Press & Policy

*Originally published in the Courier and the Press & Journal in March 2021

Dr Liz Cameron, Chief Executive, Scottish Chambers of Commerce

As vaccines continue to be the source of hopeful news and the prospect of springtime lightens our spirits, we can see the finishing line in the distance. Albeit the race we have been on to outrun the virus has been long and gruelling, and too many have fallen along the wayside. But look forward we must.

Before we get there, there will be Scottish elections at Holyrood. With so many experienced MSPs retiring – nearly a quarter of them – the vote brings the potential for renewal and fresh energy to the Scottish Parliament. That said, it is also important that we have experience and appropriately-skilled parliamentarians across all the parties.

Renewal and fresh energy will be essential if we are to ensure the economy gets back up to speed following the damage inflicted by lockdown. Scottish Parliamentarians, new and those hoping to retain their seats, can support this by making business recovery and growth, jobs and skills their top priority. If they get this right, it will enable our social policies to be implemented and funded.

Positive partnership forged through dialogue will be key. We need to see the understanding of how businesses are at the heart of our communities fostered widely. We need our parliamentarians to share our ambition to create good, sustainable jobs and to support a skills development system that works with employers to ensure that our people are ready to thrive and contribute.

Essential to this will be a coherent vision of what our economy will look like. Much has been said about “building back better” but this must be underpinned by practical policies.

By practical, I mean useful business incentives and an environment that makes a meaningful difference felt by businesses and their employees.

Support for the Scottish budget in parliament has meant some welcome interventions for struggling businesses, including the extension of business rates relief for the businesses most affected by pandemic restrictions for the rest of the year.

Both budgets presented by the Scotland’s finance minister Kate Forbes and chancellor of the exchequer Rishi Sunak have offered useful lifelines and opportunities that businesses should grasp with both hands.

The chancellor’s new super-deduction – which allows an uncapped 130% capital allowance on plant and machinery – came as a pleasant surprise. The UK record of investment is not as strong as we would like. Let us hope this bold incentive will provide a major boost for companies to invest and grow, which in turn should support economic recovery, productivity, and act as a real enabler for the energy transition, especially for our businesses here in the North East.

However, the increase in corporation tax from 19% to 25% in April 2023 is likely to be a shock for many companies and risks sending the wrong message to inward investors. The business community understands that the fiscal response to the pandemic has been extraordinary and someone needs to pay the piper. The time-lag announced will give businesses time to trade through this crisis before the tax increases are applied, but it is essential the economy is firing on all cylinders before taxes hit to ensure that damage inflicted by the pandemic does not become permanent.

Our central call to the Chancellor was to extend the Coronavirus Jobs Retention Scheme, recognising just how essential it is to protect jobs and support businesses. The Chancellor made the right decision to extend this support package to the end of September as well as maintaining VAT reductions for the most-affected businesses.

The UK budget also provided an extra £1.2billion in consequentials for Scotland. The challenge now is to ensure that this funding is targeted to the business community to help us not only recover, but to have a chance to develop our business models so we are ready to grasp future opportunities, including supporting ambitions for a net-zero economy.

Both governments must keep the door open to providing more support if the pandemic hits our economic re-opening plans again. Let us not lose sight that for many there is still some way to go before we can get back to “normal” – whatever that means.

Effort now must be placed on how we kickstart and create an environment for growth. An essential element of this will be smoothing the way for businesses to reach international markets.

Undoubtedly, Brexit has caused significant complications for exporters. It should not be the case that companies have to give up on selling goods and services into the EU due to onerous red tape. Ministers must do everything they can to fix the problems that are within the UK’s own control and increase their outreach to EU counterparts to solve the issues that are stifling trade in both directions.

The Scottish Chambers continue to support businesses through its trade documentation services, training and advice. Of course, it should go without saying that we will continue to work with government at Holyrood and Westminster to build on our new trading relationships with the world.

We also need to ensure that business costs don’t strangle recovery as we edge our way towards the opening of the economy. Throughout this difficult year, businesses have still had to pay for maintenance, heating, insurance, holiday pay, pension contributions, leases, rental, rates and so on while restrictions have continued. As businesses continue to lose money, their chances of survival drain away. No matter how welcome business support is, it simply does not compensate or replace the need for us to be allowed to trade freely and quickly.

Both the Scottish and UK Government must now collaborate more than ever before to make sure businesses and jobs remain protected until we are well on the road to economic recovery.