This blog provides an overview of all business support measures introduced by the Scottish Government in response to COVID-19. It also explores the costs and funding of these measures. We have published previous blogs looking in detail at the Non-Domestic Rates related support, support for tourism businesses, and the appropriateness of the Barnett formula for business support, which are referenced below where relevant.
The Scottish Government’s measures to support businesses represent the largest element of the spending plans announced so far in response to the coronavirus (COVID-19) pandemic.
Final details of spending allocations will be confirmed when the Scottish Government publishes a Summer Budget Revision on 27 May 2020, but at the time of writing, the announced plans are as detailed in the chart below.
To date, measures totalling £3.6 billion have been announced, of which business support measures represent almost two-thirds (64%).
Overview of Scottish Government business support measures
The table below provides an overview of Scottish Government (SG) COVID-19 business support measures and associated estimated costs as at 7 May 2020. To date it is estimated these measures will total £2,296 million.
The majority of the Scottish Government’s support in terms of value is linked to Non-Domestic Rates (rates relief and/or grants). In total, these measures account for £2,174 million, or 95% of total business support measure costs. Further details and analysis on the Non-Domestic Rates related support can be found in our recent SPICe blog exploring this topic.
Approximately £100 million has been made available to protect self-employed people and viable micro and small and medium-sized enterprise (SME) businesses in distress due to COVID-19 via three funds:
- £34 million Newly Self-Employed Hardship Fund, managed by Local Authorities, will be allocated to the newly self-employed facing hardship through £2,000 grants. Those facing hardship and excluded from UK Government schemes can apply.
- £20 million Creative, Tourism & Hospitality Enterprises Hardship Fund, managed by the Enterprise Agencies in partnership with Creative Scotland and VisitScotland for creative, tourism and hospitality companies not in receipt of business rates relief. Companies of up to 50 employees will have rapid access to £3,000 hardship grants. Larger grants up to £25,000 are available to those who can demonstrate that level of support is required.
- £45 million Pivotal Enterprise Resilience Fund, managed by the Enterprise Agencies for vulnerable SME firms who are “vital to the local or national economic foundations of Scotland”.
These funds went live on 30 April 2020. Over recent days there have been a number of technical issues experienced by those submitting applications to the Pivotal Enterprise Resilience Fund and the Creative, Tourism and Hospitality Enterprises Hardship Fund. The Pivotal Enterprise Resilience Fund was paused for live applications on 5 May 2020 to allow partners to review the applications received to date. The Scottish Government hopes to reopen the fund soon and will keep businesses informed on next steps.
In addition to the above, a further £23 million has been allocated to four different support measures for the fishing and seafood industry.
The most recent addition (7 May 2020) to the Scottish Government’s business support offer is an emergency loan fund for SME housebuilders. SMEs with liquidity issues due to the temporary closure of the housebuilding sector will be able to apply to the £100 million fund. Loans will be capped at £1 million and most loans are expected to be repaid within two years with interest rates set at 2%. The minimum loan amount is £50,000. This loan scheme will go live on 18 May 2020.
Outwith the support described above, there are other business support initiatives ongoing:
- Three funding programmes provided by Creative Scotland and Screen Scotland designed to provide further support to sustain the country’s creative community during the COVID-19 outbreak.
- Two funding programmes provided my Museums and Galleries Scotland to help Independent Accredited museums affected by the coronavirus.
- Support for coastal businesses and third sector organisations affected by COVID-19 is being made available through a £7.2 million Scottish Crown Estate fund.
Full details of all COVID-19 business support measures are available from findbusinesssupport.gov.scot – this website is part of a joint response by Scotland’s Enterprise and Skills system (Agencies, Local Authorities, Scottish Government and business/industry organisations). The Scottish Government has also opened a support helpline. This helpline is to handle urgent issues and more detailed questions that can’t be answered on the above Find Business Support website.
How are these business support measures being funded?
The Scottish Government has received funding (known as “Barnett consequentials”) from the UK Government in relation to coronavirus (COVID-19) support measures. Further detail can be found in a recent SPICe blog on the COVID-19 Barnett consequentials.
At the time of writing, the Scottish Government had received £3,580 million in Barnett consequentials. Of this total, £2,313 million relates to UK Government spending on business support measures in England. The Scottish Government has committed to passing on all the Barnett consequentials received in relation to business support to its own business support measures, although the specific details of the measures vary between Scotland and England. The differences between the English and Scottish business support measures is explored in two recent SPICe blogs:
- Coronavirus (Covid-19): Non-Domestic Rates related business support FAQs
- The Barnett formula – is it working for Scotland’s businesses?
The Cabinet Secretary for Finance and the Cabinet Secretary for the Economy, Fair Work and Culture wrote to the Economy, Energy and Fair Work Committee on 28 April 2020 noting that – at that point in time – the Scottish Government’s planned spending on business support measures exceeded the Barnett consequentials in relation to business support. However, since then, a further £60 million in Barnett consequentials has been received from the UK Government in relation to a further announcement on business support measures. This means that – at the time of writing – the Scottish Government’s planned spending on business support measures falls slightly short of the relevant Barnett consequentials by £17 million.
But this is a fast-moving area and new announcements are being made regularly by both the UK and Scottish Governments. As such, while this is the position at the time of writing, there are likely to be further revisions, especially given the Scottish Government’s commitment to pass on all business support-related Barnetts to its own business support schemes.
What about UK-wide schemes?
In addition to the schemes introduced by the Scottish Government, Scottish businesses can also access a number of UK-wide schemes that have been introduced (and funded/guaranteed) by the UK Government. As these are UK-wide schemes, the Scottish Government does not receive Barnett consequentials in relation to them as Scottish businesses can benefit through applying directly for the relevant support.
UK Government schemes and support measures that can be accessed by Scottish businesses include:
- A Self-Employment Income Support Scheme that will pay self-employed individuals up to 80% of their profits for three months, up to a £2,500 per month cap. The scheme will not apply to those who operate under a company structure and take dividends.
- A Coronavirus Business Interruption Loan Scheme that will see banks offer loans of up to £5 million to support SMEs. The Government will cover the costs of interest on these loans for the first six months. The scheme was extended to larger businesses from 20 April.
- The Bounce Back Loan Scheme helps small and medium-sized businesses to borrow between £2,000 and £50,000. UKG guarantees 100% of the loan and there won’t be any fees or interest to pay for the first 12 months. Loan terms will be up to 6 years. No repayments will be due during the first 12 months.
- A Coronavirus Job Retention Scheme that will see HMRC pay 80% of “furloughed” workers’ wages, up to a £2,500 per month, currently for up to 4 months starting from 1 March 2020, but it may be extended if necessary and employers can use this scheme anytime during this period.
- Statutory Sick Pay (SSP)costs for businesses with fewer than 250 employees will be met by the UK Government in full for up to 14 days per employee.
- A COVID-19 Corporate Financing Facility (CCFF) for large businesses.
- Tax deferments are available on both self-assessment tax returns and VAT returns.
- Up-scaling of HMRC Time To Pay service, allowing businesses and the self-employed to defer tax payments over an agreed period of time.
At the time of writing, there is no data on uptake of these schemes by Scottish businesses, but the Scottish Government has indicated that it is urging the UK Government to provide details of access to the loan schemes by Scottish businesses.
Alison O’Connor and Nicola Hudson, Senior Analysts, Financial Scrutiny Unit