Coronavirus (COVID-19) business support: equality impact assessments

Local Authority Discretionary Fund

Name of Grant:

Local Authority Discretionary Fund

Policy Lead

Andrew Baird

Legal power used:

Section 126 of the Housing Grants, Construction and Regeneration Act 1996.

Grant Overview:

The Local Authority Discretionary Fund was announced by the First Minister on 17^th November 2020. An initial £30 million was made available to empower local authorities to direct financial support to businesses ‘where they consider it to be necessary or justified’ based on the needs of their local economies and business communities. This recognises the insight that councils have on the business community in their area and where funding would be most effectively deployed in supporting local economies. In doing so, the LADF was intended to compliment rather than duplicate the financial support that had already been made available to businesses through the Strategic Framework Business Fund as well as through other sector specific funding schemes.

The Scottish Government worked with both CoSLA and Scottish Local Authorities Economic Development (SLAED) to produce non-statutory Guidance for local authorities which set out factors local authorities might wish to take into account when taking decisions on where to target funding. Specifically, the Guidance empowered local authorities to direct their funding towards those businesses that were impacted by restrictions introduced to control transmission of Covid-19 but were otherwise ineligible for other Scottish Government Covid-19 Business Support schemes. In doing so, the Guidance identified the following groups:

• Businesses subject to specific restrictions but that do not pay Non-Domestic Rates i.e. Mobile Close Contact Service providers or B&Bs/Guesthouses that pay Council Tax)
• Businesses that operate from closed or restricted sectors i.e. personal trainers, exercise instructors and performers
• Businesses that rely on entering domestic premises i.e. cleaners and tradesmen
• Businesses in the supply chain of closed or restricted sectors i.e. food and drink manufacturers and wholesalers, taxi and private hire vehicle drivers.
• micro, small and medium-sized enterprises (250 employees or fewer) and the self-employed

There was no obligation on Local authorities to take account of this Guidance in establishing their individual schemes and they had full discretion to target, develop and implement their schemes based on the needs of their local economies and business communities.

£5 million of the £30 million initially allocated to the LADF was reserved for distribution among the 11 local authority areas subject to Protection Level 4 restrictions from 2 November 2020^[13] and distributed according to the proportion of VAT/PAYE registered companies that comprise the business base across these 11 areas according to the Inter-Departmental Business Register. The remaining £25 million was distributed among all 32 councils, using the same formula. The total allocation for each local authority based on this formula was distributed through Grant Offer Letter.

Further announcements by the Cabinet Secretary for Finance on 7 February and the 9 February 2021 respectively increased the level of funding available to local authorities by a further £90 million taking the total allocation to £120 million. This additional funding was also distributed among all 32 local authorities using the proportion of VAT/PAYE registered companies within each local authority as a formula for distributing this additional allocation. This funding was distributed to local authorities through the General Revenue Grant.

Executive Summary:

The extraordinary measures taken by the Scottish Government to protect the right to life and right to health for the people of Scotland throughout the Covid-19 pandemic have placed unprecedented pressures on Scotland’s economy and business community. Health protection regulations introduced by the Scottish Government required certain businesses to close or placed specific restrictions on their operations at different times between March 2020 and August 2021. Many others were impacted by significant reductions in demand due to these restrictions or as a result of the introduction of domestic and/or international travel restrictions.

Since the start of the pandemic, the Scottish Government has spent £4.3 billion in providing direct financial support to those businesses impacted by Covid-19 restrictions and regulation. As the impacts of restrictions were felt differently across the business community varying according to factors such as sector and location, a range of different funding streams were developed to target financial support towards specific sectors or types of business based on the challenges they were experiencing as a result of the pandemic. Given the unprecedented challenges presented by Covid-19 it was necessary to develop financial support schemes at pace to ensure that funds were distributed rapidly in the interests of preventing business closures and preserving jobs. The Local Authority Development Fund and derivative schemes were no exception to this although, as with other funds, we have maintained a commitment to review the delivery of these funds and to update policy where necessary.

