BUSINESS leaders have warned the extension of the Government’s job retention scheme may not be enough to save Scottish firms from closure or prevent thousands losing their jobs.

Experts say Rishi Sunak’s announcement last night may be less effective in Scotland as the lockdown easing measures are “misaligned”.

The Chancellor unveiled the final stages of the Job Retention Scheme (JRS), announcing that companies will have until September before they have to start paying wages, and can bring back staff part-time from July 1.

For those who are self-employed, they will be eligible for a second grant of up to £6750 in August, taken as an average of three months’ earnings based on previous tax returns.

While the extra support has been welcomed, some fear the lack of coordination between the Scottish Government’s lockdown easing measures and the end of the UK Government’s financial support schemes could make it harder for Scots firms.

Dr Liz Cameron, Chief Executive of the Scottish Chambers of Commerce said the issue for Scottish firms was that the Chancellor’s plan could leave firms having to fork out for staff salaries when they are yet to even open.

She said: “ Businesses are mindful that the Coronavirus Job Retention Scheme has cost billions and the pot of money to support employers and the economy is not unlimited. This has been a lifeline for the majority of Scottish businesses preventing a mass tsunami of people losing their jobs.

“The big challenge for Scottish businesses is that the UK government’s new tapered approach to the furlough scheme is not aligned with the Scottish Government’s roadmap out of lockdown. This misalignment will affect crucial areas of the economy such as tourism which are forced to close for longer.

“Before tapering hits, we need to ensure all sectors of our economy are able to generate trade so they are able to pay employees. Currently there is still a lack of clarity for businesses in Scotland over when they can re-open.

“We urge the Chancellor to adopt measures to ensure that businesses facing ruin as the furlough scheme tapers aren’t forced to fall at the last hurdle.’’

The JRS and the Self-Employed Income Support Scheme (SEISS) has cost the UK Government around £80bn already, and is anticipated to cost more than £100bn in total.

It is one of the largest ever financial support packages provided by the government to workers, but is less than the £500bn paid out to banks during the 2008 financial crash.

Previously business leaders called for the Chancellor to introduce different furlough payment schemes depending on which industry firms were in, with some areas expected to be hit worse than others.

Tourism firms, for example, could lose up to a year of income if they cannot open before the peak season ends in September.

Federation of Small Businesses (FSB) Scotland Policy Chair, Andrew McRae said firms in these industries may need more long-term support, despite the Chancellor ruling out any extension to the financial support schemes after October.

Mr McRae said: “There may be certain sectors for whom a return to any sort of revenue generation remains some way off – such as those in and reliant upon Scotland’s visitor economy, for example. Depending on how things progress over the summer, we might need to look at longer-term support for those particular parts of the economy.”

He said the announcement, on the whole, would give businesses “additional certainty for the next few months”, and added: “

“We’ve long argued that by extending the job retention scheme while making it more flexible we can help to get the economy back on its feet. Keeping the current level of government support largely unchanged until August gives firms much-needed breathing space while lockdown is eased. Opening up the part-furlough option a month earlier than planned will help small employers sustainably rebuild their business as restrictions are lifted and trade returns.

“Scotland’s self-employed community will be relieved to know that the income cliff-edge they were facing in two days’ time has now been removed. While more self-employed people will be able to return to work in the weeks and months ahead, others from barbers to tour guides, look like they face a longer wait.

Mr McRae said the flexible options provided by the Chancellor, meaning employees can return part-time and still receive furlough payments for the days they do not work, would help the economy.

He said: “We’ve long argued that by extending the job retention scheme while making it more flexible we can help to get the economy back on its feet. Keeping the current level of government support largely unchanged until August gives firms much-needed breathing space while lockdown is eased.

“Opening up the part-furlough option a month earlier than planned will help small employers sustainably rebuild their business as restrictions are lifted and trade returns.”

Mairi Spowage,deputy director of the Fraser of Allander Institute at Strathclyde University said even with the financial support many firms would still struggle.

She said: “The updated proposals for the job retention scheme, which will see both a gradual withdrawal of support and additional flexibilities around part-time work, are designed to provide continued support to businesses whilst encouraging them to begin to reopen.

“The decision to shut-down businesses was arguably the easy – albeit costly – part of the economic response to COVID-19.

“Even with the support of the JRS, it will still be the case that many businesses will find trading conditions extremely difficult in the months ahead. The scale of the hit to our economy means that many businesses will go to the wall, with those most impacted in work places and sectors that will continue to be affected by physical distancing measures.”

The Treasury last night said that many more firms would have closed without the scheme.

A spokesman said: “The way we look at it is, how many people would not have had their jobs protected if we hadn’t done this?

“The Chancellor has always been clear, including in the speech he gave towards the end of March when he launched the scheme, that we can’t protect every job. We will be in a very deep recession in the next quarter.”

When pressed on whether the department had done any analysis of unemployment rates as a result of the policy, he said: “There are estimates out there,they all depend on scenarios for how long this goes on for. But there are and will be many more people made unemployed as a result of this recession.”