Data gap limits analysis of Covid business support in Scotland

'Knowing where the money went matters’

It is “not possible” to know how many Scottish firms were helped through pandemic support schemes due to gaps in the records, a watchdog says. 

Audit Scotland says no detailed analysis of the way Covid business support cash was shared out can be carried out thanks to “gaps in data”. 

The Scottish Government distributed around £4.4bn in grants and non-domestic rate reliefs between March 2020 and October last year, most of which was paid out by councils. 

A further £375m followed in December, following the emergence of the Omicron variant. 

In a report published today, the watchdog says that while action was taken to improve the management of funding during the pandemic, there was “not enough focus on gathering detailed data”. 

This has left questions over the distribution process and the speed at which successful applicants received funding.  

Experts are unable to use centrally-held Scottish Government data to check how funding supported firms owned by women, which were disproportionately affected by Covid, and other specific groups.  

Businesses were potentially eligible for support under more than one funding stream. However, because no unique identifier was used for each organisation across different streams, it is “not currently possible to determine the exact number of businesses that received support”. 

And for sector-specific relief administered by national bodies like Scottish Enterprise around 20 per cent of payments cannot be matched to council areas. 

Retrospective impact assessments and other checks were carried out by the Scottish Government late last year and a “large data cleansing exercise” is currently under way to ensure that the datasets for individual funds, including those administered by councils, are complete.  

The Scottish Government says it helped protect thousands of jobs and aided 5000 self-employed people who were ineligible for UK support and Finance and Economy Secretary Kate Forbes said the report “recognised how quickly the Scottish Government was able to establish a wide-ranging business support package”. 

But Stephen Boyle, Auditor General for Scotland, stated: "These business support schemes were administered at pace in exceptional circumstances. But knowing where the money went matters. To get future policy development and delivery right, it will be important for the Scottish Government to fully understand how funding was used to support specific businesses and groups over the last two years of the pandemic." 

Labour’s economy and finance spokesperson, Daniel Johnson MSP, said the spending of billions of pounds was “mired in secrecy and confusion” and called for “clarity and openness” on how the public money was spent.  

Meanwhile, Willie Rennie, the economy spokesperson for the Lib Dems, said: “At the height of the Covid crisis, there was a case for getting money quickly into the hands of businesses in order to prevent good firms from going to the wall. 

"Now the government needs to account for the money it spent and where appropriate make sure that it is reclaimed. These data gaps will make analysing whether spending was effective more complicated. 

"Ministers will need to keep the public updated on any fraudulent claims it uncovers and how much money it has successfully recovered." 

According to William Moyes, chair of the Accounts Commission, councils' fraud arrangements are “generally robust” but were “heavily relied upon to ensure businesses were eligible for funding during the pandemic”. He commented: “Councils will need to continue to work closely with the Scottish Government to ensure a better picture emerges of how money was distributed." 

Forbes said: “Every decision the Scottish Government has taken has centred around ensuring businesses got the support they needed when they needed it – resulting in over £4.5bn being allocated to businesses across the country, including around £1.6bn in rates relief, which is more generous than the other UK administrations so far. 

“We will now carefully consider the findings of this report and of course any lessons will be learned, but fundamentally this report shows the decisions we took ensured lifeline support reached key businesses promptly and our economy continued to grow by 7.1 per cent despite the necessary public health restrictions.”