Business leaders have warned jobs in the north-east are still at risk, despite the UK Government unveiling a new top-up scheme.
Chancellor Rishi Sunak unveiled the successor to the furlough scheme, which will see the Government subsidise workers’ wages.
If employers are unable to bring back staff full-time, ministers will top up their pay to at least three-quarters of normal levels.
The scheme is designed to prevent mass job losses brought about by the Covid-19 pandemic and will run for six months.
Mr Sunak said it was time to create “new opportunities” in order to move the economy forward over the next six months, which means supporting people to be in “viable jobs which provide genuine security”.
The scheme has gathered a mixed reaction in the north-east, with political opponents and business leaders saying the programme does not go far enough – and could still leave thousands out of work and without support.
Russell Borthwick, chief executive of Aberdeen & Grampian Chamber of Commerce, welcomed the topping-up of wages and a continuation of the reduction in VAT.
However, he added: “It is not tenable for governments to instruct businesses in key industries like aviation, hospitality, live events and their supply chains to limit or effectively close their operations, and yet find a way to survive with a scheme offering such a limited contribution to employment costs for staff that cannot be productively engaged for their full working week.
“More needs to be done to protect parts of the economy worst-hit, to position us for growth when we can take off the shackles and attempt to regain the unnecessary economic ground lost.
“Vitally, both the Scottish and UK Governments must ensure messaging does not continually dent consumer confidence and renew efforts to find ways to reopen the economy in full as soon as is practically possible.
“This is the only sustainable and affordable way to protect tens of thousands of companies and millions of jobs across the country.”
Meanwhile, Adrian Watson, chief executive of Aberdeen Inspired, said: “Any support for jobs and key industries during this time is to be welcomed, particularly with the recently announced restrictions.
“The need for a continuation of some form of job support was paramount and it is our hope that the announcement of the Job Support Scheme, will go some way to further help city centre businesses at a time when they urgently need it.
In addition to this, the extension of the VAT cut for hospitality and tourism companies amongst other measures is helpful, as it will allow businesses hardest hit to navigate the difficult times ahead.
“However it remains to be seen if this action will be enough to help those of our levy payers that are already on the line and need even more support. For all of local businesses, this continues to be a hugely worrying time despite the announcement, and Aberdeen Inspired will continue to lobby at a local and national level to ensure that they get the further help and support they need.”
Bosses in the region’s hospitality sector warned support would be needed for much longer than the six months guaranteed under the new scheme.
Stephen Gow, vice chairman of the Aberdeen City and Shire Hotels Association, said: “The hospitality industry, particularly in Aberdeen City, has been hit very badly by the coronavirus pandemic. The further restrictions introduced this week which will affect the night-time economy, along with the lack of any conference and banqueting events over the forthcoming winter period, means that the industry will continue to struggle in the medium term.
“The continued reduction of VAT on accommodation and food is, of course, welcome, but it is a short-term measure. The hospitality industry will need continued support over at least the next 12 months if it is to survive and generate much-needed income from the visitor economy and we would welcome a permanent reduction of VAT to 5%.”
Stuart McPhee, spokesperson of Aberdeen Hospitality Together (AHT) said: “There are a couple of things which make me think the Job Support Scheme doesn’t go far enough.
“One of the main things they are trying to avoid is the continuation of posts that no longer exist, so people who are being paid for furlough for the sake of it – classified as ‘zombie workers’.
“That is something that does need to stop which is understandable, but in doing so it looks to me like they have built the scheme around jobs in businesses which are operational, or operational in some type of capacity such as nightclubs or soft play.
“I don’t really see the scheme being welcome news for them because they won’t necessarily be able to access it if they can’t provide their staff with any hours.
“The scheme only kicks in if you do a third of your hours. If you do 30 hours a week, a third of that is 10 hours, so you are still going to be short in your wages.
“Looking at it on face value, it seems to fall short.”
Political opponents also questioned whether the scheme was extensive enough to deal with the impact of Covid-19.
North-east Labour MSP Lewis Macdonald said: “Unfortunately, under this new scheme it will be cheaper for an employer to bring one furloughed worker back full-time and let another one go, rather than to bring them both back in part-time.
“Clearly any support is better than no support, so Rishi Sunak listening to Shadow Chancellor Anneliese Dodds and bringing in a new job support scheme is welcome. We now need to see further action to plug the gaps in this new scheme, particularly here in Scotland.”
Aberdeen South MP Stephen Flynn added: “If we pull back the rhetoric from the Chancellor’s statement and look at the reality, employers who are facing a crisis like no other are now expected to shoulder ever-increasing financial costs.
“I do fear that the measures simply do not go nearly far enough and the consequences could be stark for tens of thousands of employees across Scotland and Aberdeen.
“It’s high time the Chancellor gave the Scottish Government the borrowing powers they have repeatedly asked for so that action can be taken to protect incomes.”
However, some business owners welcomed the scheme and said it would help them keep staff in jobs.
Colin Cameron, who owns the Kirkgate Bar, The Bridge and Masada Bar, said: “We haven’t had Masada Bar open since around the end of March because we do functions and live music, so for certain venues the Job Support Scheme is ideal.
“I’ve had part-time staff who have been on furlough since March, so I’m delighted to hear we can take them back gradually if we do get any signs of being able to re-open properly.”
Chris Foy, chief executive of VisitAberdeenshire, added: “The extension of the reduced VAT level makes many visitor experiences more affordable. This is a glint of light in an otherwise difficult situation for the tourism sector as winter approaches.”
And Aberdeen City Council co-leader Douglas Lumsden – after previously warning “thousands” of jobs could go across the city as a result of the pandemic – said: “I am really pleased to see there’s another scheme going forward for the next while. It will help protect many of the jobs that have already been saved by the furlough scheme.
“It’s good to see the cut in VAT for the hospitality industry which is a really positive move.
”This whole package is about protecting as many of the jobs affected by Covid-19 as we can going forward.
“A lot of people will be concerned about their jobs as the furlough scheme comes to an end but hopefully this new support will help protect them as we go forward through the pandemic.”
The announcement of the new support scheme came as 19 new cases of Covid-19 were confirmed in the north-east – with a total of 465 across Scotland.