SNP Government must wonder what more it could do to please businesses

Only 9% of firms north of the Border agree that the Scottish Government understands the business environment in Scotland, compared with 64% of businesses that disagree, according to the survey from the University of Strathclyde’s Fraser of Allander Institute.

These percentages match those in a survey published by Fraser of Allander in August last year.

The latest survey, of more than 350 firms, was conducted in August and September, and published last week.

The institute asked firms about their relationship with the Scottish Government as part of an annual assessment following the SNP’s “New Deal for Business” launch in April 2023, under former First Minister Humza Yousaf.

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The hope was that this “new deal” would help improve the Scottish Government’s relations with the business community.

However, the latest survey shows just 6% of businesses agree that the Scottish Government engages effectively with their sector, down from 8% in 2023. Meanwhile, 68% of firms disagree, up from 67% in last year’s survey and suggesting a marginal worsening of perceptions of Scottish Government engagement.

Fraser of Allander noted that “a slightly better” 19% of firms believe they can influence Scottish Government policy if new announcements affect their business. However, 46% disagree with this statement, up from 39% last year, with Fraser of Allander saying this reflects “a growing frustration among businesses regarding their ability to have a say in policymaking”.

The latest analysis highlights differences across sectors, with construction and finance firms expressing the highest levels of dissatisfaction in matters relating to the relationship with the Scottish Government.

Businesses in the professional, scientific, and technical activities sectors were slightly more positive, “although overall confidence remains low across the board”, Fraser of Allander observed.

The research institute declared: “The results suggest that the [Scottish] Government’s New Deal for Business initiative has done little to turn the tide with the business community. Instead, the findings indicate that this relationship has either stagnated or deteriorated further.”

João Sousa, deputy director of Fraser of Allander, said: “These results will undoubtedly be disappointing for the Scottish Government, particularly given that it’s been well over a year since the launch of the New Deal for Business.

“While no one expected a dramatic reconciliation in only a year, the [Scottish] Government would have hoped for at least some signs of progress. But that is not what we found. And while businesses have undoubtedly faced broader challenges from economic instability over the past 15 years, some specific high-profile policies and political turmoil closer to home have only strained this relationship further.”

He did observe: “Of course, there is a shared responsibility here. Business representatives and firms, both locally and nationally, need to actively engage in this reset. Real improvement in the relationship between government and the business community can only come through meaningful collaboration.”

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A few things are worth observing here.

Mr Sousa’s comment that the results will “undoubtedly be disappointing” for the Scottish Government seems a fair enough assessment.

The other point worth noting is these are difficult times, with straitened public finances in Scotland arising in large part from the consequences of bad policymaking at Westminster.

This woeful policymaking has included the Conservatives’ entirely ill-judged and counter-productive austerity programme, and of course the hard Brexit.

The bottom line is the state of the public finances, which does not look likely to get better any time soon given Labour’s seeming great reluctance to loosen the purse strings to boost growth, means much of what business is lobbying for will not be granted.

The needs of business must, of course, be balanced against those of individuals. Many households are facing very tough times.

And you wonder whether, were we in days like those of the late 1990s or early years of the millennium before the global financial crisis when there was a lot more money and hope around, businesses might be much happier.

Furthermore, it could surely be argued that First Minister John Swinney and Deputy First Minister and Cabinet Secretary for Economy and Gaelic Kate Forbes could justifiably feel aggrieved at the survey results.

They seem to have been making the right noises on business and the economy since taking the helm in the spring.

And, even before they arrived, Mr Yousaf was making some good points on the economy, notably about the damaging impact of Brexit.

Mr Swinney and Ms Forbes have continued to highlight the consequences of Brexit.

It is a pity that such a sensible stance on Brexit, which is causing such colossal damage to businesses and the economy in Scotland and the UK as a whole, is not being rewarded through a more positive attitude of businesses to the SNP administration at Holyrood.

Labour, at Westminster, is sticking its head in the sand on Brexit.

And we should remember the Scottish electorate opposed Brexit by a very significant margin in the 2016 referendum.

Our political leaders have a duty to flag the damage from the Brexit folly, and act to mitigate this in a meaningful way.

Ms Forbes came across impressively on business and the economy in an exclusive interview with The Herald in June.

Asked whether she saw it as difficult to balance maximising economic growth with social justice, Ms Forbes replied: “No, it is not difficult to balance at all. I have never seen even an iota of difference in our desire for resilient public services, for eradicating child poverty, for protecting our environment, and our economic objectives, for the very simple reason that we can’t achieve those objectives without economic growth.”

She added: “In terms of every single one of our public services, their resilience requires us to be generating public revenue that comes from businesses doing well, bluntly, and we are then able to reinvest that.

“So all of the Government’s social justice aims and objectives, from ending homelessness to ending poverty to dealing with the health inequalities that come from poverty, all of those can only be resolved in partnership with economic growth, and there is no path to resolving them without a thriving and prosperous economy.”

These are the kind of sentiments you would think should go down well with business, notably the recognition that economic growth is crucial.

However, the Fraser of Allander Institute survey indicates the Scottish Government has a mountain to climb regarding its popularity with businesses.

That said, senior members of the SNP Government might be wondering just what more they can do to make those perception readings less bad.