Nicola Sturgeon has admitted the Scottish Government do not have a Plan B to save jobs once the furlough scheme is ended by the UK Government.
Speaking at her daily coronavirus briefing, the First Minsiter was asked, given the lack of any sign of movement on the issue by the UK Government, whether she or the Scottish Government had a back up plan.
Ms Sturgeon said the only way for the Scottish Government to avoid a “potential tsunami of redundancies” would be to receive greater borrowing powers from the UK Government, assuming the furlough scheme ends in October.
However, that suggestion was dismissed yesterday by the chair of the economic recovery advisory group Benny Higgins who said it would not be feasible to expect such a change in the fiscal framework.
Ms Sturgeon said: "This is the heart of it. I don’t have an alternative to furlough. I don’t have the wherewithal to put in place an alternative to furlough because I don’t have access to the borrowing powers that is currently funding the furlough scheme.
"The UK Government is borrowing money to fund it, rightly so in my view, and if they decide to cut it off I don’t then have the ability to borrow than money for Scotland and continue it for Scotland.”
"The Scottish Government’s budget is largely finite so if I was to within the existing Scottish Government budget find an alternative to the UK’s furlough scheme, I would have to take that money from the health service, the education system, and that’s the fundamental point and why I am so anxious about this.”
The First Minsiter added that she does not believe the UK Government will “simply stand back” and watch jobs being lost, and said she was hopeful its position on furlough would change.
She said: "If they UK Government doesn’t want to extend furlough then my appeal to it would be give extra borrowing power to the Scottish Government so that I can then make the choice of having a Scottish scheme.
"What is not in my view acceptable is just to leave us with no options around this.
"I hope the UK Government will see sense on this. I do not believe they will simply stand back and watch the potential tsunami of redundancies that are avoidable if they take sensible decisions.”
The comments were echoed by Scottish Labour leader Richard Leonard and came as the Labour party lead an opposition debate on the subject in the House of Commons.
Mr Leonard said: “Almost 350,000 workers are facing a furlough cliff-edge next month – and this could lead to long-term unemployment on a scale the people of Scotland have not seen in their lifetimes. The UK Government must think again over its rash withdrawal of the furlough scheme.”
Alison Thewliss, the SNP’s shadow chancellor in Westminster, added: “The Tory government's outright refusal to extend the furlough scheme in the middle of a pandemic is nothing short of reckless and will lead to an inevitable jobs apocalypse unless support is strengthened and extended.”