20 Sep 2023
By Stuart Patrick, Chief Executive of Glasgow Chamber of Commerce
Of all the business surveys published this year, perhaps the Fraser of Allander Institute’s recent review of the relationship between business and the Scottish Government was the most revealing. From the sample of 400 companies asked over the summer, only 9 per cent felt the Scottish Government understood the business environment and 64 per cent felt it did not. Larger firms and businesses in the hospitality sector were especially unconvinced.
To be fair, Humza Yousaf’s administration has recognised the problem and established a New Deal for Business group under Neil Gray in his role as Cabinet Secretary for Wellbeing Economy, Fair Work and Energy. The First Minister has been clear he appreciates improvement is essential. It is nevertheless a relief that the FAI survey is so stark since it reflected exactly what I had been hearing from Glasgow Chamber of Commerce members.
In the last meeting of the Chamber’s governing council before the resignation of Nicola Sturgeon as First Minister, the discussion was dominated by the Deposit Return Scheme, alcohol advertising restrictions and housing rent controls. It seemed that every quarter a new policy was emerging that made doing business in Scotland harder. Throw in the moratorium on North Sea oil and gas, Transient Visitor Levy for tourism accommodation, the continuing controversy over short-term letting licences and a possible Workplace Parking Levy and it should be no surprise that only 8 per cent in the FAI survey felt the government engaged effectively with their sector.
A lot therefore rides on the New Deal for Business Group. In Mr Yousaf’s presentation of the Programme for Government he stated that the Group’s recommendations will be implemented in the next 12 months. Drawing on a comfortingly wide range of business bodies, the group’s focus so far has been on addressing the scale of business regulation, improving the partnership with industry, exploring further reform to business rates, understanding what is meant by the wellbeing economy and agreeing what the measures of success should be.
It is tempting to chuckle at the need to better understand what is meant by a wellbeing economy. Neil Gray’s title alone has the tone of a mini lecture on the duties business must fulfil if it is to be a valued component of Scottish society. Proponents of the wellbeing economy often sound antagonistic towards economic growth and wealth creation so I hope the New Deal group settles any doubts about the government’s commitment to both.
But of all the topics the group is exploring, the review of business regulation is the most immediately significant. It has been the appetite for legislation placing more and more responsibilities on business or creating more taxes on business activity that has created most of the tension the Chamber experienced under the last administration. The New Deal group is proposing a system for assessing the impact on business for every new piece of proposed legislation. The pressure on small businesses is to be given particular emphasis. That is sensible given the limited resources smaller firms have for responding to new legal requirements and the rising costs they are having to cope with already.
I would hope that in making those assessments the impact on business investment is given some prominence. Given the uncomfortably low rate of business investment compared to the OECD countries for both Scotland and the UK there should be much more attention paid to the cumulative impact of government policies on capital investment. The First Minister’s positive response to Sir Tom Hunter’s call for lower corporation tax on three growth sectors covering renewables, life sciences and data technologies is encouraging in that regard although, of course, it is beyond his remit.
The main message I now hear from members is one of relief that many – though by no means all – of the measures affecting business have been paused. There is a willingness to give the new administration a chance to deliver on its promises. We will be watching how effectively the New Deal for Business recommendations are implemented.
This article was first published in The Herald on Wednesday 20 September 2023
