Scottish Covid-19 Inquiry: Research Commission: Financial and Welfare Support to Businesses and Individuals

Research output: Book/ReportCommissioned report

Abstract / Description of output

Over the last two years, there have been four lockdowns in Scotland. The two most stringent lockdowns were in March-June 2020 and January-March 2021.
Despite warnings, the Scottish government were ill-prepared for the pandemic. Their strategy over the pandemic was reactive rather than proactive. The government changed from a ‘route map’ approach to a ‘levels’ approach and was surprised by Covid-19 in both December 2020 and 2021. The UK government expenditure on the pandemic was £370 billion and £129 billion on loans and guarantees. The Scottish government’s expenditure was modest by comparison.
The Scottish government has ambitious plans for recovery. The UK’s budget deficit, though, is the highest ever peacetime budget deficit.
The regulatory burden on businesses during the pandemic led to business uncertainty and issues with the frequency, speed, and cost of regulatory change.
In general, personal well-being fell during the pandemic and depression levels went up. Although there was not a rise in suicides in 2020, the mental health of particular groups deteriorated over the pandemic alongside a slight increase in hate crimes and abuse.
Despite the Scottish economy seeing GDP fall by a fifth in the second quarter of 2020, the size contraction of the Scottish business population was modest and the numbers of dissolutions actually fell in 2020. Employee indicators (redundancies, unemployment and the claimant count) all had an inverted ‘U’ shape pattern: they rose quickly from pre-pandemic levels, peaked in 2020, and fell back in 2021.
Although business revenues and cash reserves fell markedly, the economic downturn particularly affected customer facing sectors (e.g. accommodation and food services, construction, arts, culture and recreation and other services). The UK government spent £180 billion supporting businesses. The Scottish government spent £4.4 billion. This support was a significant factor in explaining the muted impact of the pandemic on the business and employee outcomes.
The support was welcomed by Scottish businesses but there were significant concerns about fraud and losses, the targeting of such schemes, difficulties in accessing support and intergovernmental challenges in supporting businesses.
There are an estimated one million Scots in poverty with around a quarter of a million children in poverty. Poverty particularly affects groups (e.g. single mothers, ethnic minorities) and has impacts on their existing quality of life and their life chances.
Pandemic support to those in need largely came through the UK government in terms of benefits, housing support and (for Scotland) in protection against eviction.
The support was welcomed but there are concerns about the impacts of the pandemic on household finances going forward given that those on low incomes have limited savings and rising debt levels.
Original languageEnglish
Commissioning bodyScotland Covid 19 Inquiry
Number of pages81
Publication statusPublished - 20 Feb 2022


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