The 5% funding cut to Highlands and Islands Enterprise (HIE) will not be reversed, the SNP Scottish Government have said.
The SNP budget passed in Holyrood earlier this year saw £2.954m slashed from HIE for the coming year and figures show a fall of 44 (almost 50% reduction) in permanent operations staff working within the organisation since 2017.
In a written question to the Scottish Government, Highlands and Islands Scottish Labour MSP, David Stewart asked what plans they have to reverse the decision in its 2020-21 Budget to reduce Highlands and Islands Enterprise's budget by 5%, in light of the impact of COVID-19 on businesses, and to support economic recovery in the region.
The Scottish Government however refused to confirm that they will reverse the swingeing cuts instead responding to say they are working closely with HIE to “identify opportunities to manage the in-year financial pressures so that they can continue to meet the needs of businesses and communities across the region.”
Commenting on the Scottish Government’s response, David Stewart MSP said: “Businesses and communities across the Highlands and Islands will be deeply concerned that the Scottish Government is still refusing to stop the considerable cuts to Highlands and Islands Enterprise at a time when small and medium size enterprises the length and breadth of the region are facing some of the most significant economic upheaval and challenges in a generation.
“We already knew the effects of the Coronavirus shutdown on businesses – including restaurants, shops and arts organisations – was going to be massive. Every day we hear evidence of businesses now struggling and concerns over the long term economic impact of Coronavirus on the fragile rural economy.
"The Fraser of Allander Institute has estimated that if lockdown measures continue for a three-month period, there could be a 20-25 per cent contraction in Scottish GDP and I’m concerned the Highlands and Islands could face the brunt of the recession.
“The cuts being passed down to HIE this year were always short-sighted, however, the impact that these cuts are going to have now due to the additional pressures being put on businesses across the region by the negative economic impact of Covid-19 bring this into even sharper relief.
“HIE play an essential role in strengthening local communities across the Highlands and Islands, which is one of Scotland’s most economically fragile areas.
"It is vital that the Scottish Government now listen to the concerns of people, communities and businesses across this region and finally commit to reversing these cuts and show a real commitment to supporting businesses and economic recovery in the region once we are through this crisis.”