.
“That’s why I have been making the point to the Treasury that with this uncertainty you need to give me the tools with flexibilities and new fiscal powers to manage it.”
A UK Government spokesperson said: “The UK government has set out an unprecedented package of support-including £3.7 billion of funding for the Scottish Government through the Barnett formula. This is on top of the support people in Scotland are receiving through Uk-wide measures such as business loans and the job retention scheme.
“When sharing figures in relation to specific support, we are always clear when these are early estimates. In addition, we have so far only increased the overall support available to the Scottish Government, through Barnett, not reduced it.”
Official figures shows that less than £50 million was distributed by Scottish councils to struggling businesses last week, while around 16,000 applications remain outstanding.
The data also showed councils have so far received 85,511 applications, or 16,003 more than have so far been awarded.
Opposition MSPS have warned the delays are putting jobs at risk.
Scottish Conservatives finance spokesperson, Donald Cameron said: “We’re now more than two months into this crisis, and thousands of businesses are on the brink.
“The SNP needs to buck up its ideas and get these companies the support they deserve.
“Failure to do so jeopardises thousands of jobs, which in turn would pile further pressure on the economy at a time when it’s already struggling.
“For businesses of all sizes there is now some light at the end of the tunnel, but that will be of no use unless they get the compensation they need from two months of enforced lockdown.
“We know this is a public health crisis first and foremost, but getting it right economically is vitally important too.
“The SNP still has a number of questions to answer on that front.”
Scottish Labour’s Jackie Baillie added: “The SNP government keeps defending its unfair funding cap on the basis that there’s not enough money in the pot, but these excuses just won’t wash. Week after week, the statistics show that vast sums of money – almost half a billion pounds – have been left unallocated by SNP ministers.”
More than 100 MPS have written to Chancellor Rishi Sunak, calling on him to continue supporting the selfemployed income support scheme.
The UK Government has extended the furlough scheme until October, but MPS have raised concerns over whether the self-employment income support scheme (SEISS) will be extended.
The UK Government is keeping the SEISS scheme under review, but has not confirmed if it will be extended.
The SNP’S business spokeswoman, Kirsten Oswald, said: “The payment period for this self-employed and freelance support concludes this week, so a decision is needed now. It is simply not good enough for the Prime Minister to attempt to kick this into the long grass when there is a clear and pressing need for answers”
“Self-employed workers contribute very significantly to the economy and to the sustainability of local communities such as those in East Renfrewshire. If the Prime Minister does not extend the SEISS, these selfemployed workers will face a financial cliff edge.”