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The new business minister's in-tray

Douglas Fraser | 11:14 UK time, Sunday, 8 May 2011

Wanted: a new business minister. Whatever else Alex Salmond does with his ministerial team, he'll have to find a replacement for Jim Mather, who stepped down from frontline politics ahead of the landslide.

For all his breadth of choice, the re-elected First Minister would be hard-pressed to find someone with as much energy and enthusiasm for the task. Business leaders may be slightly less bamboozled by mind-maps and laden with reading lists than they were by Mr Mather, but they knew he was on their wavelength.

Looking at the list of endorsements from Scottish business figures that the SNP built up over the campaign, business seems to have liked what it saw in the last SNP administration, particularly its competence and its open door to corporate Scotland.

But then, what it saw was a Scottish government that was unable to push through its minimum pricing of alcohol, or its £30m supertax on supermarkets, and which was unable to call a referendum on independence. Being constrained in minority and with few taxation powers, it was unable to do much to alienate the business lobby.

Mandate

That's all changed. If the SNP had a majority over the past year, it would have introduced the minimum pricing that the drinks industry fought ferociously to block. The proposal is coming back to Holyrood, so will that fight start again? Or will the drinks industry do as the opposition parties will surely have to do, and give way to the power of a democratic mandate?

If John Swinney had a majority last winter, he would also have imposed that extra tax on large retailers to balance his budget. He, or his successor as finance secretary, is facing yet more tight budgets, for sure.

So will the supermarkets be back in his sights? They won't be able to rely on opposition parties in the Parliament or in committees to block such a move this time.

Liz Cameron, of the Scottish Chambers of Commerce, has an interesting observation when she says: "Minority government delivered a great deal of welcome consensus over the last four years, and the Scottish government now faces a real challenge to deliver a Scottish consensus from a majority position".

Export priority

There are other proposals in the SNP manifesto for the new business minister and colleagues to implement. It points to tourism becoming more integrated with the international outreach work of inward investment agency Scottish Development International (SDI).

Exports are to be one of the priorities, with a target for increased exports to be set. When the manifesto says "we believe Scottish businesses can deliver a 50% increase in exports over the next six years", it's not clear if that is the target itself, or something less binding - merely a belief.

Small-scale manifesto commitments range across an expansion of social banking, support for near-market research and development for smaller companies, and a strategy on something called agri-renewables.

There are plans to help sole traders take on their first employees, and to introduce four new enterprise zones. Some may be 'low carbon' enterprise zones. I'd guess that Moray might be one, in response to the closure of at least one air force base.

But then, with so many constituencies won, it's less clear if or how the new administration looks after such SNP heartland seats - will the pork barrel now be rolled out in more marginal, newly-won seats?

With ambitious target on renewables, there's a lot planned. It's not just about encouraging big companies to invest big money on wind and marine power, and facing down local opposition to planning applications. The new government also has to get on with adapting infrastructure for electric cars and the move to district heating.

Risky business

And those commitments are only dealing with the powers the Scottish Parliament already has. What about the powers its new SNP majority wants?

Top of the list are the changes Alex Salmond wants to see to the Scotland Bill, currently going through Westminster. Among them are more power to borrow and control of corporation tax in Scotland.

Those business figures who endorsed the re-election of Alex Salmond seemed to assume that devolved corporation tax would be lowered. Can they be sure, given what happened with the proposed supermarket tax?

What's for certain, says CBI Scotland, are the business costs of creating separate tax accounts, and it's not convinced those costs are outweighed by the benefits to business.

And now that an independence referendum is very likely within the next five years, where will Alex Salmond's business endorsers stand on that? Several of them are clearly against.

More immediately, what will inward investors make of the uncertainty that now hangs over the future management of the Scottish economy, particularly if it hangs there for most of the five-year parliament.

There's no evidence that four years of SNP administration has in any way harmed inward investment. On the contrary, there have been significant successes, notably in the renewable energy sector. And the abolition of England's regional development agencies can be an opportunity for SDI to press its advantage with foreign companies.

But with independence now in play as never before, that represents uncertainty about future tax rates, change to regulation, and even a switch of currency to the euro.

Change adds risk. And business attaches a price to risk.

Comments

  • Comment number 1.

    Mr Fraser is correct about change adding risk. But it also brings opportunity: businesses which recognise and exploit that are always the most successful, and those are precisely the kind we want. Moreover, change may be good itself. I saw that one of the oil companies said it would be happier dealing with the government of Angola rather than that of the UK, following the recent tax changes: perhaps they might welcome the chance to deal with a Scottish Government lead by an oil economist!

  • Comment number 2.

    It's all dead in the water unless the Scottish Government can get control of their own finances via the Scotland Bill.

