Not surprisingly, a survey by the Fraser of Allander Institute about the business community’s perceptions of the Scottish Government has attracted much attention.
There is no doubt the survey’s findings are striking, in terms of the cold numbers.
And the febrile environment in the Scottish political goldfish bowl right now means there was never any chance the results of the survey, published by the highly regarded Fraser of Allander think-tank with law firm Addleshaw Goddard, would not be seized upon.
Firstly, only 9% of surveyed firms agreed or strongly agreed that the Scottish Government understands the business environment in Scotland, compared with 64% of businesses which disagreed or strongly disagreed.
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While the perpetual noise from opposition politicians about the Scottish Government’s relationship with business might have meant it came as a surprise to some people that even 9% were positive on the understanding the environment question, there is no doubt these numbers are an issue for First Minister Humza Yousaf.
Secondly, only 8% of businesses agreed or strongly agreed the Scottish Government engages effectively with their sector, with 67% disagreeing to whatever degree.
Thirdly, 19% of surveyed firms agreed or strongly agreed that they know an effective route to influence Scottish Government policy if new announcements are likely to affect their business, with 39% disagreeing or strongly disagreeing.
Fraser of Allander and Addleshaw Goddard said: “Our analysis also finds that larger firms typically disagree more than smaller firms when it comes to whether the Scottish Government understands the business environment in Scotland or engages effectively with their sector. We also find that hospitality, other services, wholesale, and construction are among those who disagree more with the first two questions.”
There might be crumbs of comfort for the Scottish Government in the less-negative response from smaller businesses, given it is perhaps them which might be most affected by devolved policy-making such as relief for minnows on business rates in Scotland as well as the work of enterprise agencies etcetera. That said, the response from large companies is striking, and that from smaller firms, while less bad, is not great, as the Federation of Small Businesses pointed out.
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Andrew McRae, Scotland policy chairman for the FSB, said: “It’s perhaps encouraging that smaller businesses are slightly less likely to feel alienated - but still nearly three-quarters of businesses…with fewer than 100 employees say the Scottish Government doesn’t understand the environment in which they operate.”
It is perhaps no surprise that hospitality firms are among those particularly at odds with the Scottish Government, given the lockdowns and restrictions implemented to tackle the coronavirus pandemic and more recent issues such as the deposit return scheme and short-term lets legislation.
What is clear is there is plenty for Mr Yousaf and his Cabinet to pick over as the First Minister attempts to pursue his “new deal” for business.
One thought that occurred on reading the findings of the Fraser of Allander and Addleshaw Goddard research was what the percentages would be if the same questions were asked with “UK Government” substituted for “Scottish Government”.
This would be an interesting exercise, given it is the UK Government that has the real power when it comes to affecting the macroeconomic environment and, by extension, the climate for businesses. We must guard against taking a parochial view of what affects Scottish businesses. And the UK Government has the greatest power over living standards, for better or worse.
There is some survey evidence, for example about the damage done by the UK Government’s hard Brexit to small businesses. However, it would be interesting indeed to see the overall proportions of firms in Scotland and the UK as a whole which agree and disagree with the statements that the Conservative Government understands the business environment, and engages effectively.
The FSB research on the damage done to small businesses and by extension to the broader UK economy by leaving the European Union is obviously different from the surveying of perceptions. That said, it does show what has actually happened, which is not to say in any way that the feelings of business towards a particular government are not important.
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The FSB’s Customs Clearance survey looks at small businesses’ experiences of exporting and importing.
Detailing the March Customs Clearance report findings, the FSB said: “Nearly one in ten (9%) small firms who used to trade internationally have stopped doing so within the past five years, in a real challenge to the UK’s growth plans. The volume of paperwork (56%), overall cost burden (49%) and supply chain and logistical issues (29%) are cited as key drivers.”
And, in case the Conservative Government were to claim this was nothing to do with Brexit, the FSB research makes it plain that Europe is the most important market for small businesses in the UK in terms of both exports and imports. This is something that should be taken on board by the UK Government as it chases trade deals with far-off countries and its hard Brexit continues to make trade with the European Economic Area difficult after a long period in which such dealings were gloriously frictionless.
The FSB said: “In terms of trading partners, Europe continues to be the top export and origin market by global region for small firms: 93% of small exporters and 87% of small importers move goods between the UK and other European countries.
“Ireland is where UK small exporters trade with the most, followed by Germany and France.”
In its June Customs Clearance report, the FSB said: “As businesses are adjusting to the new UK-EU trade relationship, small international traders say they have been asked to pay fees attributed to post-Brexit paperwork, but in many cases there is a lack of clarity from intermediaries on what exactly these extra costs are for.”
In terms of assessing perceptions of the UK Government’s performance on the economy, we also have some polling of ordinary people.
Ipsos’s latest Political Pulse release of August 25 shows 63% of Britons believe things in Great Britain are heading in the wrong direction.
And 55% think Brexit has had a negative impact on the country, while only 21% say it has had a positive effect.
Clearly, the UK Government has absolutely not covered itself in glory when it has come to business and the economy.
A survey of views from firms about whether the UK Government understands the business environment would therefore be most interesting.
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