Coronavirus Scotland: Scott Wright: Gove was wrong: We need experts more than ever now

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PREMIUM

IT was the now Minister for the Cabinet Office Michael Gove who foolishly declared that “people in this country have had enough of experts” as he campaigned for Brexit in 2016, a populist bid to persuade the electorate the ignore the warnings of leading economists and analysts about the many downsides of wrenching the UK out of the European Union.

Now, with the chaos many predicted would happen after Brexit unfolding before our eyes, and the world relying on our most learned minds to plot the way out of the coronavirus pandemic, Mr Gove’s words seem more fatuous than ever.

I was reminded of the remark after listening to Andrew Bailey, Governor of the Bank of England, offer his thoughts on the economic impact of Covid-19 at a Scottish Chambers of Commerce event this week. In the course of reinforcing the importance of listening to experts, he offered thought-provoking observations on a range of issues, from the role of interest rates policy to the ultimate outcome for business and the labour market by the time the country has finally clawed its way out of the current crisis.

It was particularly striking to hear Mr Bailey talk of the “uneven” effect the pandemic has had on UK society. On the one hand, Mr Bailey said, there has actually been a significant increase in the savings rate. People in safe employment who no longer have to pay to travel to work and have fewer outlets to spend their disposable income have been able to boost their reserves of cash.

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Sadly, as Mr Bailey went on to point out, this is not a luxury shared by the many thousands of people who have lost their jobs, notably in consumer-facing areas such as hospitality, tourism and retail, because of the fallout from the crisis.

Indeed, the picture on jobs is likely to be more painful than official figures currently state. Mr Bailey expressed the view that the labour market is at present the “hardest” part of the economy to read. The Governor noted that the latest official figures point to a nationwide unemployment rate of 4.9 per cent, and 4.2% for Scotland, but added: “We think it is higher. Our best guess nationwide is probably around 6.5%. It has risen.”

Worryingly, there are fresh fears for hospitality and retail businesses today, following the tightening of the rules around takeaway and click and collect services announced by First Minister Nicola Sturgeon yesterday.

Under the new measures, takeaway customers will not be allowed to enter premises to pick up food, while in retail timeslots will be required for click and collect orders, with people forbidden to enter shops.

There is no doubt that current infection rates are extremely alarming, but the more restrictive conditions are undoubtedly another blow for business. Many shops and outlets have used such services to provide a desperately needed source of income throughout periods of lockdown, and in some cases sales from this activity will have been crucial to their survival thus far. Business groups are now calling for evidence from ministers to justify the latest restrictions, and for financial help to allow them to prepare for yet more rule changes.

Tracy Black, director of the Confederation of British Industry in Scotland, said: “It’s really important that the Scottish Government sets out compelling evidence that these services are a source of transmission and provides additional, urgent support to compensate for what would be a further loss of revenue in increasingly challenging times.”

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With the UK in near-total lockdown to suppress the alarming spread of coronavirus, it remains hard to predict when the country will return to anything approaching normal life again.

The safe money is now on a gradual recovery over several months if not years, and in that context governments at Scottish and UK level must not be hasty in turning off the taps of support for people and business.

The return to normal economic activity will not occur overnight and instead be phased over time, with the loosening of restrictions correlating closely with the pace at which vaccines are rolled out and the success or otherwise in suppressing infection rates.

A reminder that we cannot expect a swift return to business as usual was provided in a weekend newspaper report. It listed the major global sporting events scheduled to take place in 2021, from the Grand National to Wimbledon, and analysed whether or not they will take place. The article also weighed up whether fans would be allowed inside stadiums to spectate, should events go ahead.

That uncertainty was encapsulated last week by Dick Pound of the International Olympic Committee, who was quoted in media reports saying there is no certainty that the Tokyo Games will go ahead, given the risk posed by further “surges in the virus”. The comments were reported by some as the first sign of doubt that the event, postponed from last summer because of coronavirus, would take place, despite the confidence displayed outwardly by Games organisers.

There have also been suggestions that football’s European Championship may now take place in just one city, instead of the 12 originally planned.

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In the context of the continuing uncertainty that lies ahead, it was important to see the Scottish Government earlier this week show some understanding of the challenges facing business, by announcing further financial support for those that have had to close or curtail their operations.

The supplementary support begins at £6,000 for smaller retail and leisure businesses, in addition to the four-weekly £2,000 already announced, and rises up to £25,000 for larger hospitality companies, on top of the £3,000 currently received every four weeks.

The move was welcomed by industry groups such as the Scottish Licensed Trade Association (SLTA), which emphasised the need for the cash to get to struggling businesses as quickly as possible. That is even more pressing today, in light of the new rules on takeaway services.

Of course, while all financial support is welcome, it will not be enough to compensate for the loss of revenue businesses have had to contend with, or to cover their regular overheads.

The SLTA and the Scottish Tourism Alliance have been right to note longer term support must also be put in place to help their industries get back on their feet after losing so much. Ministers must give serious consideration to further extending the furlough scheme, providing longer-term relief from business rates, and continuing the temporary reduction in valued-added tax, at the very least.

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