The variable impact of the pandemic on different demographic groups in Scotland and the inequalities created by this are well understood. Throughout the pandemic the Scottish Government has taken measures to mitigate these inequalities where possible. In line with its responsibilities under the Public Sector Equality Duty as enshrined in the Equality Act 2010, in developing the LADF, the Scottish Government has considered how it can eliminate unlawful discrimination, advance equality of opportunity and foster good relations between people who share a protected characteristic and those who do not. In doing so, the Scottish Government drew on a wide range of sources to understand the impact of restrictions on businesses on those with protected characteristics including statistics published by both the Scottish Government and the Office of National Statistics as well as insights from the Annual Population Survey, the Department of Business, Enterprise and Industrial Strategy’s Longitudinal Small Business Survey, as well as from organisations such as Close the Gap and the Social Metric Commission.

Every effort is made to ensure that Equality Impact Assessments (EQIA) are published timeously. However, the speed at which it has been necessary to ensure mechanisms are in place for supporting businesses impacted by Covid-19 restrictions has resulted in delays to completing EQIAs for a number of business support funds.

It should also be emphasised that it is local authorities who are responsible for determining the eligibility criteria for distributing their LADF allocations in accordance with the needs of their local economies. The scope of this assessment is therefore limited to consideration of the Guidance developed by the Scottish Government in collaboration with CoSLA.

Key Findings - impact assessment of benefits and/or disadvantages.

The discretion extended to local authorities in distributing the funding allocated to them through the LADF was a significant departure from other Covid-19 Business Support schemes where specific eligibility criteria was developed by the Scottish Government to target funding at specific businesses and/or sectors. As such, this EQIA assesses the impact on groups with protected characteristics arising from where the Guidance suggests that funding should be targeted with specific decisions on where funding should be targeted entirely devolved to local authorities. In doing so, this assessment identifies specific sectors within the broad categories which the Guidance suggests should be prioritised for support through the LADF and where data is available and uses these as proxies to understand the impact on groups with protected characteristics. Specifically, this assessment looks at some sectors paid by a number of local authorities:

• Cleaners – Impacted by restrictions on entering domestic premises
• Tradespeople - Impacted by restrictions on entering domestic premises
• Fitness Instructors – Impacted by restrictions by restrictions on closed sectors
• Performers - Impacted by restrictions by restrictions on closed sectors
• Kennels and catteries – Impacted by restrictions on domestic and international travel^[14]
• The Self-Employed – Impacted by restrictions and reduced activity in the wider economy.

The above are specific examples of businesses that the Guidance encouraged local authorities to prioritise for support through their LADF allocations. These have been chosen specifically because we have sourced the most data and data from recognisable sources such ONS. These industries also have a high standard of data publication from verified sources.

The Guidance also specifically encourages local authorities to support businesses in the supply chain of those sectors which are specifically required to close or adapt their operations as a result of restrictions. In developing this assessment, we were unable to source data on the demographic profile of supply chain businesses with which to draw conclusions about the impact of these sectors on groups with protected characteristics and so this sector is not considered as part of this EQIA.

Advancing Equality

By making additional financial support available to businesses through the LADF the Scottish Government sought to mitigate the impact of restrictions introduced to control the transmission of Covid-19 on businesses to support them in remaining financially viable. This assessment finds that the approach to targeting funding as set out in the Guidance produced by the Scottish Government encouraged local authorities to prioritise funding towards businesses that employ a disproportionately high number of people from among groups with protected characteristics including both young and old people, women, minority ethnic groups as well as those with disabilities. As the data below highlights, the Guidance also encouraged local authorities to target some sectors which are associated with insecure employment and low pay and, in doing so, acted to mitigate inequality arising from socioeconomic deprivation.

The LADF not only advances equality by preserving jobs, they also protect businesses in sectors where there is a disproportionately high number of women-led and ethnically minority-led businesses thereby protecting the livelihoods and assets of those with protected characteristics. According to a parliamentary report named “How has the Coronavirus pandemic affected women in work” published on 08/03/21, Data shows that the proportion of women-led and minority ethnic-led businesses will suffer the most as they are more likely to be in part-time, lower paid industries.

