Scottish budget falls short on meeting business needs

“The Finance Secretary had limited room for manoeuvre in this budget and we therefore welcome some of the announcements that she made, such as the investments in the offshore wind industry and affordable housing, and the rates reliefs for some businesses,” Prosper chief executive Sara Thiam said.

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However, she added: “It is disappointing that funding for growing the economy seems to have been reduced again and that the funding for universities and colleges does not go far enough to strengthen their stability, competitiveness, and skills, research and innovation delivery.”

News on the high-profile issue of rates relief was a mixed bag, with 40% relief extended to most hospitality venues as well as the continuation of the Small Business Bonus Scheme that has been branded a “lifeline” for firms throughout the country. Both were high among the concerns of Scottish businesses.

But FSB Scotland policy chair Andrew McRae said the failure to extend the same rates relief to small retailers was “a bitter pill to swallow”.

“The pressures they are facing are exactly the same as those in England and Wales, where relief has continued to be available since July 2022 – the last time such relief was offered in Scotland,” Mr McRae said.

“As a result, many retailers will face yet more difficult decisions in the months ahead as they look to protect the future of their businesses and employees.”

Ms Robison’s commitment to not introducing any new bands or increases to rates of Scottish income tax for the remainder of this parliament was welcomed in what many believe is already an overly-complex system that has yielded little benefit.

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“The income tax divergence between Scotland and the rest of the UK remains a significant disadvantage for local firms and their ability to compete for highly skilled staff,” said Tracy Black of CBI Scotland.

“While firms will be relieved to see commitments to no additional bandings, the reality is that the policy remains a handbrake on growth and comes against a background of escalating costs for employers.”

The Scottish Property Federation welcomed the reinstatement of £200 million cut last year from the government’s housing budget, but warned that further improvements are needed on the Housing Bill currently making its way through parliament to unlock investment that could “quickly bring forward 15,000 new homes”.

Meanwhile, partner Graham Howarth of property consultancy Gerald Eve lambasted the lack of support for owners of larger business properties.

“We despair at the continued incredulous position of the Scottish Government to maintain the large business supplement, despite it being a manifesto policy in the previous and current parliamentary term to remove this,” Mr Howarth said.

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“Scottish properties with a rateable value more than £100,000 will continue to pay a supplement that is 1.4p per £1 of rateable value higher than the equivalent properties in England, meaning that Scottish-based large properties pay some of the highest property-based taxes in the UK at a time when the Scottish Government is seeking growth, stability, and transformation of the Scottish economy. This will cost Scottish companies an extra £60 million compared with their counterparts based south of the border.”

And while welcoming significant investments in affordable housing, heating, insulation upgrades and green energy jobs, trade body SNIPEF warned these efforts could be undermined by a lack of support for further education and vocational training.

“Our latest State of Trade survey reveals that 65% of plumbing and heating businesses are struggling to find skilled professionals in their area,” chief executive Fiona Hodgson said.

“Without investment in training and upskilling, the plumbing and heating profession cannot deliver the housing and green energy projects Scotland urgently needs. Heat pumps and other renewable technologies, for example, require a skilled workforce, and this cannot be achieved without meaningful investment in further education.”