Analysis of Covid business funding impossible due to data gap, watchdog finds

Analysis of how almost £5 billion of Covid-19 funding for business was distributed is not possible because of a data gap, a watchdog has said.

The Scottish Government provided £4.4 billion in grant and business rates relief between the start of the pandemic and October last year, with a further £375 million following the onset of the Omicron variant towards the end of last year.

However, Audit Scotland said there was “not enough focus” on gathering good quality data “below an aggregate level”.

A report released on Thursday said the quality and completeness of the data collected by the Government “varies” and prevents detailed study of how funding was allocated and how quickly it was allocated.

Auditor General Stephen Boyle said: “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.”

According to the report, the Scottish Government cannot provide an analysis of the total amounts paid to the different sectors of the economy from the more general funding schemes, and information that could allow analysis of groups more impacted by the pandemic is not available from the Government centrally.

Sector-specific funding administered by organisations rather than government or councils has also run into issues, with some 20% that cannot be matched to specific council areas.

William Moyes, chairman of the Accounts Commission, said arrangements put in place by councils to prevent fraud when providing funding were “heavily relied upon” during the pandemic, adding: “Councils will need to continue to work closely with the Scottish Government to ensure a better picture emerges of how money was distributed.”

Responding to the report, Economy Secretary Kate Forbes said she was “pleased” it recognised the speed of the rollout of funding to businesses and how it “reflects the unique and challenging context in which new support packages had to be established”.

She added: “Every decision the Scottish Government has taken has centred around ensuring businesses got the support they needed when they needed it – resulting in over £4.5 billion being allocated to businesses across the country, including around £1.6 billion 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% despite the necessary public health restrictions.”

Ms Forbes also thanked industry, enterprise agencies and councils, saying without whom “we wouldn’t have been able to deliver this lifeline support at the scale and pace necessary”.

Scottish Conservative finance spokeswoman Liz Smith said the report highlighted a “shocking lack of data”.

She said: “Enormous sums of public money were paid out to help struggling businesses yet, thanks to the SNP, we don’t properly know where it went.

“While we accept that Covid funding had to be rolled out swiftly, there is no excuse for this shocking lack of data.

“Audit Scotland exists to make sure that public money is spent responsibly, and when even they can’t track where it went, Government accountability is lost.

“Taxpayers have a right to know where their hard-earned cash has gone and will naturally be suspicious when this information can’t – or won’t – be provided by an SNP Government that increasingly considers itself above scrutiny.”

Labour MSP Daniel Johnson said the Scottish Government has “disdain for economic transparency”.

He added: “Billions of pounds have come and gone through the SNP Government’s coffers, but this spending has been mired in secrecy and confusion.

“The lack of data highlighted in this report makes it impossible to determine whether these huge sums reached those who really needed it and delivered good value for taxpayers.”