October 21, 2020

Coronavirus in Scotland: Fears that economic scars will run deep

Image caption More than a quarter of households in Dundee were classed as workless in 2018

The chancellor is borrowing and spending billions of pounds to prop up the economy. But there are still concerns that some of the pandemic’s economic scars will be unavoidable, deep and long-lasting.

Alan and Heather Kelly’s Dundee motorcycle school is on the skids.

Even though social distancing is easy on a bike, lockdown rules treat the business like a driving school, meaning that for four months now they’ve only been allowed to train key workers.

“It’s been pretty devastating,” said Mr Kelly told BBC Scotland’s The Nine programme. “The majority of our work is done spring to summer.”

Image caption Alan Kelly (R) has only been able to instruct key workers during lockdown

A typical weekday would see at least six trainees with three instructors on Scotriders’ training track near the docks in Dundee.

Today, just one lone learner is weaving through the cones.

“If it hadn’t been for the government help, the grants and that, then I think we would have been pretty much on our knees by now,” said Mr Kelly, who remains worried about paying the bills through the winter as support is withdrawn.

‘Much less money’

Fiona Webb is also worried about the months ahead.

She runs Sparkle Magic Events, a venue decoration business, and has a shop in the Angus town of Kirriemuir.

Ms Webb should be decorating wedding venues this weekend.

Instead, assisted by her six-year-old daughter Eliza, she’s in her garden in Dundee blowing up balloons for children — and making much less money.

“The last wedding we completed was mid-March,” she said.

“Bye bye work. Bye bye income. It’s gone.

“So I had to then think of what else I can do to bring some money in.”

Image caption Fiona Webb and her daughter Eliza have made party balloons in lockdown

Ms Webb has furloughed her two staff, which means they have been receiving 80% of their income from the Treasury.

She decided to continue paying them the other 20% herself.

Her own position is trickier.

As a self-employed sole trader, she has received one grant from the government and is expecting another.

But with the grants based on average profit over three years, and the fledgling business having made little money in its first couple of years, she is actually receiving less than her employees.

Ms Webb says the chancellor Rishi Sunak’s announcement of a £1,000 payment to firms for each employee they bring back from furlough may help “kick start” her business next year.

However, she thinks targeted support for the sector may be needed to help get through the winter.

Mass unemployment

In the meantime, she said, the Treasury should spend whatever it takes to prevent small firms like hers – which economists often describe as the backbone of the economy – from collapsing.

She said: “If my business folds, I lose my job. I’ve got to try and find another one.

“If that happens across the country, there are only so many jobs. You’re going to have mass, mass unemployment.”

Even before the pandemic, Dundee had Scotland’s second-highest rate of households with no-one in employment, whether jobless, retired, studying or disabled.

The most recent Office for National Statistics figures, for 2018, classed 25.2% of households in the city as workless, compared to 17.1% across Scotland, and a British average of 14.3%.

Image caption Carol and John McKay say they have fallen through the cracks of government support

Carol and John McKay have turned to charity for the first time in their lives.

Ms McKay said: “We’ve just managed to pay our bills and no more.

“If it wasn’t for Dundee’s community support I don’t know where we’d be – and I think a lot of people in Dundee feel the same.”

Ms McKay’s health issues means she’s been shielding and her husband does not want to risk bringing the virus home by driving his taxi.

The couple have fallen through the cracks of government support, with Mr McKay being ruled ineligible for furlough money.

HMRC says this is because he did not file his tax return on time.

The couple dispute this, blaming a computer glitch and insisting that the tax was collected anyway and that they won an appeal against a fine for late filing.

Food parcels

Ms McKay said she never expected to be using food parcels from a charity.

She said: “I’ve worked since I was 12 years old.”

Her husband added: “Any kind of help, I would always refuse.”

Mr McKay said he never claimed a penny of unemployment benefit while he was between jobs in 30 years working offshore in the oil industry.

He said: “I’ll be honest, with you. I’ve had a lot of sleepless nights.

“I’m a strong person, very strong – and I’ve felt that I’ve started to get a bit depressed.

“I’ve been worrying, it makes me feel horrible.”

Ms McKay said: “I still feel for John not getting what he was entitled to.

“We’ll get through this. We’ll get on. That’s the way we are. There’s always people worse off than yourself.”