Coronavirus, Scottish Economy

Yesterday, a framework for decision making… tomorrow, what next?

Yesterday, the Scottish Government published “COVID 19 – A Framework for Decision Making”. This document sets out how and under what circumstances the SG will take decisions on relaxing the current lockdown restrictions that we have all been getting used to.

The First Minister presented this as an attempt to have a “grown-up” conversation with the Scottish people about the ongoing realities of dealing with this pandemic, and what it is likely to mean for all aspects of our daily lives for the foreseeable future. While this can be seen as a thinly veiled criticism of some of the current Westminster rhetoric, and an attempt to differentiate the Scottish approach from that of Westminster, it is welcome that the SG are setting out this structure for decision making.

What has become clear is that we are not going back to pre-lockdown life any time soon. So the frankness of this document and the associated narrative from the FM and the CMO is helpful to set the scene for this honest conversation.

So what does this framework tell us?

Overall, that the measures associated with lockdown will remain in place for as long as necessary in as minimised a form as possible to restore as much normality as possible. Any lifting or tweaking of them is going to be gradual. It’s going to be a long time – multiple months, not weeks – before things return to normal, and it is very unlikely to be a smooth progression, but one punctuated by further targeted lockdowns as the health needs dictate.

What does this mean in reality? Several tests will need to met before restrictions are lifted, based on scientific advice and evidence. Also, that restrictions will be re-imposed if necessary.

In short, anyone who was hoping to be going to Hampden anytime soon or going to Glasgow Green to see Guns n Roses in June is going to be disappointed. Relaxing the curbs on larger gatherings – be they sporting, entertainment, religious, pubs, restaurants and the like – will, in all probability be a long way off.

That’s the reality that we now face. An economy in some form of lockdown for the foreseeable future. A v-shaped recession this is not.

But what happens next?

While seeing the principles under which such decisions may be made is helpful, yesterday’s report said nothing about practicalities. For many businesses on the brink of survival, and for families facing unprecedented uncertainty – not to mention looking at significant hardship – uncertainty will continue for some time yet.

So whilst overall frameworks are helpful (and the frankness particularly so), we need too to think about practical steps for both living with some evolving form of this lockdown for much longer than first thought as well as how we unwind it safely in due course.

For example, different businesses are going to need different forms and levels of support:

  • For those under huge demand right now, they may need support to continue to operate sustainably at a higher level of output, perhaps through assistance for sourcing labour and supply chains;
  • For those still operating but at reduced level right now (perhaps including working from home), what can we do to keep supporting them at reduced levels of output – perhaps through allowing the Job Retention Scheme to be more flexible and allow partial furlough of staff – but also to upscale where possible?;
  • For those currently closed, but don’t necessarily need to be (or are able to open with modest tweaks to working conditions), what can be done to help them get back up and running?; and
  • For those likely to be closed for the foreseeable future, government will have to set out how to support these business throughout the enforced shut down period.

The longer the lockdown lasts, the more important it is for consistency across businesses – both on a business-by-business level and across the UK.

But as we discussed in an early article, so much of our economy is interlinked it’s almost impossible to think of a solution based upon a sector-by-sector (or business-by-business) basis without a wider appreciation of the overall context.

Take public transport for example. How will social distancing actually work as people return to travelling to work? For example, Glasgow Central is one of the UK’s busiest stations, with almost 33m passengers a year and provisional estimates from DfT’s survey of bus operators indicate that there were 377 million bus journeys made in Scotland in 2018. Although these numbers will undoubtedly be lower for the foreseeable as more work from home and probably switch to private cars where possible, implementing social distancing on busy routes will be extremely challenging.

The logistical challenges of introducing soft lockdown measures in this should not be underestimated. But until we have a plan here, many businesses – even if their own operations can operate safely – will struggle to get back up and running. Greater use of private transport is one option, but clearly there are major equality issues here, and of course environmental issues given the climate emergency and the policy objectives here.

Also, what about schools – more children will need to return to school if their parents are returning to their workplaces? There has been much talk in recent days of social distancing within classrooms. Which is ok in principle, but outside of classrooms how practical is it to keep children from mixing with each other, at lunch, at break, in corridors and travelling to school?

Finally, we can reopen businesses, public transport and schools, but we cannot underestimate the toll this has taken on people and how anxious many will be about coming back to work. There will be a difficult balance for employers to strike when they are trying to get back to normal given they may be dealing with very anxious staff. Messaging at this time, both about the risks people face and the importance of all working together to support public health and the economy, is important both from our political and business leaders.

What are the implications for policy makers?

Policy makers need to plan for the evolving nature of this lockdown, probably looking at measures over the next year as part of a road map to the “new normal”, whatever that turns out to be. Part of this is accepting, as the SG have done, that we will be living with a form of this lockdown for the foreseeable future.

This means that the hit to the economy will be more sustained, and more likely to lead to long-term changes in how our society functions.

Government must therefore be honest with businesses about the longevity of policy measures, which obviously should be related to the length of the lockdown and its relative severity. And adjust their support packages accordingly. And, importantly, government need to be honest about the uncertainty here. We simply don’t know the path of the virus now, the timing of any vaccine, the timing of any treatments, the potential for mutations, etc. We need to clarify openly the assumptions that we are making in the absence of hard evidence.

As things stand, the CJRS runs to the end of June. We don’t want businesses to start thinking about redundancy notices in mid-May in order to give the statutory notice period, therefore the Government must act now to avoid this.

Finally, we cannot think of Scotland in isolation to either the global or UK economy, or not acknowledge the differential impacts it will have on local communities. This virus does not respect political boundaries.

The paper from the SG says “While we will continue to operate within a four nation UK framework and align our decisions as far as possible, we will take distinctive decisions for Scotland if the evidence tells us that is necessary.”

What is clear though is that there are key UK Government policy decisions that need to be taken to support all areas of the UK through this crisis, in conjunction with the decisions made by Devolved Administrations.

Therefore our hope is that a “grown up conversation” happens between all layers of government to ensure the best policy solutions can be found.


The Fraser of Allander Institute (FAI) is a leading economy research institute based in the Department of Economics at the University of Strathclyde, Glasgow.