Some of the findings of The Herald’s major poll of Scottish business leaders, in partnership with the Institute of Directors in Scotland, were perhaps more surprising than others.

It was striking, given the Conservatives’ hard Brexit and the fact the UK is in recession, that respondents overwhelmingly believe the Scottish Government is doing a worse job than the Conservatives at Westminster on business and the economy.

Asked if the Scottish Government is doing a better or worse job on business and the economy than the UK Government, or whether their performances are similar, 68% of the 133 respondents, 91 in all, said “worse”, 13% declared “better” and 19% believed “similar”.

This represents something of a blow for First Minister Humza Yousaf and his Government.

In any poll, myriad factors have a bearing on respondents’ views.

The survey by The Herald and IoD Scotland indicated one factor which appears to be irking business leaders north of the Border is the Scottish Government’s use of devolved powers to make higher earners pay more income tax than they would elsewhere in the UK.

Asked 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 was “not right”. Meanwhile, 22% or 29 respondents said it was right.

Many business leaders tend to be against higher taxes to pay for public spending.

So maybe, while the overwhelming view is that devolved powers should not be used to raise additional tax from higher earners in Scotland, the fact that 22% of respondents believe the Scottish Government is right to do so is just as notable.

It is clear, however, that Mr Yousaf, and the SNP and its junior partner at Holyrood, the Scottish Green Party, have a long way to go if they want to win over Scotland’s business community.

The First Minister has clearly signalled his desire to improve relationships with business. He launched his New Deal for Business, with some fanfare, swiftly after being elevated to First Minister last spring.

However, subsequent Scottish Government decisions have annoyed some in the business community.

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This seemed inevitable given, especially at a time of tight public sector budgets arising in no small part from the UK’s dismal economic performance, it was always going to be impossible to please all of the people all of the time.

However, you wonder if Mr Yousaf has created a rod for his own back with his New Deal for Business pledge.

The latest decisions on income tax in the Scottish Budget in December, which widened the differential between the amounts paid by higher earners in Scotland and those in other parts of the UK, caused further angst among some in the business community.

One respondent in the poll said: “Staff are no longer bound by location to work – we will see higher-earning staff move to England, pay less tax, but continue to work in the same roles on a hybrid basis. The differential between tax authorities is becoming too wide.”

Another declared: “As a lifelong SNP supporter I can no longer support a party that is hell-bent on providing freebies in an attempt to ‘fairly’ distribute wealth, rather than actually looking to increase the overall wealth of the nation.

“Moving funds from one group to the other in the name of equality is not the answer. Their policy to tax the ‘rich’ will drive many, many people who create wealth and jobs out of the country.”

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And Scottish hospitality operators have expressed great displeasure that they continue not to get  the same relief on business rates as that provided by the UK Government to those in the sector south of the Border.

The Herald and IoD Scotland poll is not, however, all bad news for Mr Yousaf.

It seems plain the business community is in widespread agreement with the First Minister that Brexit is damaging Scotland’s economy.

Asked for their views on whether Brexit had hindered or helped the Scottish economy, or neither, 101 of 133 respondents, 76%, said it had been a hindrance. Only 4% believed it had helped, and 20% opted for “neither”.

That 4% is most eye-catching.

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And  there appeared to be a tone of exasperation in some responses.

One IoD Scotland member said: “Ninety per cent of our business comes from international trade. Brexit has severely impacted our ability to do business in Europe by creating barriers to demand in the minds of European distributors as well as adding significant time and financial costs to trading in the EU. Brexit has been massively harmful to Scotland’s craft spirits industry by placing additional burdens on the sector.

“Craft distillers who are the length and breadth of this country creating rural jobs are now under pressure from the cost of living crisis, facing a local UK market which is in decline and now struggle to access one of the world’s largest economies which is right on our doorstep. Utter madness.”

On Brexit, another respondent said: “The current UK Government makes our whole country a laughing stock in the various [countries] in which I work.”

 

It is interesting to reflect on the findings on Brexit relative to those on whether the Scottish Government or UK Government is doing a better job on business and the economy.

Brexit has had a clear negative impact on the economy, and a very large one at that.

It is a much more significant issue for the overall economy than business rates relief or differential income tax.

Brexit is also responsible for a major hit to the public finances in Scotland, and throughout the UK.

Mr Yousaf declared last month that Scotland had been deprived of £1.6 billion of devolved public spending in calendar year 2023 as a direct result of Brexit.

The National Institute of Economic and Social Research think-tank calculated the loss at £1.2bn, still a very significant number relative to the Scottish Budget, which has been set at £59.7bn for fiscal year 2024/25.

Brexit has also fuelled the UK’s skills and labour shortages crisis.

So it is perhaps surprising Mr Yousaf’s championing of membership of the European Union, while eminently sensible, does not appear to have made more corporate chiefs believe his administration is doing a better job than the UK Government on business and the economy.