THE Scottish Government should consider taking a stake in businesses left struggling because of coronavirus, a group set up to advise ministers on Scoltand’s post pandemic economic recovery has recommended. 

The Advisory Group on Economy Report, chaired by former Tesco Bank boss Benny Higgins, also suggested the government consider plans for a job guarantee scheme for 16-25 years olds.

It says that offering at least two years of "secure employment" to young people, will help avoid "long-term scarring" of a generation.

The Scottish Government has said it will "develop a detailed response” to the 25 recommendations in the report by the end of July.

In the foreword, Higgins says the government will need to take radical action if it wants to stimulate the economy.

“If the monumental scale and nature of this economic shock is not a catalyst to accelerate change and to find new bold, radical interventions that will transform Scotland’s economy, then nothing ever will be. 

“We must be willing to revisit old demarcation lines without bias, and to discover new methods and levels of collaboration as we navigate our path of rehabilitation, recovery, and re-imagination.”

Higgins also points out that the health crisis “has spawned further inequalities” and warns that “the relaxation of restrictions will create yet more” with most of the bottom 50% of earners being forced back on to the front line, while most of the top earners work from home.

“Many of the lowest paid essential workers have put their health and that of their families at risk during this crisis. There are countless studies that demonstrate the impact of ‘learning loss’ when young people are denied access to conventional schooling. Once again, it is most pronounced in disadvantaged communities, where the alternative to formal delivery is very constrained,” he said.

Education and the plight of Scotland’s young feature heavily in the report and in the recommendations. 

The group says a "Scottish Jobs Guarantee" scheme will offer "secure employment, for a period of at least two years, to 16-25 year olds, paid at the living wage and with access to training and the possibility of progression".

It would be led primarily by local businesses, but within a "coherent national framework" set up by the Scottish government and with "targeted funding support" to assist firms.

Other recommendations include bringing forward the revision of the fiscal framework between the Scottish and UK Governments - the agreement which sets out the funding arrangement north of the border - to allow for more autonomy in Scotland, effectively giving ministers in Edinburgh more powers over borrowing.

The report said: "It would benefit both the UK and devolved governments to design a model for investment in the economic recovery period, which enabled an appropriate flexibility to allow different priorities to be pursued.

"There is also a strong case for the Scottish Government to have greater autonomy to use targeted fiscal measures to stimulate demand or incentivise behavioural change in the recovery period."

Other recommendations include prioritising a green recovery, strengthening the relationship between business and government and investing in digital infrastructure.

It also calls for the creation of a "National Arts Force, composed of freelance and gig economy workers across the sector, to work in schools, care homes and communities."

On ownership stakes, the report calls on the Scottish Government to "build its professional capability to manage ownership stakes in private businesses, which are likely to arise out of the crisis."

Speaking at the daily briefing, the First Minister said that as the pandemic comes under more control, the Scottish Government had a responsibility to “focus on how our economy recovers and renews itself for the long term.

She said the Scottish Government saw the report “as a serious and substantive piece of work” and that they agreed with its basic principles.

Nicola Sturgeon said: “The Scottish Government agrees with the advisory group about the importance of working with the UK Government, so that our fiscal framework has enough flexibility to enable us to support investment for recovery.

“We also support the advisory group’s prioritisation of a green recovery, and its recognition of the vital importance of the new Scottish National Investment Bank.

“And the report’s recommendations for youth employment and a Jobs Guarantee - including the essential contribution that business can make- are potentially very significant, as we seek to ensure that young people get the opportunities they deserve in the wake of this pandemic.”