The next First Minister can be sure of one thing based on the experience of recent years – the Scottish business community will be difficult to please particularly in these days of straitened public finances.
And recent times should leave Mr Yousaf’s successor in absolutely no doubt that business will be quick to find fault if it feels it is being given insufficient priority by the Scottish Government.
Mr Yousaf, who announced his resignation today, last spring embarked on his New Deal for Business.
This followed a period, especially in the later stages of Nicola Sturgeon’s time at the helm, when Scottish business was highly critical of the relationship it considered it had with the Scottish Government.
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Business had appeared overall, during the leadership campaign last year, to favour Mr Yousaf’s rival, Kate Forbes, a former cabinet secretary for finance and the economy.
While there was a degree of positivity from business about Mr Yousaf’s “new deal”, and around his swift postponement of the deposit return scheme and rethink on alcohol advertising proposals, this appeared to become quickly overshadowed by discontent on some key issues.
Hospitality, leisure and retail businesses have been very unhappy that the Scottish Government has continued to decline to introduce the temporary relief on business rates of up to 75% given to their peers south of the Border by the Conservatives.
The Scottish Retail Consortium (SRC) took great issue with plans being mooted, quietly, for a possible “surtax” on big grocery stores.
And the Scottish Government’s decision in the December Budget to further widen the differential between income tax paid by higher earners north of the Border and those in the rest of the UK did not go down well with business.
Asked in a recent poll by The Herald and the Institute of Directors if the Scottish Government is right to use its income tax powers to raise additional tax from higher earners, 78% or 103 of the 132 respondents said it is “not right”. Meanwhile, 22% or 29 respondents said it is right.
The reaction to Mr Yousaf’s departure from business organisations today was exactly as you would expect.
An understandable desire was expressed for the First Minister post to be filled swiftly to minimise instability.
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And there were calls for Mr Yousaf’s successor to prioritise the economy.
Tracy Black, the Confederation of British Industry’s devolved nations ambassador, said: “While Humza Yousaf leaves office with our best wishes, firms will want to see the vacuum filled quickly to prevent further instability impacting business confidence.
“Whoever comes in as First Minister must put addressing Scotland’s faltering economy first. Without a competitive and resilient economy that prioritises investment, the ambition to deliver sustainable economic growth will fall short of the mark.”
SRC director David Lonsdale declared the "pre-eminent priority" of Mr Yousaf's successor "should be economic recovery".
Mr Lonsdale said: "There is a pressing need to lift private sector investment, productivity, and growth. After all, an expanding economy is good for living standards, job prospects, and government revenues. If the economy recovers, other policy challenges become more manageable. Conversely, a weak economy will exacerbate the existing pressures on households and public finances.”
He added: “Central to this should be a plan to ease the regulatory burden, and lower the tax burden on business by scrapping the mooted public health surtax on grocery stores, and finally delivering on the pledge to restore business rates parity with England for medium-sized and larger commercial premises.”
Mr Lonsdale did note that the SRC had been “an early supporter" of Mr Yousaf's "attempts to reset the relationship with industry through his New Deal for Business”.
Colin Wilkinson, managing director of the Scottish Licensed Trade Association, said: “We initially welcomed Mr Yousaf’s pledge to ‘reset’ the Scottish Government’s relationship with business, in the wake of turmoil caused by the Covid pandemic, Brexit and misplaced legislation, when he was named as Scotland’s new First Minister just over a year ago, in March 2023.
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“However, that early enthusiasm clearly waned as hospitality businesses and the licensed trade have continued to struggle since his arrival in Bute House and there appears to have been no real understanding – or willingness to understand – the myriad problems and challenges facing what is one of the biggest employers in Scotland.”
Mr Wilkinson added: “One of the key asks of the new regime at Holyrood is to work with us to find a meaningful solution to change the current non-domestic rates system which is hugely outdated and in need of reform.”
And he called on Mr Yousaf’s successor to “pick up on his pledge to work with the business community and implement an urgent reset in the relationship between the Scottish Government and businesses”.
It perhaps rather sums up just how difficult it will be for Mr Yousaf’s successor to please all sectors of the business community that Mr Wilkinson, more than a year on from the “new deal” being embarked upon, still sees a need for an “urgent reset” in the relationship with the Scottish Government.
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