Policy making in Scotland

Understanding public policy making in a devolved setting can be a challenge and understanding how public services in Scotland are funded is a whole different level of complex. Looking through the published documents can be a minefield and making any sense of underlying trends can take a lot of work (you can attempt it by reading the 283-page Budget document here, or look through the Level 4 Budget spreadsheet and its 9,443 figures here). This has become even more complicated over the past few years, with further devolution of tax and spend powers and corresponding block grant adjustment and reconciliation mechanisms. Complex funding mechanisms don’t lend themselves well to a rapid crisis response.

In addition, with two big constitutional questions hanging over everything on a political level over the last five years, it seemed conflict rather than co-operation has been the defining approach between the Scottish and UK governments – certainly in public - with rhetoric especially ramped up during election campaigns. So, what happens when an unexpected, fast-changing event occurs, requiring fast action from both governments? It turns out, politicking is set aside, and genuine co-operation becomes the default. When the leader of the biggest opposition party stands up in Parliament and declares he has every confidence in the First Minister’s leadership through this crisis, you know it’s not business as usual anymore.

Co-operation, communication and coordination are key to supporting individuals and businesses through this crisis. The opportunities of devolution - to better tailor policy to local circumstances - become a challenge when the level of government intervention amounts to a near-nationalisation of the entire country when faced with a virus that knows no borders. In addition, during a 24-hour news cycle with new policy announcements and advice coming out daily, if not faster, it can be difficult to keep up with the territorial coverage of various measures.

A good example is the Chancellor’s series of announcements around business support. Some of these measures apply UK-wide, like the VAT payment deferral, the HMRC jobs grant or the British Business Bank loans. Others, however, need to be considered and implemented by the Scottish Government. This includes direct business grants (e.g. £10,000 to small businesses) or business rates reliefs. For these measures, the Scottish Government’s budget will receive Barnett Formula consequentials from the Treasury’s equivalent spend in England. In theory, this funding could be spent elsewhere, but in reality, it is only tweaked to Scottish circumstances (e.g. tying grants to Scottish business rates relief schemes and rateable values).

However, there is still more to do. This is a fast-changing situation and it is likely that additional measures will be announced between the time this article is finished and published. That being said, the CIPD has been hard at work to provide clear and practical policy suggestions to the government and will continue to do so. Most of these measures apply UK-wide, but there is a devolved element too.

CIPD's calls to government

Out of the CIPD's key asks, the UK Government already announced a wage subsidy scheme, which will help protect jobs across several sectors experiencing a significant slow-down in business. We are also scrutinising measures announced to help the self-employed. The CIPD itself has around 15,000 self-employed members, but they make up a significant 15% of the entire UK workforce. In Scotland, it is a slightly lower 12%, but we are still talking about over 320,000 people. One of our suggestions was a temporary increase to Statutory Sick Pay and an extension for it to cover self-employment too – this could help those still missing out under the announced scheme.

Developing skills in Scotland

The one area where the Scottish Government could get ahead of the UK Government is in skills and training. We think there are three interventions that could be put in place. While jobs may now be retained due to direct government support, it is still likely that there will be cuts in hours worked or simply less employee activity due to a lack of demand. There will also be skilled staff who will have been laid off despite the interventions, who could be redeployed as essential workers where demand will rise.

Firstly, the Scottish Government could use this period as an opportunity to boost participation in skills development and training courses across the economy. This could take the form of a flat rate training subsidy per employee, possibly tied to the receipt of the HMRC’s jobs grant if information-sharing arrangements can be put in place. With regular job demands likely to be lower in the near future across many sectors, this would offer an incentive to boost Scotland’s levels of in-work training. Even in the absence of a direct subsidy, this should be a time when businesses take advantage of online learning – often freely available – and when peer-to-peer sharing is encouraged.

Secondly, Scotland already has a unique mechanism in place to encourage a limited number of workers to think about their own skills development by offering some £200 in Individual Training Accounts to be used for training. Eligibility for ITAs – which have already evolved over several years – could be temporarily extended to include furloughed workers. Budgets and grant levels could also be boosted to provide a meaningful incentive for these workers to invest into their own skills development over the coming months.

Thirdly, while many sectors will see a reduction in activity over the coming months, others will see a spike in demand – those employing the oft-mentioned essential workers. The Scottish Government should seek to put in place a job swap mechanism – perhaps a dedicated online platform - through which workers who have been laid off or had their hours reduced, can be matched (possibly upskilled and retrained rapidly) to areas where there is demand. There will be parts of the NHS supply chain, in particular, that will require further support, in addition to a rising demand for delivery drivers.

All these suggestions have to be seen in the context of a broader conversation that needs to be had on the responsiveness of our skills development system to the fast-changing requirements of our economy. It remains the case that the majority of government funding is directed at skills development of under 25s, and most of that is delivered relatively inflexibly. This, amongst other things, inhibits how well our economy can respond to an unexpected event like the coronavirus outbreak.

Wider impact of the coronavirus pandemic

We will not understand the full impact of the pandemic for years to come. But it is already challenging established orthodoxies. On a business level, many companies are seeing that homeworking and flexible working are a lot more viable than they ever thought. Employees are discovering they can upskill very quickly when faced with permanent homeworking. We are beginning to see – and will see it even more clearly when the dust settles – which companies put their employees and the communities they serve first.

On a societal level, we are discovering that our definitions of 'key worker' may have been out of date. We are re-evaluating the balance between care responsibilities and working hours. And we are witnessing an unprecedented appreciation for teachers, nursery workers and, of course, NHS staff.

The world of work will undoubtedly change, but hopefully change for the better. Some of this temporary disruption should result in a permanent shift towards the things we at the CIPD have been calling for years - better work-life balance, more flexible working and a proper lifelong skills development infrastructure. It can't just be back to business as usual.