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SNP ministers urge public sector bodies to exploit loophole to furlough staff

Guidance has been issued to the public sector in Scotland - WPA pool/Getty
Guidance has been issued to the public sector in Scotland - WPA pool/Getty

SNP ministers are encouraging taxpayer-funded bodies in Scotland to take advantage of a loophole in Treasury rules to furlough public sector workers, it has emerged.

The UK government has said its furlough scheme, which is designed to prevent widespread redundancies during the Covid-19 pandemic, should not usually be used by publicly-funded bodies.

However, despite the Scottish Government receiving around £3.5 billion on emergency funding from The Treasury to deal with the crisis, hundreds of public sector workers in Scotland have been furloughed, meaning the UK government will face further costs.

Historic Environment Scotland, a public body that received around £40 million in Scottish government funding last year, has placed around 900 staff - around 60 per cent of its workforce - on furlough. SportScotland, the Scottish government’s national agency for sport which received around £35m in public funding last year, will furlough a further 86 workers.

Treasury rules state that the furlough scheme should not be used by bodies in receipt of continued public funding for staff costs.

However, in guidance issued by Scottish ministers, publicly-funded bodies are told that as their funding is not usually explicitly tied to staffing, they can still apply. It is understood that some staff at the bodies believe the move is designed to shift responsibility for paying workers from Edinburgh to London.

Meanwhile, all cultural organisations north of the border have been urged to consider placing staff on furlough, despite responsibility for the sector lying with Scottish ministers.

Donald Cameron, finance spokesman for the Scottish Conservatives, said any public bodies using the scheme while continuing to receive funding to cover staffing were “clearly acting against the spirit and the letter of the scheme”.

"While any business suffering a financial loss as a result of the crisis has every right to apply for this kind of support, those accessing funds they don’t need must think twice, given that it will simply increase the cost to taxpayers and slow down our future economic recovery,” he said.

“It would be extremely serious if there is evidence to show that the Scottish Government might be encouraging any sort of ‘double dipping’ that is contrary to the rules of the furlough scheme.”

Historic Environment Scotland defended its use of the scheme, which sees the UK Government cover 80 per cent of a furloughed workers’ wages up to salaries of £25,000 per year, saying commercial incomes had declined dramatically due to the closure of visitor attractions.

Edinburgh Castle is among the Scottish Environment Scotland sites that has been shut to visitors - Stuart Nicol/Stuart Nicol Photography
Edinburgh Castle is among the Scottish Environment Scotland sites that has been shut to visitors - Stuart Nicol/Stuart Nicol Photography

According to its accounts, the body received £38.6m in Scottish Government grants in 2018-19, and a further £44.8m from “charitable activities” which includes admission charges and membership fees. It spent £37m on staff salaries.

However, Historic England, which has a broadly similar remit south of the border, said it had not placed any staff on furlough.

Meanwhile, SportScotland also said it had been unable to provide commercial services through its national centres, which include training facilities for water sports, gymnastics, football and golf.

It received around £6m for activities including course fees and venue hire last year, but the vast majority of the organisation’s funding comes from the Scottish Government, which provided a £34.9m grant for 2019. It spent just under £9.5m on wages.

Most of the 86 staff, from a workforce of around 310, were furloughed last week, with the rest to follow over the next fortnight. The body will top up wages so furloughed workers still receive their full salaries.

UK Treasury guidelines state: “Where employers receive public funding for staff costs, and that funding is continuing, we expect employers to use that money to continue to pay staff in the usual fashion – and correspondingly not furlough them. This also applies to non-public sector employers who receive public funding for staff costs.”

However, in guidelines drawn up by Scottish ministers, publicly-funded bodies are told to “note that Scottish Government grants usually support activities and outcomes rather than specific staff costs.”

It adds: “We encourage all cultural organisations to consider whether an application to the Coronavirus Job Retention Scheme would be a way to mitigate some of the challenges posed by the current situation.”

A spokesman for Historic Environment Scotland said it had placed staff on furlough from March 24.

He added: “We were advised by the Scottish Government, following discussions with HM Treasury, that Public Bodies which are only part funded from the public purse and which have lost some or all income from other sources as a result of the impact of coronavirus and would otherwise not have sufficient funding to pay all staff can consider furloughing staff.

“This advice confirmed that HES was eligible to seek support from the Coronavirus Job Retention Scheme.”

A spokesman for the Scottish Government said its guidance was appropriate.

He added: “There are some public organisations who have had to close and have seen a collapse in their commercial income from visitors and audiences, particularly in the heritage and cultural sectors and the UK Government have made clear in their own guidance that these organisations are entitled to apply for the Coronavirus Job Retention Scheme.

“The UK Coronavirus Job Retention Scheme is open to public bodies in Scotland and across the UK where public funding only forms part of their income stream and where they have experienced a reduction in other funding (for example a reduction in commercial revenue) due to Covid-19.”

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