Well, that’s that over for another year.
All the surprises are unwrapped – some looking less impressive now they’re out the box – and it’s already descended into brandy-fuelled acrimony, shouting, and people casting up long-forgotten offences from years back.
Yes, there are only 360-odd taxpaying days left until the next Scottish Budget.
Like Christmas, most of the excitement around the Budget lies in the anticipation. Who might be getting what, and who’s been cut from the Christmas card list this year. And, especially for parents, the concept of being given a “present” bought with your own money isn’t exactly unknown.
For our members, there were a few things in the Finance Secretary’s announcement that had been on their list.
Notably, it was a considerable relief that no further changes were made to the lifeline small business bonus rates relief scheme. Last year’s Budget saw the surprise move to change thresholds, bringing many small businesses into paying rates for the first time. We know first-hand from our members about the importance of this scheme and they were very clear that this wasn’t the time to tinker with it.
Ms Robison also listened to us and a broad coalition of business organisations and froze the main poundage rate.
On personal taxation, it was more of a mixed bag. The last time we asked our members, about two thirds were in the starter, basic or intermediate rate brackets. Only about a quarter were at the higher or top (or, as of next year, the advanced) level. So, for many small business owners, being a top rate income tax payer is more a problem they aspire to have.
That said, if you run a business that relies on discretionary consumer spend and your customers suddenly find their disposable income takes a hit, that’s going to pose problems. And we need more, not less, money moving round the economy if we’re going to trade ourselves back to growth.
But elsewhere the Budget statement was a story of missed opportunities. Most glaring was the decision not to replicate the same targeted business rates reliefs afforded to retail, hospitality and leisure in England.
Although the particular confluence of pressures facing these firms – from shaky consumer confidence to rising costs – are common across the UK, those based in Scotland haven’t had access to this additional relief for 18 months. Those in England, in contrast, can continue to rely on it until at least March 2025.
While some of those in Scotland will be supported through the small business bonus scheme, not all will. And, as if we need reminded of the parlous nature of these industries, the latest official statistics show we lost almost 3,500 businesses in Scotland’s hospitality and accommodation sector in the last year alone.
The only exception, of course, was the islands, where hospitality businesses will receive 100% rates relief, up to a maximum of £110,000. Given the particularly acute challenges faced in our rural and remote areas – skills and labour shortages, for one – this was a welcome surprise.
Beyond business rates, the fact that the ground had been well-prepared for a tough budget did give the Finance Secretary an ideal opportunity to take some genuinely difficult decisions (of a type, some might argue, that could and should have been taken some time ago).
But, again, I’m not sure this opportunity was exploited as fully as it might have been. Rather, some of what were presented as big decisions were in fact false dichotomies.
For example, when the Finance Secretary told MSPs that “if I spent every penny of consequentials on business relief and tax cuts, that would mean making a real-terms cut to our NHS and other vital public services” it’s not really the whole picture.
It’s not a binary choice between a competitive business environment and shutting a hospital. There are many, many other options open or moves that could have been considered.
For example, it seems, from what I’ve read at least, that the Scottish Government accepts that the public sector workforce will have to shrink. However, there doesn’t seem to be a plan to make this happen, beyond references to looking at the workforce size and shape, or assurances that government won’t make anyone compulsorily redundant.
Equally, the Government has chosen to announce a council tax freeze, chosen to agree expensive pay deals, chosen to maintain a series of non-means-tested benefits for the better off.
I’m not saying any of these are the right or wrong choices, just that they are clear choices and need to be recognised as such.
Nor is it true to say, as was implied by some in the run-up to the Budget, that Westminster can dictate how the Scottish Government spends any Barnett consequentials. So, the extra £545 million allocated to Scottish ministers as a result of last month’s Autumn Statement could have (and indeed has) been spent in any devolved area of their choosing.
And, with choices, we also need to recognise the costs and risks of not acting. Even in the teeth of some of the toughest conditions we’ve faced in many years, Scotland’s small businesses still employ over 900,000 people and turnover £82bn. That’s a lot of mortgages paid, revenues generated and services delivered.
But you can’t take them for granted. Business owners are telling us that turnover might be flat or even slightly up, but inflation has killed any margin, per customer spending is down and reserves are exhausted.
Sadly for them, the final thing that was missing from the Budget was any real mention of economic growth. At the risk of stating the obvious, if we don’t get the economy growing, we don’t get any more revenue and next year’s Budget will be even tougher.
Before the Budget we set out a number of ways that growth can be boosted by making different choices on procurement, regulation and more. Thankfully, none of these actually need a Budget Bill to be enacted, so we’ll be wasting no time in 2024 pushing for reforms that will give us the economic boost our businesses, public services and society as a whole need.
Colin Borland is director of devolved nations for the Federation of Small Businesses
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereLast Updated:
Report this comment Cancel