According to report by the Women’s budget group and a House of Commons report titled “Unequal impact? Coronavirus and BAME people”, emphasis that people with protected characteristics such as gender and race will be some of the most affected by Covid restrictions. The reports further state that women and minorities are employed in some of the most insecure sectors and lowest paid jobs and by advising local authorities to support those businesses that weren’t eligible for other sources of Covid-19 Business Support funding such as the SFBF, and to suggest it is targeted at SMEs and/or the self-employed which are more likely to be owned by and/or employ people from groups with protected characteristics and in doing so will contribute towards advancing equality by helping to prevent against business closures and job losses in these sectors.

Eliminating Discrimination

Decisions on where funding should be targeted was at the discretion of local authorities and so this assessment identifies limited opportunities for the Scottish Government to eliminate discrimination in the distribution of this funding. This assessment does not, however, identify any discrimination within the Guidance that it is necessary to take action to mitigate.

Fostering good relations

Many of the sectors that the LADF guidance encourages local authorities to target such as personal trainers and performers are important for social and community interaction providing an opportunity for engagement across and between groups with protected characteristics and helping to foster good relations between these groups. By providing financial support to businesses in these sectors to remain financially viable through the restrictions, the Scottish Government is therefore acting to foster good relations between groups with protected characteristics.

Age: Older People and Children and Young People

Data shows that young people are over-represented across a number of the sectors identified as being impacted by Covid-19

• Fitness instructors – Data from the ONS shows that 15.3% of Fitness Instructors are between the ages of 16-24 compared to an overall labour market share of 12.3%.
• Performers – Data from the ONS shows that 24% of performers are between the ages of 16-24 compared to an overall labour market share of 12.3%.

This indicates that young people are more likely than other age groups to experience disadvantaged as a result of the closure of and restrictions on premises which they rely on access to in order to provide those services from which they derive their income.

Older people also experience disadvantage as result of being over-represented in the sectors identified.

• Construction – ONS data indicates that 35% of the construction workforce is over the age of 55 although that falls to 19% for those trades that specifically require access to domestic premises. These compare to a share across the labour market of 20% for those over the age of 55.

^[15]

• Cleaning - 29% of the cleaning workforce is over 55 years of age compared to a labour market share of 20%.
• Self-employment - People 55 and over have the highest rate of self-employment. 15% of those aged 55 and over in employment were self-employed compared to an overall self-employment rate of 12.2% for Scotland as a whole.

The above are good examples of the businesses that received little or no funding. Many of those based in the above sectors are working in a self-employed bases and faced financial hardship due to Covid travel restrictions, entering domestic premises etc. according to various reports and research from ONS, annual population survey.

In contrast to younger people, the older age group is more likely to experience disadvantage as a result of not being able to access domestic premises for non-essential purposes.

Sex: Men and Women

A report by the House of Commons highlights women are significantly over-represented in part-time and insecure work, which gives them increased exposure to economic shocks. Furthermore, women are over-represented in industries at risk of contraction during COVID-19: leisure, services, and hospitality. Many women working in paid roles such as domestic cleaning, and hospitality are likely to be self-employed.

Data published from organisations including the ONS, equality evidence.scot and The annual population survey related to the employment of men and women shows the following:

• Cleaning industry – Women are substantially over-represented in the cleaning workforce with ONS data showing that 84% of cleaners are women compared to a labour market share of 48.8%
• Kennels and Catteries – Data from the ONS indicates that the animal care sector (which includes kennels and catteries alongside other subsectors) is overwhelmingly female- dominated with 91% of employees in this sector being women.

There are also a number of the groups identified in which the data shows men appear to be clustered and which they experience specific disadvantage as a result:

• Construction – Men make up the vast majority (87%) of construction workers compared to a labour market share of 51.2%
• Personal trainers/gym/fitness instructors – Males make up the majority of personal trainers/fitness instructors (65%) compared to a share across the labour market of 51.2%

Self-employed – Men are also more likely than women to be self-employed with 68% of those registered as self-employed identifying as male.

