THE SNP has renewed its calls for an extension to the furlough scheme  as Scotland’s economy goes officially into recession. 

The party has urged the Chancellor to follow Germany’s lead and extend the job-saving scheme, which has cost billions so far and prevented thousands of redundancies since March.

MP Alison Thewliss, the SNP shadow chancellor, hit out at Rishi Sunak’s refusal to extend the scheme past October and accused him of “recklessly ploughing ahead”, despite the impacts of withdrawal. 

She has also repeated the calls for the Scottish Government to be given more fiscal powers. 

However, the Treasury said the SNP had “failed to grasp” the need to end the furlough scheme, arguing that it was giving people false hope they would still have a job to return to if it was extended indefinitely. 

It comes as Scotland officially went into recession yesterday with the latest GDP figures showing a 19.7% fall between April and June, and a consecutive decline in GDP for two quarters.

Ms Thewliss said: “Reports that Germany may look to extend its version of the furlough scheme as early as next week will be a welcome relief to millions of workers and businesses in Germany who are struggling to navigate through the coronavirus crisis and have been worried about their job security.

“In stark contrast, the Tory Chancellor in Westminster is recklessly ploughing ahead with his premature plans to shut down the UK’s furlough scheme by the end of October, despite repeated warnings that such a move risks creating a tsunami of job losses and trapping people in lasting hardship and debt.

“The Treasury must rethink its plans and, instead, look to extend the measures into 2021, fix the gaps in support, and stop obstructing furlough appeals – and if they refuse to do so they must transfer the necessary powers to Holyrood so that Scotland can take the action needed to save jobs and protect livelihoods.”

Germany looks likely to extend its furlough scheme as early as next week, allowing part-time working for up to 24 months. Chancellor Angela Merkel said she was “positively” inclined towards suggestions for extending the programme, which allows companies to put staff on part-time hours to save their wage bills, and the government contributing the remainder. 

Currently claims are only allowed to be made for a maximum of 12 months, however Finance Minister Olaf Scholz suggested the extension on Sunday and Ms Merkel welcomed it yesterday. 

About 5.6 million people in Germany are thought to be currently on the scheme.

A  Treasury spokesman said the UK scheme had helped more than 700,000 jobs in Scotland since its launch in March.

He said: “The Coronavirus Job Retention Scheme will have been open for eight months from March through to October, with the government helping to pay the wages of over 736,000 people in Scotland so far. 

“This is an unprecedented scheme that has protected millions of jobs in Scotland and across the United Kingdom. 

“But we’ve been clear that that we cannot sustain this situation indefinitely and must now focus on providing new work opportunities for those in need across the UK.” 

Boris Johnson announced plans to “build build build” the country out of  economic problems in June, by changing the legislation to make it easier to build more affordable housing. 

However, Nicola Sturgeon said she was underwhelmed by the plans, and criticised the Prime Minister for failing to grant any new Barnett Formula funding to Scotland as a result of his announcement.

Mr Johnson did commit to dualling the A1 as part of a pledge to investigate new transport links between the nations of the UK, that is also expected to examine a possible bridge across the Irish Sea, and the extension of the Borders Railway to Carlisle.
However, his £5bn “new deal” to invest in hospital maintenance, school refurbishment and road building in England is not expected to result in any new funding for devolved administrations.

Instead, these governments were encouraged to use funds already allocated to devolved budgets to push ahead with “shovel-ready” projects.

The Treasury spokesman added that cutting the furlough scheme in October was “not reckless”.

He said: “This is the responsible and right thing to do. What would be reckless and unfair is keeping people trapped in jobs that they may never be able to go back, a reality that the SNP so far have failed to grasp.

“We will continue to support businesses bringing back staff through the £1,000 job retention bonus, while our Plan for Jobs will drive our economic recovery by creating new roles for young people with the Kickstart scheme, and providing new incentives for training and apprenticeships.”