Small business offers verdict on EU referendum

“I’ve got enough on my plate thank you,” joked Cabinet Secretary for Social Justice, Communities and Pensioners Rights, Alex Neil. Should the Federation of Small Businesses (FSB) get their wish for the Scottish Government to follow the UK Government’s lead and appoint a standalone business secretary, it looks doubtful the Airdrie and Shotts MSP will step into the breach.
 
It is, however, just one of several calls to be contained within the business group’s manifesto ahead of next May’s Scottish Parliament election. Improved mobile and broadband infrastructure, a Digital Services Bill as well as a commitment that every public body aim to spend 10 per cent of its procurement budget with micro businesses – those firms with fewer than ten employees – are all on their wishlist, which was discussed at last week’s SNP conference in Aberdeen.
 
“I don’t think any of us in this room would say that we were completely happy with the shape of either the UK or the Scottish economy,” said Colin Borland, head of external affairs for the FSB in Scotland. “We still have far too many bits of the country where no matter how well the broader economy is doing, they seem to get left behind – it isn’t really what you would call a functioning economy worthy of the name.”
 
Rather than relying on the “shiny big fix” of quick inward investment, there is a need to build greater resilience into local economies and communities, Borland told an audience of small business owners and delegates. 

It is the upcoming referendum on the UK’s membership of the European Union, though, which dominated discussion. Research conducted by the FSB involving 6,000 businesses across the UK – 10 per cent of which were based north of the border – found firms to be in favour of a staying in, albeit with just a six per cent margin.

Against a backdrop of warnings from the First Minister that demand for a second independence vote would become “unstoppable” if Scotland is taken out of the EU against its will, the split between staying or leaving on either side of the border is of considerable interest. In Scotland, 60 per cent were in favour of remaining in the EU compared to 26 per cent against, the rest being undecided. In England, the split was 43 per cent to 41 per cent.
 
“During the long independence referendum campaign, Scottish businesses were told and informed from both sides of the debate of their importance in Europe and Europe to them,” said Scottish policy convener Andy Willox. “So I don’t think it’s any surprise that… there’s a majority of people in businesses in Scotland that are going to vote to stay in.”
 
Even so, the EU is far from the finished article. Whilst Scottish Government ministers have made clear they intend to campaign to stay in, that does not mean they are averse to change.

“As we’ve said many times [before], the EU is definitely not perfect and one of the areas where we want to see very substantial change indeed is in the application of the European fisheries policy because it is not as good for Scotland as it needs to be, far from it,” said Neil, citing the need for cabinet colleague Richard Lochhead to be given a “seat at the top table”.
  
Reform of the EU procurement directive to allow more flexibility to help the small and medium-sized enterprise sector is another aspect the Cabinet Secretary stressed he is keen to see movement on. “Some of the directives on procurement mitigate against the micro-business sector and the SME sector and it certainly mitigates against awarding contracts to indigenous businesses, particularly in areas where economic growth is very difficult, maybe in some of the peripheral parts of Scotland for example, some of the rural parts, some of the inner urban areas.

“I believe the EU should look at loosening up procurement laws to allow us to do much, much more to get a much higher percentage of the procurement business into indigenous businesses.”
 
Closer to home, government ministers continue to make the case for adoption of the ‘living wage’, albeit Neil acknowledged doing so is a “real challenge” for certain companies, especially in hospitality. Four-fifths of employees north of the border are already earning the living wage of £7.85 an hour or above, with the Cabinet Secretary wishing to see that proportion surpass 90 per cent in the lifetime of the next parliament.

“The last thing we want to do is to end up with a living wage that ends up in job losses or businesses going out business,” he added. “So we want to work with the business community to get the living wage.”
 
Devolution of national insurance contributions on top of powers set out by the Smith Commission last year is key, stressed Neil, whilst control over VAT rates would allow Scotland to mirror parts of continental Europe that lower rates for hospitality as well as renovation of buildings. “We want control over the VAT rates not just for the pleasure of it but because we can do things with it.”