Race

Equality evidence.scot shows that there is a Higher self-employment rate for ethnic minorities than the white ethnicity. In 2019, the self-employment rate for minority ethnic adults (16.1%) was higher than the 'White' ethnic group (12.2%). This fund seeks to mitigate covid restrictions for self-employed people from all backgrounds and provides guidance to Local Authorities to assist those that didn’t receive grants from previous funds.

Studies from the ONS shows that ethnic minorities in certain industries:

• Cleaning industry – the number of foreign-born people working in the industry accounts for 20% of the workforce. This is greater than all sector figure where 17% of the workforce are foreign born.
• Self-Employment - Equalityevidence.scot shows that ethnic minorities groups have a higher self-employment. In 2019, the self-employment rate for minority ethnic adults (16.1%) was higher than for rest of the population which is 12.3%.

According to Close The Gap’s report, Black and Minority Ethnic women are more likely to work in a sector that has been shut down; more likely to be in insecure work which puts them at increased risk of loss of hours and earnings; and are concentrated in low-paid service sectors which are more susceptible to redundancies over the course of the crisis. This shows that a significant portion of ethnic minorities are likely to be employed in some capacity that has been affected by Covid restrictions.

Disability

Specific data on business ownership and employment by sector is not available to fully assess the impact of the LADF on those with a disability.

Equality evidence.scot states that 13.4% of people with a registered disability are self-employed which is higher than the self-employment rate across the population as a whole which is 12.3%.

Religion and Belief

No discernible impact

Sexual Orientation

No discernible impact ^[16]

Pregnancy and maternity

No discernible impact

Gender reassignment

No discernible impact

Marriage or Civil Partnership

No data available

Socio-economic disadvantage: any people experiencing poverty

According to a report by the Joseph Rowntree Foundation which states that developing local economies will reduce poverty. Also states that due to their local knowledge, local authorities work with local employers, employees and training providers and make connections between employment support and job creation. This states that Local decision making is more effective when rejuvenating local economies than a decision made by central government.

According to the Social Metrics Commission those employed prior to the crisis and already in the deepest forms of poverty have been most heavily impacted by the economic fallout of the pandemic. For example, compared to those more than 20% above the poverty line, those more than 50% below the poverty line have been more likely been furloughed, had reduced hours or wages, or lost their job.

This fund will assist local authorities by ensuring that local businesses continue to survive, thus keeping people in employment. This will have a positive impact on low income families. Reducing material deprivation arising from financial hardship.

The LADF has provided local authorities with guidance to support sectors which have received no prior funding which are predominantly low paid and insecure, with employees most at risk of slipping into poverty. It has prevented these businesses from issuing redundancies and those who are often low-skilled having to find alternative employment.

This fund should also assist local authorities in reducing area deprivation by way supporting employment levels, income and wider economic activity thereby reducing area deprivation. Local authorities will know best how best to distribute funds to reduce mitigate socio-economic deprivation in their respective areas.

Stakeholder Engagement:

We have engaged extensively with businesses and their representative organisations during the pandemic. In the year to March 2021 the Scottish Government had more than 1,270 ministerial engagements with business, including virtual conferences, roundtables and calls.

Engagement with business leaders included regular communication with HMRC, CBI, FSB, IoD, SCC, SCDI, SFE, STUC, Scottish Retail Consortium, Scottish Tourism Alliance and Scotland Food and Drink etc.

This provided an opportunity to listen to stakeholder views, test ideas, share information about progress and discuss and address specific issues identified by sectors and individual businesses.

This funding and its guidance was developed in conjunction with COSLA, regarding the basis on which allocations from the Discretionary Fund are made to local authorities and sets out parameters which councils should take into account when distributing this funding.

Mitigations:

As this assessment did not identify any opportunities for the Scottish Government to eliminate discrimination in the design and distribution of LADF, no specific mitigations were identified as being required. Local Authorities had full discretion on where to distribute funds according to the needs of their local economies.

Next Steps (if any)

Local authorities to review the impact it has had on local businesses and areas as full discretion was given to them as where to distribute funds.

Declaration and Publication

I have read the Equality Impact Assessment and I am satisfied that it represents a fair and reasonable view of the expected equality impact of the measures implemented.

Signed:

Date: 19/11/2021