Johnstons of Elgin has survived two world wars, flash floods and a devastating fire in the 1950s. The Covid-19 pandemic could have forced the luxury knitwear manufacturer to shutter the doors to the Moray mill that it has run since 1797 – but, at the riverside works, sewing machines are still whirring away.
For now, instead of making cashmere joggers, batwing jumpers and elegant stoles for customers across the globe, Johnstons of Elgin is making scrubs, vital for local primary care centres and a hospital.
By pivoting from Mongolian cashmere to medical gear, Johnstons of Elgin has kept its mill open and been able to bring staff out of furlough as well as plan for the weeks and months ahead.
It’s a story seen across Scotland, whether in the hand sanitiser being produced by distiller Loch Lomond Group, or the meals being cooked for vulnerable people by Buzzworks, a family-run hospitality business based in Prestwick, which has had to furlough 500 workers because its restaurants and bars are shut.
“With government support – and agility and innovation on the part of businesses – many companies are utilising their expertise and stock to help support those that need it,” says Liz Cameron, chief executive and director of the Scottish Chambers of Commerce, which represents 12,000 companies, from the Outer Hebrides to Dumfries & Galloway.
But not every business is able to switch to providing essential services, which means, says Cameron, that the multibillion-pound package of loans and support from the UK and Scottish governments has been invaluable.
“Holyrood and Westminster have worked together providing different but complementary business support,” she says. “Without it, we’d be facing millions of job losses. It’s been a lifeline for employers and employees alike.”
The most helpful package, by a long way, has been the job retention scheme. With HMRC currently reimbursing 80% of furloughed workers’ wages, capped at £2,500 a month, the scheme has helped 1m businesses and 8.4 million workers across the UK.
Such has been its impact that recent Scottish Chambers of Commerce research found that 58% of businesses surveyed thought they’d be up and running within a week of lockdown ending.
For the Aberdeenshire trawler fleet, which has seen a slump in foreign demand for langoustines, the furlough scheme has enabled it to retain experienced staff.
On top of this help, the Scottish government has provided £22.5m in support for Scotland’s seafood industry, including £10m for onshore fish processing and £3.5m for large shellfish vessels.
The Perthshire paddle-sports firm Beyond Adventure is among the companies that believe the job retention scheme has helped them stay in business. “The biggest challenges for businesses have been about the ability to survive,” says Cameron. “It’s not about growth right now, but survival: getting cash in the door and managing possibly fragile cash flows.”
The recent announcement that the job retention scheme would be extended until the end of October has saved many Scottish firms from staring into a financial abyss, according to Cameron. “Businesses were anxious that if furloughing finished in June, they wouldn’t have had time to restore trading to previous levels,” she says.
The furlough scheme is just one of the packages available to SMEs. In late-April, the Treasury introduced bounce-back loans that let small businesses borrow up to £50,000, capped at 25% of turnover. Backed by the government, the loans have a simple online application form and the borrower pays no fees or interest for the first year.
“These have almost been flying out of the door,” says Cameron. “Firms can easily apply, get a decision and quickly get the money into their bank accounts [the government has said most loans will arrive 24 hours after they are approved].”
Businesses across the UK have also been taking advantage of other cashflow-boosting measures, such as the opportunity to defer paying VAT for the next quarter, and the HMRC Time to Pay scheme, designed to help firms in financial distress.
Scottish companies can also access schemes introduced by Holyrood. The rates relief scheme (almost £10bn has been pledged across the UK, with the scheme handled differently in England, Wales and Northern Ireland) has been welcomed, particularly by those in sectors such as retail, hospitality, leisure and airports, which will pay no business rates this financial year.
The now-closed £120m Scottish Government Pivotal Enterprise Resilience Fund provided grants for SMEs, plus sector- relevant packages for industries ranging from charities to the creative sector.
The support has been most keenly received by Scotland’s tourism industry, which is among the sectors expected to take longer to recover. At this time of year, hotels, B&Bs, loch-side camping sites, restaurants and whisky distilleries would usually be bracing themselves for the summer rush. “Many Scottish rural communities are 100% reliant on tourism,” says Cameron. “We need to make sure government support will be there.”
For remote and island communities that don’t depend on tourism, but whose lives and jobs are reliant on local manufacturing and other businesses, a £20m Supporting Communities Fund is in the process of being distributed.
Despite the help available, many Scottish firms seem unaware of it. The Scottish Chambers of Commerce survey found that only 4% had used the resilience fund, while just 6% had used the UK’s Coronavirus Business Interruption Loan Scheme, which offers funding through the British Business Bank’s accredited lenders.
Although the Covid-19 pandemic has been such a challenge, Cameron has detected a silver lining. “For many SMEs, Covid-19 has accelerated innovation and the use of technology, whether by entering e-commerce trading, increasing productivity or reducing costs,” she says. “When we come back to the workplace, we’re going to see new, more flexible business models emerge.
“Businesses don’t want to stay on furlough forever, they want to start getting back to doing what they do well, which is running successful firms ... We went into this together, and it’s by utilising private sector and business expertise that we’ll come through it together too.”
This advertiser content was paid for by the UK government. All together is a government-backed initiative tasked with informing the UK about the Covid-19 pandemic.
