LIKE many of us, I have been digesting the results of our UK General Election and, with my Scottish Engineering hat on, considering the opportunities this might bring for our industry in Scotland and across the UK. As an insufferable optimist, I find it hard not to see some reasons for optimism.

The UK’s new Labour government starts with a strong majority – across the UK and in England, Scotland and Wales – and they appear to be a stable group, mostly devoid of the kind of infighting that has hampered the outgoing government. Certainly, they face a tough challenge in the fiscal reality that the UK faces, but there appears to be no imminent constitutional challenges to face.

Political change brings opportunities to listen and learn

Whatever plays out on the global stage, stable, inspired and engaged leadership from our UK Government will be key to the future prosperity of our sector and wider economy. In other words, a potential for stability, an essential ingredient for industry to recover and grow, may be a good enough reason to be cheerful.

In a bid to compare and contrast what a stable platform might look like, I found an interesting timeline analysis outlining that in the years that our outgoing government had power, we have had 11 growth strategies, nine business secretaries, and seven chancellors. Or put another way, in that time the UK’s industrial strategies have lasted an average of just 14 months.

Improved stability, combined with a meaningful and detailed industrial strategy, could be a powerful agent for the kind of economic and productivity growth that the UK could really use to ease the current financial pressure.

Scottish engineering investment, and foundries, crucial

While there is plenty of ambition in the new UK Government’s industrial strategy, we await the detail on key areas of interest for industry – even where those areas are devolved to Scotland.

For example, if a planning overhaul for infrastructure development can accelerate the rate that projects like wind energy can develop, why wouldn’t we follow that model?

This week, I was reminded of the phrase “campaign in poetry, govern in prose”, a reminder to contain my optimism until the devil in the detail is clear.

Another outcome to consider from the UK election is a significant shift in the elected MPs that represent Scotland, and while that doesn’t change the makeup of the Scottish Parliament, it’s an additional point of focus for the SNP-led Scottish Government after their loss of a majority from a split with the Greens, and a new First Minister and leadership group as a result.

To return to the theme of change potentially bringing opportunity, our sector welcomes the Deputy First Minister’s recent comments that the policy of divergence in personal taxation from the rest of the UK was “under review”.

The potential impact of the change has been a vocal talking point for our members since its announcement, with concern raised that in the midst of a skills crisis it reduces Scotland’s ability to attract skilled workers from other areas of the UK. As a result of those conversations, we surveyed member companies as part of our mid-year quarterly review to quantify industry’s response to the changes.

New tax is 'direct blow' to engineering sector in Scotland

In summary, 70% of member organisations stated that they were concerned that personal taxation divergence has or will deter investment in Scottish-based businesses where ownership is outside Scotland. Some 60% were concerned that divergence has or will deter any tax bracket employees moving from the rest of the UK to work in Scotland, and that rose to 68% for higher tax bracket employees. In addition, 62% were concerned that divergence may lead to employees leaving Scotland to work in other areas of the UK with lower personal taxation.

Comments added by companies cited examples where mid to higher-salaried roles have been declined by applicants outside Scotland due to the change, and a number of comments repeated that, with the skills shortages we have, we don’t need any additional barriers to attract staff. In balance, the significant minority cited other benefits in prescriptions, dental, optical, and university fees that they felt more than offset higher tax rates.

Apprenticeships key to Scottish engineering sector's future

In roundtable discussions, there was a recognition that the change has only been with us for a few months, and therefore there is little hard evidence of actual impact. However, it is a significant mid to long-term concern for the majority of our industry, and so for a government that says it is minded to review this policy, and wants to build a closer relationship with industry, this seems like a great opportunity to consider and enact change if the evidence supports that it would help.

Paul Sheerin is chief executive of Scottish Engineering