    Without control of your own financial base, with no borrowing powers and no control over strategic assets Holyrood will never be anything more than a Pocket-Money-Parliament.

    This does however play into his hands whenever it suits him, because he can say those hands are tied by the Tories in London.

  • Comment number 3.

    Hi Douglas - What an excellent week to be Scottish - and indeed to do business in and with Scotland!
    As you say -
    "There's no evidence that four years of SNP administration has in any way harmed inward investment. On the contrary, there have been significant successes, notably in the renewable energy sector. And the abolition of England's regional development agencies can be an opportunity for SDI to press its advantage with foreign companies."
    5 more years of progressive and pragmatic Scottish Government!
    John Swinney + Council of Advisers + New Minister = a good routemap to a prosperous wee country.
    Slainte Mhor

  • Comment number 4.

    The independence issue is on the back burner for at least 3 years
    The priority is getting proper financial powers to boost jobs and growth.

    Also, in light of the Labour party's intellectual and charisma deficit, can they
    maybe bring "Wee Wendy" back ? A swap for her brother would be a better deal for Scottish labour.

  • Comment number 5.

    The alcohol bill is a must - if only for the savings to the health and policing bills.

    I would live in hope that the borrowing powers will be used for the bridge. Which would free up a little capital spending to accelerate the council house building programme and/or a modest increase in the housing association. Not a penny more for Tavish's tram!

    Corporation tax would go down if the Scottish Government gets control of it. No question.

  • Comment number 6.

    I think you'll find that the FM will just get stuck in and make a start on the problems that need dealt with... Unlike the Labour voice on the Radio Scotland this morning who proclaimed that last week was just a protest vote.... You cant make this up!

  • Comment number 7.

    6 FastEagle
    Well said.
    Unbeleievable isn't it!
    The SNP Government are all focused on the Economy on Jobs on Prosperity on Health on Justice on Education.
    They want to strengthen the Scotland Bill at Westminster - building a consensus - to lever the Tories to proffer what the majority of Scotland's politicians - across all Parties, want.
    In short they want to govern pragmatically to try to get Scotland out of the mess that Gordon Brown and New Labour made of the economy - and to protect Scottish citizens from the worst excesses of the Tory and Liberal cuts.
    Meanwhile, the Unionist Alliance wishes to witter on about a Referendum - that the SNP have said quite clearly will take place in the second half of this term in Government.
    In the words of a "Brookside" Liverpudlian Cameron - "Calm down. Calm down."
    Slainte Mhor

  • Comment number 8.

    Reality sinks in! I used to be employed for a company that still has 2 satalite sites in Scotland I always recall announcements of the winning of new substantial 5yr contracts, a fellow employee remarked that we need at least one of these each quarter! Or they'll end up shutting us down, and transfer lock stock & barrel to England! I'm doubting any form of protectionisim will carry any weight in instances of this nature, when business makes its decision the accountants very rarely have any social fibres in their bodies......I'm quite sure on a similar peoples vote of this nature in some other parts of the world, on this basis declared independance from some other dominent partner! Trust me they'll be a mother of un-holy alliances just round the corner aka TORY/NULAB etc.......and all disruptive.......

  • Comment number 9.

    Yes, Jim Mather will be a hard act to follow. Any guesses, Fraser?

  • Comment number 10.

    Douglas,

    It would seem you are suggesting that the SNP majority in Holyrood may jeopardise investment in Scotland.

    This is in spite of everything that the SNP have accomplished in the last four years.

    I suspect that your view, along with that of many of your bbc colleagues, is more sour grapes than reality. It would seem that pacific quay as a staunch part of the union establishment has been rocked to its core by the result delivered by the people of Scotland.

    It is time you stopped the negativity and got on board. If you don't then in due course the people of Scotland will have their say about bbc Scotland , just as they have done with the union.

    The bbc gravy train is going to come to an end. Better get used to that thought.

  • Comment number 11.

    9 - Apologies, I meant Mr Fraser.

  • Comment number 12.

    Common sense provided the SNP with their historic victory and common sense will prevail and the SNP will be all to aware of the trust they have gained from the people of Scotland.

    Alex Salmond is a very astute politician and is not foolish enough to ruffle feathers and start forcing through unpopular legislation for the sake of it. Similarily the Westmister Government would be foolish to try and force the issue of a referendum or indeed in view of the fact that the SNP now have a working majority to block any necessary changes to the Scotland Bill.

    It seems Annabel Goldie thinks she has some power over the SNP and she alone will be able to reign them in and block any decisions they make. Like the Lib Dems the Tories are becoming a spent force in Scotland.

    I would say we are facing very interesting time in the world of politics and the SNP will keep their promises and continue to deliver for the people of Scotland.

