THE BUSINESS PLEDGE STURGEON SHOULD HAVE UNVEILED

BILL JAMIESON

 

Another day, another Great Leap Forward this morning for progressive, sustainable, diversity aware, gender balanced Scotland.

This morning (Tuesday) First Minister Nicola Sturgeon and her deputy John Swinney will formally launch the Scottish Business Pledge.

It’s a new voluntary code “for companies to commit to the best of modern business practices”.

The Business Pledge proposal was first mooted in the First Minister’s New Economic Strategy earlier this year.

Now there’s no doubt that the Scottish government needs a New Economic Strategy.

To achieve anything like the ambitions it has set out in its public spending and social policy pronouncements we are going to need a major step change in economic growth.

And there’s much to applaud in the social ambitions of the Business Pledge.

But there are also searching questions to ask here.

By how much will the Pledge help achieve the government’s growth objectives?

By how much will they encourage business to invest and expand?

How much do its ambitions relate to the real world concerns of business?

Indeed, how much consultation was undertaken to find out what ministers could do to help business confidence and growth?

The Pledge asks businesses “to commit to fair and progressive policies that boost productivity, recognise fairness and increase diversity”.

Made up of nine components, companies wanting to commit to the Scottish Business Pledge must pay the Living Wage to all direct employees over 18, be delivering on at least two other elements and be committed to achieving the rest over time.

The Pledge, says Mr Swinney, is intended to promote “shared ambitions of fairness, equality and sustainable economic growth.

“With the Living Wage at its core, the Pledge covers issues such as zero hours contracts, investing in young people, pursuing innovation and internationalisation and progressing diversity. Companies can now make their Scottish Business Pledge to demonstrate their commitment to these values and to delivering them through future plans.”

But business is already battling to innovate, internationalise and expand. The vast majority of companies already invest in young people – indeed, all the growth in employment in Scotland since the recession has come from the private sector.

And Scots businesses are no enemies of diversity. They have been keen to take on immigrant workers from all over Europe.

How does the Business Pledge materially help what business is already doing?

How about ideas to boost jobs and investment? These might help.

The parent economic strategy hammers away with pages on gender balance and “cross generational inequality”: worthy concerns. But they do not themselves create growth, investment, jobs and wealth. That’s what an economic strategy should be helping to do.

And businesses looking for guidance on tax and fiscal policy in Scotland will search The Pledge in vain.

Business wants to hear how the Scottish government’s new tax powers might be used to make us more competitive. Yet there is nothing here that might guide them.

As for regeneration, there’s nothing about a key factor that has contributed to the boarded up shops, closed businesses and blight in many of our towns and villages: business rates and levels. These are of major concern to business as another rise took effect last month. Instead, the refreshed strategy proposes “a ministerially-led innovation hub”. Spare us!

Planning application fees have risen by 25 per cent over the past two years, and water and sewerage charges are set to be levied on empty shops and commercial premises.

 Instead are government admonitions to introduce a Living Wage – this oblivious to the warning of Sir George Bain, founding chairman of the Low Pay Commission, that introducing the Living Wage would cause massive unemployment in sectors such as retail and social care.

The impression given by The Pledge is that thousands of businesses are failing to pay even the minimum wage. But the document is shockingly devoid of evidence as to how widespread this failure is and how many companies have fallen foul of existing sanctions for non-compliance.

In fact, the number of employers “named and shamed” across the UK for non-payment of the minimum wage last year came to just 48. The n total since sanctions were introduced comes to 210.

Of course more should be done to lift opportunity and aspiration for those on the lower rungs of the ladder. But documents such as The Pledge overlook the fact that we have one of the most advanced welfare services in the world. Indeed, welfare is the single most important activity of government. Across the UK we spend £165 billion a year on it – almost 14 per cent of GDP.

Such spending commitments have risen materially faster than the rate of growth in GDP. And until we raise this, the “refreshed economic strategy” sets us down a road that is truly, and ruinously “unsustainable”.

How much better it would have been had the authors of The Business Pledge sat down and talked to business organisations across the waterfront – Chambers of Commerce, FSB groups, CBI Scotland, Institute of Directors, Business Gateway. Draw up a list of practical, real-world, specific, deliverable proposals that would spur investment and expansion.

Helping SMEs get a larger share of public sector procurement might help. Or a push on late payment by government and public sector agencies.  Or a bigger push on high speed broadband. Every little helps.

That would be a Business Pledge to give business hope and encouragement to grow and hire staff. It’s never too late to do this. Indeed, the Scottish government will soon be obliged to do this. But the cost of delay keeps going up.

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  Comments: 1

  1. James Cameron Munro


    The First Minister is no lover of the market place and managed to go through a five week General Election Campaign without once advocating any support for private business or what steps her party would take to encourage investors to come to Scotland She is a Clause 4 socialist who believes that the State can and should intervene but only on those aspects that are intended to place further obligations financial and others on employers.

    In the hubris of an excellent campaign she may rightly feel that she is holding all the cards but I am less convinced that her economics add up. It may be populist among certain sections of the community but we are at risk of becoming a high tax high spend welfare based economy and that has little long term benefit to anyone Whatever failings her predecessor had it is a not a mistake Mr Salmond would have made The error in part during the election campaign was the Unionist parties focussed on the alleged constitutional threat of SNP and ignored their economic strategy It is tempting for Mr Cameron to provide ‘full fiscal autonomy’ but not in my name Prime Minister Like many in this country I have no desire to be forced to bail out overspend however well intentioned its cause. I would go further and suggest that constitutionally there can be no case for such a power in a devolved Parliament.

    It would be encouraging if there was sight of an alternative on then political horizon to address this economic folly.

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