Ending furlough scheme completely very short sighted, shadow chancellor warns

Labour’s shadow chancellor has suggested the UK Government’s poor handling of the coronavirus crisis has increased support for Scottish independence as she called for more flexible borrowing, investment and targeted extensions of the furlough scheme.

Anneliese Dodds criticised the “very, very short-sighted” plan to end the job retention scheme in October, which she warned will lead to even higher unemployment in Scotland.

Speaking after a visit to Summerhall – one of the main venues of the Edinburgh Festival – where she met with festival organisers, the STUC and business representatives, Ms Dodds said there needed to be an extension of furlough for certain industries.

Calling for a “more flexible system of wage support”, she said: “The Labour Party’s been saying that we don’t want to see that wage support expire across the whole economy at the same time across every sector.

“We think that’s very, very short-sighted; doing that will just lead to additional waves of unemployment coming through.

“That’s a particular issue in Scotland where we’ve got higher rates of unemployment already but we’ve also got very low rates of new vacancies coming through.”

Ms Dodds said that Nicola Sturgeon’s clear communication through the pandemic has been in stark contrast to that of Boris Johnson and his government, who have now “switched off” and are taking “knee-jerk approaches” to the public health and economic consequences of coronavirus.

Asked about the rising support for Scottish independence, which is now regularly polling at more than 50%, Ms Dodds said: “Sadly, we have currently a Westminster government which is not dealing with this pandemic well.

“We have the highest rate of excess deaths in all of Europe, we also have the deepest recession in all of Europe, and I think people are looking at that and are clearly very, very worried about that, thinking ‘is there an alternative?’.”

She added: “I’m very aware that the leader of the Scottish Government is someone who has been clear in her communications around the public health side that Boris Johnson has been, but I’m also aware of some of the major issues that we’ve had in care homes for example in Scotland.”

The Aberdeen-born MP also stressed Scotland now has the highest unemployment rate of any UK nation and referenced economic reports that warned the Scottish economy “is going to be particularly hard hit because of the impacts of the pandemic”.

She said: “We really need to have a very focused approach, one which isn’t this kind of one-size-fits-all approach of withdrawing support across all sectors.

“Labour has been saying very clearly that we need to be focused on the long term, let’s try and preserve economic capacity right across the UK, including in Scotland.”

She declined to back Scottish Government calls for more borrowing powers for Scotland, arguing the UK Government is able to borrow at lower rates, but said there should be more “flexible” borrowing, “so that we do get that investment absolutely where it’s needed”.