  • Comment number 13.

    Bring it on! Settle your debts and be on your way!

  • Comment number 14.

    I think it's time for you to stop your anti-Scottish agenda here at the BBC, if you don't embrace the wishes of the people you serve you will soon become the croppers that anti-Scottish Labour and Lib Dems did on Thursday.

  • Comment number 15.

    13. At 10:13am 9th May 2011, Anglophone wrote:
    "Bring it on! Settle your debts and be on your way!"

    I don't think England could afford to pay us back the £276billion they have had from the Scottish oil over the last 30 years, most of which has been squandered. But out of goodwill we would probably let this go.

    Westminster's problem is that without oil and whisky to back up their obscene borrowing their credit rating would drop from AAA to BBB, Scotland's credit rating would go from AAA to AAA+.

  • Comment number 16.

    15 X_Sticks
    I'm sure that you are correct.
    It would be good to see an OECD or other impartial analysis of Scotland's economic situation projected post-Independence.
    Regarding the "goodwill" to Boris and David and Nick - I think we may have to send Xmas foodparcels until they get used to the loss of our subsidies.
    :)
    Slainte Mhor

  • Comment number 17.

    "Bring it on! Settle your debts and be on your way!"

    Someone should run a book on how long it takes before one of the Daily Mail tendency turns up to trot out the usual ill-informed subsidy junky nonsense.

    Anglophone - If Scotland is such a drain on England's resources how come every UK PM, Chancellor of the Exchequer and govt. when they're not just ignoring us as irrelevant, is always banging on about how they'll fight with every fibre of their being blah blah to keep us in the union.

    Unusually altruistic of Dave and his pals at Westminster given it would be in his party's interests to be shot of Scotland as it would just about guarantee a Tory govt. in London for the foreseeable future

    The cynical amongst us might come to the conclusion that since they're the guys who have actually seen the books, they know something about who's subsidising who that they're not telling the rest of us.

  • Comment number 18.

    @15. X_Sticks
    "Westminster's problem is that without oil and whisky to back up their obscene borrowing their credit rating would drop from AAA to BBB, Scotland's credit rating would go from AAA to AAA+."

    Well said X_Sticks. Also, I'm sure the process of 'debt settlement' would become much more interesting once the UK government opens up all the books for us to look at.

    btw - O/T : for any who are interested the comment responder script has a new version which works with the current bbc blog pages. Sorry for the delay - I've been off the beeb blogs for awhile and didn't know they'd changed.
    http://userscripts.org/scripts/show/56550

  • Comment number 19.

    16. At 11:19am 9th May 2011, spagan wrote:
    "Regarding the "goodwill" to Boris and David and Nick - I think we may have to send Xmas foodparcels until they get used to the loss of our subsidies."

    I don't think we should send any food parcels to that lot.

    I do think, however, that a successful, prosperous Scotland should do all it can to provide work and wealth to the north of England and Wales.

    This would begin to rebalance the power in britain away the south east gravy train. And not before time.

  • Comment number 20.

    Interesting, to hear all this nationalist crowing, but the proof of the pudding will be in the eating. So we will have to wait and see how the SNP move forward without having to negotiate concessions with other political parties. I wish them well and very much hope the Scottish economy can avoid suffering the same fate as the UK economy whilst it was under the control of Scottish politicians.

    One thing I would like to learn is, assuming the residents of Scotland vote in favour of Independence, would that be enough to move the process forward or would it have to be ratified by Westminster?

  • Comment number 21.

    18. At 12:15pm 9th May 2011, mrbfaethedee wrote:
    "I'm sure the process of 'debt settlement' would become much more interesting once the UK government opens up all the books for us to look at."

    For the first time in 300 years! No more deceipt or obfuscation.

    BTW good to see you back mrb!


  • Comment number 22.

    The referendum;

    I’m betting on 24th June 2014, 700 years later, this would keep it in line with our last independence day and being in the summer would make an excellent day for a public holiday. Rock on :)

  • Comment number 23.

    20 Alan
    I have every confidence that Westminster would not "stand in the way" of Scottish aspiration. I'm sure that we would remain significant players in any Confederation of the British Isles - and within the Commonwealth.
    Nonsense about Borders and Passports are simply scaremongering by the British Unionists - and we can expect a lot of that over the next few years!
    Slainte Mhor

  • Comment number 24.

    @21. X_Sticks
    "For the first time in 300 years! No more deceipt or obfuscation."

    Indeed! Tools of a dying state I think.

    Thanks X_Sticks! I'll try to stay back, I'll just need to manage my time a bit better.

  • Comment number 25.

    This comment was removed because the moderators found it broke the house rules. Explain.

 

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